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Disrupting the Healthcare System opportunities for innovation 1© Arthur A. Boni, Ph.D.
3 Innovation Requires all 3! Market Need job(s) to be done, job executor(s), context Solution technology, invention Business Model create, deliver and capture value Complex healthcare market Patient, Provider, Payer (3Ps)
© Arthur A. Boni, Ph.D.4 Business Model Canvas Ref: Osterwalder
Innovation Model Ref. Christensen Innovation Model Ref. Christensen Critical elements of disruption – Every market has a rate of improvement that customers can absorb – Sustaining innovations typically target demanding, higher-end customers These continue until the high end is “overshot” and those customers may be ripe for disruption – Disruptive innovations typically provide lower performance to less demanding, or under-served/non- consuming customers Once a foothold is gained, performance improves since technology improves quickly © Arthur A. Boni, Ph.D.5
Disruptive Innovation Model Sustaining innovations Disruptive Innovations Performance customers can absorb (range) Now Performance Time Low High 6 © Arthur A. Boni, Ph.D. Over shot Under shot
disruptive innovation A good enough solution offering new benefits around simplicity, convenience, or low prices to customers who were overshot at the low end by existing offerings or who would not consume at all because they lacked skills, wealth, or access to available solutions create new business models © Arthur A. Boni, Ph.D.7
Markets disrupted in two situations ( Use Christenson’s Rules) Use technology and business model innovation to power disruption 1.(Market is highly underserved ). Look for non- consumption low end or new market disruption 2.(Market is highly overserved). Look for overshot customers they may be satisfied but might consider getting the jobs done for a lower cost, easy to use solution A third opportunity exists for customers whose needs are Undershot target for up-market sustaining innovation © Arthur A. Boni, Ph.D.8
Models for Disruptions? Guiding principles: Disrupt simplicity, convenience, accessibility, affordability close to customer/user (focus on jobs to be done) – Migrate provider Expensive specialists less skilled practitioners self care – Migrate disease treatment/point of care Teaching hospitals general hospitals outpatient clinics home care © Arthur A. Boni, Ph.D.9
Disruptions in Healthcare Why would one want to utilize a service or product with less “performance”? – Identify customers/users who are “overshot” and willing to settle for a lower cost solution – Measure performance as outcomes or complexity of diagnosis and treatment – Scientific advancement can be a major driver Non-market factors can influence innovation and disruption (motivation/ability framework) – 3 rd party payment system – Government policies (e. g. FDA approval) – “Behavioral economics/finance” © Arthur A. Boni, Ph.D.10
Healthcare Disruption Trajectories Provider Level Disruption High performance – Specialists and subspecialists Medium performance – Family/personal care physicians – Nurse practitioners Low performance – Self-care Point-of Care Disruption High performance – Academic medical centers – General hospitals – Community hospitals Medium performance – Outpatient facilities – Clinics & Mobile facilities – In-office care Low performance – In-home care © Arthur A. Boni, Ph.D.11
Cases or Examples ref. Christensen Chapter 8, Seeing What’s Next The Heart (CABG to stents) – Disruptive innovation in angioplasty Move to treatment by non-surgeons (cardiologists) Blood glucose monitoring (Clinic to Home) – Easier for patients to monitor themselves Home pregnancy tests (Clinic to Home) – Patients to perform tests in own homes Health monitoring with mobile devices – Patients take responsibility for their own wellness © Arthur A. Boni, Ph.D.12
Example of provider-level disruption © Arthur A. Boni, Ph.D.13 Repairing/Replacing a Heart: Cardiac Surgeon
Disrupting the process Healing a Heart - Cardiologist © Arthur A. Boni, Ph.D.14 Coronary Stent Cardiologist Disrupt surgeons
Drug Treatment of Heart Disease Patient administered © Arthur A. Boni, Ph.D.15 Simvastatin - generic
Point of Care Disruption © Arthur A. Boni, Ph.D.16 Glucose monitoring
Point of Care Disruption © Arthur A. Boni, Ph.D.17 In Home Testing PregnancyHIV Target Non - consumption
On-going Disruptions Target non-consumption © Arthur A. Boni, Ph.D.18 Propensity to acquire disease and personalized treatment options 23andMe, Navigenics, deCode, Foundation Medicine, Precision Therapeutics
Technology Disruption PACS Overshoots Customers © Arthur A. Boni, Ph.D.19 Stentor (Philips)
Point of Care & Provider Disruption © Arthur A. Boni, Ph.D.20 SonoSite, Inc. – Hand-held Imaging
Migration in Disease Treatment Fig. 8.2 Christensen (evolved) © Arthur A. Boni, Ph.D.21 Skill Required To Implement Solution Unclear (Mystery) Problem Solving- Expertise needed Crystal Clear (Rules/Algorithms) Patterns Emerge (Heuristics) Heart Surgery CABG Provider – level Disruptions Point of Care Disruptions Stents Drugs Predictability of what will work/clarity of rules Advances in technology
Examples from Pittsburgh! © Arthur A. Boni, Ph.D.22 Skill Required To Implement Solution Unclear Problem Solving- Expertise needed Crystal Clear (Rules/Algorithms) Patterns Emerge (Heuristics) Provider – level Disruptions Point of Care Disruptions Predictability of what will work/clarity of rules Advances in technology
Non-Market Forces in Healthcare A disruption-based model needs to recognize that individuals need influenced to make choices – Concept of motivation and ability innovation will flourish when both exist in abundance – 3 rd party system has shielded consumers from making choices © Arthur A. Boni, Ph.D.23
Non-market Forces in Health Care Fig. 8-3 Christensen (Evolved) © Arthur A. Boni, Ph.D.24 Cardiac Care -High motivation & high ability -Scientific progress drives innovation -Insurances willing to pay Nurse Based Primary Care -Capability exists -But, insurance limits motivation and ability Low ability High ability Expedite approval mechanisms, remove role limitations Patients bear more expense Government spending Low motivation High motivation However, 3rd party payment dampens motivation for innovation – biases to selection of high cost option
When Body Parts Call the Doctor! Bloomberg Business Week, Apr. 12, 2010 “Facing saturated markets, cellular carriers are jumping into the remote-health-care revolution” M-health © Arthur A. Boni, Ph.D.25 $4.4 B Value of US M-health market by 2013 Knee brace for injured patient in rehab Movements simulated on screen with 3D avatar Wireless transmission to doctor on PC
Summary Scientific progress provides technology and rules that guide prevention and treatment (heuristics and algorithms) Given rules, less skilled people and settings displace those who previously required deep expertise Non- market forces affect market for innovation by influencing industry player’s motivation and ability – Align interests of healthcare and insurance (it’s not just public or private options) align incentives by encouraging provider and payer (insurer) to be same entity managed care organizations (ex. Kaiser, Geisinger, Mayo) © Arthur A. Boni, Ph.D.26
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