Validation, Diagnostics and Disruptive Technologies

Disruptive Technologies

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If you haven't heard Clayton Christensen speak, you should. Dr. Christensen, a professor at the Harvard Business School, is one of the better known commentators on what he likes to call "disruptive innovation". One of my favorite writers, Jim Stommen, reviewed an interview with Christensen and shared his interpretations, which I'd like to share with you in turn because I believe that medical-product suppliers should heed his observations and respond accordingly. (By the way, Jim Stommen is the National Editor of Medical Device Daily, a publication I heartily endorse.) An excerpt of Jim's article follows.

     While we've heard a number of arguments about what is and isn't disruptive, it's a simple thing to Christensen. He told Mark Smith, CEO of the California HealthCare Foundation, who conducted the interview, that an innovation qualifying for such description is "a technology that brings a much more affordable product or service that is simpler to use into a market".

     There are some other caveats, such as allowing a broader population to afford to own and/or have the skill to use such a product or service, but essentially it's an availabilty/affordability/accessibility thing. His favorite examples are development of the PC - the most obvious disruptive technology of our time - wireless phones, and low-fare airlines.

     Not surprisingly, Christensen finds healthcare to be a field rife with opportunity for those who look at any given market segment and think "disruptive". Wisely, he also sees the crocodiles in the moat that surrounds the castles housing the aristocracy that would put self-interest far above that which may be clearly for the common good.

     For instance, he cites LASIK as an example where the cost of vision correction surgery has come way down because the technology makes it "essentially an automated, standardized procedure . . . with the 'skill' to some extent embedded in devices or equipment". Christensen acknowledged that LASIK is an easy example because of how it has become routinized to the point that the only thing providers and suppliers truly have to think about is the most cost-effective way to do things. Since it's largely a self-pay procedure, "if it doesn't represent good value to consumers, they won't spend the money on it", he said.

     As a contrary example, he cited hip replacement, where "much of the cost and 'skill' have also moved from the surgeon to the device". But with such procedures generally covered by insurance, and with a surgeon still involved, "there have been no real . . . pressures" driving costs down.

     In his questioning, Smith raised the point that many health policy experts and practitioners argue that technology, with its attendant costs, is largely the problem rather than being or offering a path to the solution, but Christensen wasn't buying. "You can't just make a blanket statement about the technology", he said. "You have to be subtle about what kind of technology we are talking about and how it will be deployed in the business".

     What does that mean for healthcare? Well, for example, "there is a set of procedures, especially for acute care, where you can precisely diagnose: You have this disease or you don't". Where it used to take some skill for a caregiver to be able to diagnose a condition such as strep throat, "now it actually doesn't take skill, and the caregiver has been commoditized by the precise diagnosis. That means that somebody with a lot less skill can actually give a lot better diagnosis for a disease state than could the expert a generation ago". For Christensen, this makes the formula much more simple: "That's the mechanism by which nurses can take on more of the work than doctors".

     He sees three classes of medical problems, two of which lend themselves to disruptive-type approaches that offer the potential to lower the cost of treatment.

     The first are problems he calls "acute and amenable to precise diagnosis", which in turn enables rules-based therapy. Christensen puts cancer in that category, saying he is willing to bet that 15 years from now, most cancers, which at present seem very "expertise-intensive" to diagnose and treat, have the potential to become rules-based and responsive to disruptive-type approaches. Many would say that already is happening, especially with the huge strides being made in both diagnostic imaging and in molecular diagnostics.

    The second class of medical problems cited by Christensen are chronic diseases, which he characterized as being amenable to disruptive technologies, "but in a lower-impact sort of way" insofar as their costs dropping as much.

     Thirdly are what he termed "the high-end, nonstandard, medically complex cases", which he said probably can't be addressed by disruption, "but I do think that we need to begin addressing it". Christensen urged applying what he called "the rules of the Toyota production system" to the hospitals that address such cases, saying such application can "improve quality and bring costs down" by redesigning processes to reduce overhead per unit of labor.

     He also pointed to the burgeoning growth of medical tourism as an example that the American consumer is much more sensitive to cost differentials, offering real encouragement for the future of disruptive innovation in medicine.

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