New The general process of becoming affordable and accessible Health Care... · 2014. 12. 10. ·...

Laptops

3/9/2012 Copyright Clayton M. Christensen 1

The general process of becoming affordable and accessible

Mainframe

Minicomputers

Smartphones

Desktops

Slide

rule

1. First bring the problem to the solution.

2. Then bring the solution to the problem.


Decentralization is disruptive, and is hard to catch

Pe

rfo

rma

nc

e

Time

40% 20%

on $2,000

Time

Incumbents dominate

sustaining battles

Entrants

typically win

at disruption

45% on

$250,000

60% on

$500,000

Su

rgic

al

suit

es

High-speed

multi-channel

testers

Imaging: MRI,

CT, PET

Scanners

Specialist physicians

Personal physicians

Nurse practitioners

Pharmacists

Clinics

Offices

Homes

The decentralization that follows centralization

is only beginning in healthcare

1. Bring the problem to the solution. 2. Then bring the solution to the problem. Copyright Clayton M. Christensen

Retail

Clinics

Family

care

http://www.antiagingdoctor.co.za/?p=173http://www.fsu.edu/news/2008/05/13/family.physicians/http://nurseweb.ucsf.edu/www/spec-anp.htmhttp://www.ucdmc.ucdavis.edu/chronicdisease/diabetes_education/combination_pills.htmlhttp://www.citytowninfo.com/education-articles/career-guides/how-to-become-a-pharmacy-technician


Enablers of Disruption

A new “value network” – a new system of suppliers and distributers

Business model innovation

•Lower-cost venues of care

•Lower-cost care givers

Probabilistic

pattern

recognition

Rules-based

Intuitive,

trial-and-error

problem-

solving

Synthetic

fibers:

Nylon

Polyester

Acetate

Kevlar

Infectious

diseases;

Cervical

cancer

Bipolar

disorder;

Seizures

asthma

Scientific progress that commoditizes expertise

plays a critical role in disruption

Empirical

medicine

(Evidence-based

medicine)

Precision

medicine

(Personalized

medicine)

Intuitive

medicine

(symptoms < diseases) Copyright Clayton M. Christensen

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Dave Snow, asthma

CEO, Medco

National Jewish Medical Center

Pulmonary & Respiratory Diseases

No model can

do everything

for everybody.

Fee for service

• Consulting firms • R&D organizations • Diagnostic & intuitive activities of hospitals

Solution

Shops

Copyright Clayton M. Christensen

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We need solution shops for disorders that today

are determined by symptom, not the cause:


• Type II diabetes

• Obesity

• Depression

• Schizophrenia

• Bipolar disorder

• Epilepsy

• Parkinson’s disease

• Crohn’s disease

• Arthritis

• Chronic back pain

• Ulcerative colitis

• Alzheimer’s disease

• Multiple sclerosis

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•Sign in

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Copyright © 2011 Yahoo! Inc. All rights reserved.

Shouldice Hospital:

Hernia surgery

Dave Snow, asthma

CEO, Medco

National Jewish Medical Center

Pulmonary & Respiratory Diseases

No model can

do everything

for everybody.

Fee for service

• Consulting firms • R&D organizations • Diagnostic & intuitive activities of hospitals

Solution

Shops

Fee for

outcome

• Manufacturing • Education •Construction • Medical procedures

Process Businesses


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110 1

General Hospital ShouldiceHospital

(hernia repair)

$970 $700 Cost of supplies & direct labor

$6030 $1600 Overhead burden

$7,000 $2,300 Total cost for equivalent length of stay

Service families offered


Sources & magnitude of cost differences:

process vs. general hospitals

Government-paid systems are similarly stymied by their silo

structures: Canada, Germany, Netherlands Copyright Clayton M. Christensen

The structure for 90% of Americans drives caregivers to defend

and strengthen their silos. They cannot drive care towards

lower-cost caregivers and lower-cost venues of care.

http://www.startanursestaffingagency.com/http://www.irqsusi.com/2011/02/doctors-offer/http://carinsurance-companies.com/insurance-companies-how-to-find-best-insurance-companies.htmlhttp://www.countryclear.com/bottled-water-regulation

•Kaiser Permanente, Intermountain, Geisinger

•Employer-provided care

•Sweden, Finland Copyright Clayton M. Christensen

Those with a system perspective find that patient health

and the drive to lower-cost venues of care and lower-

cost caregivers improve profitability.

Business models for adherence in chronic care

Degree to which behavior change is required

Minimal Extensive

Moti

vati

on

to

ad

her

e to

th

erap

y

Strong:

quickly feel

consequences

Weak:

Complications

are deferred

Type I Diabetes

Addictions Type II Diabetes

Asthma

Congestive heart failure

Obesity

Hypertension

Osteoporosis

Cancer HIV

Myopia Crohn’s disease Chronic back pain

Ulcerative colitis

Infertility


Business models for ongoing care


Minimal Extensive

Moti

vati

on

to

ad

her

e to

th

erap

y

Strong:

quickly feel

consequences

Weak:

Complications

are deferred

Type I diabetes

Addictions Type II diabetes

Asthma


Obesity

Hypertension

Osteoporosis

Cancer HIV

Myopia Crohn’s disease

Chronic back pain

Ulcerative colitis

Infertility

Doctor’s office User Networks

Employer-

Managed Care

with HSAs

Pharmacy-

based care


Better science and the pursuit of profit will enable

pharmacies to provide more and better care.


