Guest Post: The innovator's Rx for health care

Photo courtesy of Stuart Cahill

by Clayton M. Christensen and Jason Hwang

It's strange to think that not long ago, the ability of ordinary people to access a blog like this from a PC, laptop or cell phone was the stuff of science fiction. But the advent of the microprocessor, which simplified computer design and assembly, brought computing out of corporate mainframe centers and into our homes.

The microprocessor was what we call a "technological enabler" of disruptive innovation. Translation: It revolutionized the computer industry by making products cheaper and more convenient.

We've studied these innovations in another industry, health care, over the last 10 years. Many technological enablers -- in the form of molecular diagnostics, imaging technologies, and myriad drugs and devices -- exist in health care. Yet, lower cost and convenience haven't come.

With our new President now focusing on health care, it's time to look at why the system seems so broken, and to ask why health care isn't following the pattern of the computing industry.

Actually, disruption is occurring, but often it's outside of hospitals and physicians' practices. These niches can show us how health care might become more affordable and convenient.

First, retail. As we describe in our new book, The Innovator's Prescription, CVS Caremark's (CVS) MinuteClinic provides basic care at kiosks in retail pharmacies. These clinics are staffed by nurse practitioners who can administer rules-based diagnostics and predictably-effective treatments like immunizations, strep throat exams and diabetes screenings.

Second, digital data. President Obama's new budget puts big money behind digitizing medical records -- a step toward making health data more accessible to both providers and patients. But in the private sector and apart from hospitals, Google (GOOG) Health and Microsoft (MSFT) HealthVault are already helping patients manage their clinical data by making user-generated health records portable.

Companies are also building online resources to allow patients to review health care providers. Zagat, known for its user-generated restaurant reviews, is partnering with WellPoint (WLP) to build a website that rates physicians.

There is also the giant challenge of disrupting the fee-for-service payment model, which general hospitals and private practices were built on. They profit from patients needing more services, more care, more time in the hospital, and more visits back to the doctor. In other words, they profit only when people are sick. What's the incentive to provide the excellent, low-cost care that technological enablers make possible?

Here disruption comes from innovative providers like Kaiser Permanente. These providers want to give the best care at the lowest cost because they employ their own doctors and operate their own insurance companies. Their patients pay fixed fees for full services over a given time frame. These providers win by keeping their members healthy and satisfied with their care.

So, get ready, doctors and patients. Disruption is coming soon. And it's a prescription we all need.

Clayton M. Christensen is the Robert and Jane Cizik Professor of Business Administration at Harvard Business School and co-founder of Innosight and Innosight Institute. Jason Hwang, M.D., is Senior Strategist for the Healthcare Practice at Innosight and Executive Director of Healthcare at Innosight Institute. They are coauthors, with the late Jerome Grossman, M.D., of The Innovator's Prescription: A Disruptive Solution for Health Care.