Tuesday, February 26, 2013

Age of Discontinuity and Disruptive Innovation Converging in Organizations with Wherewithal That Understand Markets,  Consumers, and Physicians
Everything That Rises Must Converge
Title of 1965 story by Flannery O’Connor (1925-1964)
For hospitals and doctors, the age of discontinuity and disruptive innovation  has arrived in the form of organizations with the wherewithal that understand the needs of patients and doctors.   Things will never be the same again once these organizations gain traction.
This is because of the rise of these economic and social forces.
·         Soaring health care costs

·         Demand for cost containment by the public,  employers, and patients

·         Health reform,  government and private

·         Digital revolution,  informational  and technological

·         Hospitals and integrated health organizations as replacements  for doctors’ offices and coordinators of care

·         Nurse practitioners,  physician assistants, and home care caregivers 

·         Physician fragility,  fragmentation, and role reallocation

These forces are converging into organizations that have the credibility – and the administrative, technological, capital, and marketing resources, and innovative capacity - to do what needs to be done.
Peter Drucker (1909-2006), the father of modern management and social philosopher, spotted this converge 45 years ago in his book, The Age of Discontinuity.
Every single social task of major impact . . . is increasingly entrusted to institutions which are organized for perpetuity and which are managed by professionals, whether they are called ‘managers,’ ‘administrators,’ or ‘executives.'
Drucker also noted that government, because of its distance from the point of care, its bureaucratic impediments, and its inability to innovate, is not up to the task of reforming health care.
The best we get from government in the social welfare states is administrative incompetence. Every country reports the same confusion, the same lack of performance, the same proliferation of agencies and programs, of forms, and the same triumph of accounting rules over results.
Into the health reform arena has stepped Clayton M. Christensen, a Harvard Business School professor, who explains disruptive innovation, or disruptive technologies this way.
Disruption enables less-skilled people to do more sophisticated things. Disruptive innovation enables a large population of less-skilled population to do things in a more convenient, lower-cost setting, which historically could only be done by specialists in a less convenient setting.
Like Drucker, Christensen is skeptical government can effectively do health reform.  In last week’s  February 16 Wall Street Journal, “The Coming Failure of Accountable Care,” Christensen and colleagues doubted that government efforts to bring down costs through Accountable Care Organizations would succeed. They say Accountable Care Organizations, which are nothing more or less than updated HMOs. will fail because of flawed assumptions about doctor and patient behavior.  The conclude” “what ACOs most assuredly will not do  is deliver the disruptive innovation that the U.S. Health care system urgently needs.”
 In essence,  Obamacare throws a bunch of ideas in the form of demonstration  projects stretched out over the next 3 to 5 years on the wall to see if any of them stick.  These include ACOs,  medica homes, bundled payments,  teams delivering care in patients’ homes, reducing hospital readmissions,  pay for performance based on evidence and  outcomes ,  paying less if health care records are not adopted and if “meaningful use” criteria are not adopted,  and enforcing their ideas through  Independent Payment Advisory Board .  These ideas are disruptive but they are not necessarily innovative. I am doubtful that iron fist of government will make them stick .  Only innovative organizations that understand markets, consumer. and physician can do that.
Tweet:  Ideas to lower costs and make health care better are converging in innovative organizations that understand markets, consumers, and physicians.

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