Clayton M. Christensen is a professor of business administration at the Harvard Business School. He is the bestselling author of five books, including his seminal work, The Innovator's Dilemma, which received the Global Business Book Award for the best business book of the year, and most recently, The Innovator's Prescription, which examines how to fix our healthcare system. Christensen serves on several public and privately traded boards and is the founder of a successful consulting company and an investment management firm. He holds a B.A. with highest honors in economics from Brigham Young University and an M.Phil. in applied econometrics and the economics of less-developed countries from Oxford University, where he studied as a Rhodes Scholar; he received an MBA with high distinction from the Harvard Business School in 1979, graduating as a George F. Baker Scholar, and was awarded his DBA from the Harvard Business School in 1992.
Topic: Bringing Disruptive Innovation to Healthcare
Christensen: A good way to visualize how disruptive innovations transform an industry is if you think of the geography of an industry as a set of concentric circles.
I’m Clayton Christensen, the Robert and Jane Cizik Professor of Business Administration at the Harvard Business School.
Question: How can disruptive innovation transform healthcare?
Christensen: The advent of sophisticated healthcare technology in the form of surgical suites and advanced imaging equipment and these big high speed multi-channel blood testing and analytical equipment has driven a centralization of the healthcare industry, so we have to take the patients to the hospital rather than to bring the solution to the problem. Now, do you think hospitals will ever become cheap by competing against each other? No. They’ll actually become more expensive. So what we need to do is drive the disruptive decentralization of the healthcare industry and we do that by bringing technology to outpatient clinics, so you can begin doing there the simplest of the things that within the past required a hospital and then keep driving that technology so that they can do more and more and more sophisticated things in that setting. And then we bring technology to doctor’s offices so they can begin doing the simplest of the things that previously had to be referred to a more expensive clinic and then drive that technology so that you can do in the doctors' office more and more the things that were required at the higher cost clinic. And then use technology to drive care to the home. And in a similar way, do you think healthcare will become cost effective if we just expect doctors to take pay cuts? That will never happen but instead we need to bring technology to physicians assistants and nurse practitioners so that they can begin doing the simplest of things that previously required a doctor and then drive that technology so that they can do more and more of those things. In other words, it’s by enabling lower cost venues of care and lower cost caregivers to become more and more capable of doing more remarkable things. That’s the mechanism by which healthcare becomes affordable not by expecting the expensive ones to become cheap.
Question: What specific innovations are most vital to the future of healthcare?
Christensen: Personal electronic medical records are very important to the future of healthcare. The challenge that we have to confront is care has to be coordinated and the reason why care has to be coordinated is there are interactions amongst drugs which if one provider prescribes a patient to take one set of drugs and another provider prescribes a different set for different disorders, those two things might interact in the patient’s body in really adverse ways and create real problems. One provider needs to know what other providers have previously done, so that we know whether or not a patient responded to a therapy so that we don’t duplicate tests and so on. Electronic medical records are really very important to assure that the right care is delivered to the right people without duplication or contradiction. In the past, a doctor could provide all of that coordination. The problem is there are so many more drugs now and so much more is known about how these drugs interact with each other and the system is fragmented enough that coordinating a patient’s care is actually beyond the cognitive ability of the world’s smartest doctors. They simply cannot keep in their mind a coordinated picture of all of the possible interactions and all of the possible sequences of care that all of their patients are experiencing. The only way to do it is to have the coordination be done by an information technology system where information about these issues is brought together and algorithms exist that will flag for the doctor and for the patient where there are problems or where there are experiences in the past from which we can learn. So these records are really very important. I think the perception in Washington of the state of digital medical records is very skewed. What they see is the patient with the doctor in the doctor’s office and the doctor continuing to write prescriptions on paper and keep the records on paper but that’s kind of the equivalent in telecom of the last 50 feet of the last mile and that indeed hasn’t been well-digitized, but 97% of all transactions and activities in the healthcare systems already are digitized and so the drug companies, the pharmacies, pharmacy benefit managers, insurance companies, everything they do is digitized. The major healthcare systems like Kaiser Permanente or Intermountain Health, Geisinger or here in the Boston area Partners, their activities are all digitized. So 97% of the data is already there. The problem is that as a natural first step in creating these electronic systems, the systems are not yet compatible. So each company has its own system and that’s a very natural first step. Now, we need technology that virtualizes the interface that enables the systems to talk to each other. That’s the problem and it will just take a little bit of time but it’s been solved in many other contexts. So it used to be that financial records were kept by different companies in different formats but they were able to ultimately virtualize those records so that all of us have a single place we can go to get our credit score even though the inputs come from many different people. This will happen.
Question: Are any low-cost technologies transforming the industry?
Christensen: There are a lot of wonderful devices that are simple and affordable that is driving the decentralization of healthcare. One set of devices have come a Seattle based company called SonoSite and from GE Medical Systems and this a little handheld ultrasound, a piece of ultrasound equipment. Now, if you ask the radiologist who has a very expensive Philips cart-based ultrasound system, these little handheld devices are just really crummy, don’t have anywhere near the functionality that the big system has. But if instead you bring that handheld system to the primary care physician or a nurse practitioner who is doing your annual physical exam, you know, in the past, the only way they could sense what was going on in the body was to feel for it or to listen for it with the test stethoscope and you give this people this little handheld ultrasound equipment, and my goodness, now they can look inside your body and do so much better a job at identifying nasant problems that might be emerging. And so at the periphery, at the distributed end of this disruptive decentralization, we’re bringing much greater capability to be more precise in the practice of medicine. The very same technology tried to deliver in the middle of the circle actually compromises quality. So that’s just one example. Let’s see…. other examples are the ability to determine whether you're pregnant or not, the ability to measure how quickly your blood clots. Point of care diagnostics are distributing the ability to figure out what’s gone wrong too a much larger population of people who can then act on that without the advise or direction of the experts in the middle.