Robert Pearl, M.D. recently wrote a piece in Forbes stating health care is ripe for disruption. I couldn’t agree more. However, we part ways on how disruption will occur. Dr. Pearl posits that Clay Christensen’s theory on disruptive innovation – starting with a new entrant capturing the low-end of the market – doesn’t work in health care. He believes that it will take the affluent, most price insensitive consumers to change how health care is delivered. I disagree. I think the theory on disruptive innovation, starting with the new entrant capturing the low end of the market as the vehicle for driving changes, holds as true in health care as it has for many other industries.
Full disclosure: I have some bias based on my experience with MinuteClinic and subsequent work with Professor Christensen. Leveraging my experience as CEO at Arby’s, I took MinuteClinic from a small chain of 19 facilities to a national brand of more than 500 facilities. Prior to leading the sale of MinuteClinic to CVS I worked with Clay Christensen on this case study of disruptive innovation. MinuteClinic is a classic disruptive innovator – much more affordable than the status quo, convenient and easy-to-use. While the services offered may represent a small portion of the health care spend, the experience in total represents an opportunity to disrupt consumers’ expectations about how and where health-care services can be delivered. And the MinuteClinic model has been validated by similar product offerings.
What Dr. Pearl fails to acknowledge is health care is largely comprised of services which traditionally have been based in hospitals and physician offices and delivered with little regards for patients’ service expectations. Increasingly we’re seeing disruptors challenge traditional approaches by delivering health services where and when people want to use them. We have fitness and yoga on demand (Wello), mobile apps to book physician appointments and check prices for services (ZocDoc and PokitDok), and of course online shopping platforms such as ConnectedHealth. We also have a host of new bricks-and-mortar outlets (or “focused factories” as Regina Herzlinger likes to call them), like MinuteClinic.
Why have they emerged and why are they going to succeed? First, technology is a great enabler. Second, consumers are spending more of their own money as rising health costs are shifted to them. They want value in health care as in other facets of their lives. And finally, the convenience, ease of use and transparency afforded by these new market entrants appeal to nearly all consumers, regardless of age and income. The consumer experiences in other industries — like retail and financial services – are driving new expectations of the health system which are demanding a change in traditional health-care delivery. These new expectations are not confined to the very wealthy or the very young. These changing expectations are more ubiquitous and what will drive innovation, disruptive and otherwise.
Guest blogger Michael C. Howe is CEO of Howe Associates, Inc. As the former Chief Executive Officer of MinuteClinic, Michael provided the strategic direction which led to the national expansion of this innovative concept. Under his leadership MinuteClinic, the pioneer and largest provider of retail healthcare services, grew from just 19 clinics in two markets to more than 525 healthcare centers in 27 states, resulting in a sale of the company to CVS/Caremark in 2006. Earlier Michael was President and CEO of Arby’s, a quick service restaurant operating company with 3,400 restaurants and almost $3 billion in annual revenue.