Minimal Extensive

Moti

vati

on

to

ad

her

e to

th

erap

y

Strong:

quickly feel

consequences

Weak:

Complications

are deferred

Type I diabetes

Addictions Type II diabetes

Asthma


Obesity

Hypertension

Osteoporosis

Cancer HIV

Myopia Crohn’s disease

Chronic back pain

Ulcerative colitis

Infertility

Pharmacy-

based care


Integration

Fasting and

prayer for

modularity

A common language and a common

way to frame the problem F

ou

r w

ay

s to

tack

le r

egu

lato

ry c

ha

ng

e


http://freechristimages.org/biblestories/boy_samuel.htm

We’ll do anything for

anybody.

•Overhead =

85% of total

•Overhead

increases 30%

for each

doubling of

complexity

•Variable

quality

3/9/2012 Copyright Clayton M. Christensen 16 P

olish

ing

De

pt.

Annealing

furnace

Turning machines

Tapping

equipment

De-burring

Cu

t-o

ff s

aw

s

Shipping Department Office area Storage

Hobbing department

Boring

machines

Stamping

machines

Assembly

The Resource

Allocation Process: Decisions about what

gets resources: what

to do & what not to do

Intended Strategy: Analytical project

followed by

implementation

Emergent Initiatives Responses to

unforeseen opportunities

and problems

Stream of new

products, services,

processes and

acquisitions

Actual strategy

that is implemented

Processes of Strategy Formulation and Implementation

Priorities embedded in company’s profit model

Bad money demands that new

businesses become very

big, very past


Market Understanding that Mirrors how

Customers Experience Life

“The customer rarely buys what the company thinks it is selling him” - Peter Drucker


Diabetes companies typically have targeted customers who

don’t own the job of keeping healthy.


Family

caregivers

Help him feel

that he’s in trouble!

Patient

Productivity

Absenteeism

Disability

Health Retention Profitability &

competitiveness

Employers

© 2007 Innosight LLC

20

7%

4% 12%

8%

18% 22%

% of tons

Ste

el Q

ua

lity

1980 1975 1985 1990

25–30% 55%

Evaluating investments on marginal rather than full costs biases incumbent

leaders to leverage what they have, instead of building what they need

$350

285

65

Minimill

$350

15

335

Marginal

$350

340

10

Existing

Price

Cost

Net

3/9/2012 Copyright Clayton M. Christensen

Business model innovation is key to

improving quality and reducing costs.

Hospital industry was

established when:

•Transportation was costly

•Doctors were inexpensive

•Each community needed a

hospital

•Though they were called

“General Hospitals,” they actually were focused because

most diseases were acute

The world has changed. The

industry’s paradigm has not.

•Transportation is cheap and

pervasive.

•Doctors are costly

•Most diseases are chronic

•Most hospitals try to do

everything for everybody

•90% of all costs in the hospital are

overhead – inherent to the business

model 3/9/2012 Copyright Clayton M. Christensen

21

Business model liquidation occurs by helping customers to get their job done: Profits

Mother boards

Computer assembly

Supply chain

& logistics

Product design

Brand

Dell AsusTek

Simple circuit boards

Mother boards

Computer assembly

Supply chain

& logistics

Product design

Brand

3/9/2012 22 Copyright Clayton M. Christensen

A common language and

a common way to frame the problem

• Science and technology propels care from left to right.

• The pursuit of profit drives things from the bottom to the

top.

• Almost all health care cost is in overhead, not direct

– Overhead is the result of complexity

– Complexity is driven by marginal, rather than full cost

thinking.

• Needing to do the job is the causal mechanism behind

changing behavior and purchasing products.

• Better quality at higher cost, vs. Better quality at lower

cost


Su

rgic

al

suit

es

High-speed

multi-channel

testers

Imaging: MRI,

CT, PET

Scanners

Specialist physicians

Personal physicians

Nurse practitioners

Pharmacists

Clinics

Offices

Homes

The decentralization that follows centralization

is only beginning in healthcare

1. Bring the problem to the solution. 2. Then bring the solution to the problem. Copyright Clayton M. Christensen

Retail

Clinics

Family

care

http://www.antiagingdoctor.co.za/?p=173http://www.fsu.edu/news/2008/05/13/family.physicians/http://nurseweb.ucsf.edu/www/spec-anp.htmhttp://www.ucdmc.ucdavis.edu/chronicdisease/diabetes_education/combination_pills.htmlhttp://www.citytowninfo.com/education-articles/career-guides/how-to-become-a-pharmacy-technician

Three levels in the architecture of a job


What’s the job-to-be-done? (Each job has functional, emotional & social dimensions)

What experiences in purchase & use

must we provide to do the job perfectly?

What and how to integrate?

Integrating correctly to help customers get the job

done is the essence of defensible differentiation

• IKEA

• Federal Express

• SAS

• Zara

• Microsoft Office

• TurboTax; QuickBooks

• V8

• OnStar


Targeting the job enables precision

in product development


Product

category

Too many

features;

wrong

features

Customer

category One-size-

fits-none

product

Job to be done

Proper

integration

of all needed

experiences

Wall Street Analysts

Pharmaceutical Cos.

Petroleum Majors

Auto companies

IT departments

Customer Supplier

Bloomberg

CROs.

Halliburton,

Schlumberger

Tier One Suppliers

TCS, Infosys, Wipro

Physicians Pharmacies

Outsourcing often sets in motion disruptive business model liquidation

3/9/2012 28 Copyright Clayton M. Christensen

New The general process of becoming affordable and accessible Health Care... · 2014. 12. 10. ·...

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