The Innovator’s PrescriptionThe Innovator’s Prescription:An Examination of the Future of Healthcare th h th L f Di ti I tithrough the Lens of Disruptive Innovation
Jason Hwang, M.D., M.B.A.
E i Di H l hExecutive Director, Healthcare
The Disruptive Innovation Model
Incumbents nearly always win
orm
ance
Incumbents nearly always win
Perf
o
Disruptive Entrants nearly always winpinnovations
Entrants nearly always win
Time
3/19/2009 Copyright Jason Hwang and Clayton M. Christensen
Disruption is driven by an asymmetry of motivation
% of tons
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Large markets of HIS non-consumption are sources of growth for disruptive productsg p p
orm
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Personal EHRs
Time
3/19/2009 Copyright Jason Hwang and Clayton M. Christensen
Centralization followed by decentralization: Computing
Centralization followed by decentralization is common
Long-distance telecommunicationHigher educationHigher educationMusic recording & distributionMovies / videoRetailingG bliGambling
The decentralization that follows centralizationis only beginning in healthcare
Surgical
suite
s
The Three Enablers of Disruption
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t mea
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Business modelI ti TimeInnovation
Technology is moving diagnosis and treatment from unstructured problem solving to a rules-basis
E i t tiExperimentation& problem‐solving
rapy
Pattern Recognition
nosis an
d ther
Rules‐Based
plexity of diagn
Comp
Time
The Three Enablers of Disruption
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Business modelI ti TimeInnovation
What is a business model, and how is it built?
THE VALUE PROPOSITION:RESOURCES:
People, technology, products,A product that helps customers do more effectively, conveniently & affordably a job they’ve been trying to do
People, technology, products, facilities, equipment, brands, and cash that are required to deliver this value proposition
they’ve been trying to dop p
to the targeted customers
PROCESSES:
Ways of working together to PROFIT FORMULA:
address recurrent tasks in a consistent way: training, development, manufacturing, b d i l i
Assets & fixed cost structure, and the margins & velocity required to cover them
budgeting, planning, etc.
The Traditional General Hospital Is Not a Viable Business Model
Value Proposition:Don’t know what’s
wrong? We can address Resourcesany problem you bring
ProcessesProfit formula
Turning machines Polishing Dept.Turning machines
Hobbing departmentTapping equipment
rtmen
t
re
Boring machines
Annealing furnace
ing
Dep
ar
A st
arts
he
Boring machines
Shi
ppCut-offsaws
aken
du
ct B
Storage
De-burring machines
Pat
h ta
by p
rod
B starts hereOffice area
Stamping machines
Hospitals are expensive conflations of three types of business models
Solution Shops Value-adding process businesses
Facilitated Networks
• Consulting firms• High‐end law firms
• Manufacturing• Education
• Telecommunications• Insuranceg
• R&D organizations• Diagnostic & intuitive activities of hospitals
• Food services• Medical procedures
• eBay• PatientsLikeMe.com
Fee for service Fee for outcome Fee for Membership
activities of hospitals
Disruption of the Hospital Business Model
Coherent Solution Shop
Stage 1
Disjointed
TodayCoherent Solution Shop
Hypo-thesisj
Solution ShopTreat-ment
dDisjointed VAP Clinic
Value‐Adding Process ClinicsValue Adding Process ClinicsOrthopedic, hernia, eye, etc.
It is often futile to cram new technologies into old business models
Major Established Electronics Markets: Tabletop radios floor standing
Performan
ce
Tabletop radios, floor‐standing televisions, computers,telecomm.equipment, etc.
P
Portable TVs (1959)
Pocket radios (1955)
Hearing Aids (1952)Path taken by
established vacuum
Time
g established vacuum tube manufacturers
Technological Enabler: Transistors vs. vacuum tubes
The Three Enablers of Disruption
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Business modelI ti TimeInnovation
Appliance Stores
New propositions often require newvalue networks to gain traction
orman
ce RCA, Zenith
Perfo
Component suppliers
re ceferent m
easur
Of P
erform
anc
Discount retailers
TimeDiff O
Sony, Panasonic
Time
Componentsuppliers
3/19/2009 Copyright Jason Hwang and Clayton M. Christensen
General Hospitals
New value networks are developingin health information systems
orman
ce HIT Specialists
Perfo
Traditional EHR suppliers
re ceferent m
easur
Of P
erform
anc
Retail Clinics, PCPs
TimeDiff O
Wal‐Mart, Dell
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eClinicalWorks
3/19/2009 Copyright Jason Hwang and Clayton M. Christensen
