The Future of Health Care The Big Questions are the wrong ...
Transcript of The Future of Health Care The Big Questions are the wrong ...
The Future of Health Care
• The Big Questions are the wrong questions: – Will quality of health care decrease if we cut costs? – What is driving costs up so rapidly? Is this inexorable? – Should government provide and pay for health care for all? Is
socialized medicine better than private medicine? • The right questions are:
– Given that we committed to provide care for all, how can we make it more affordable and accessible?
– Can we provide better quality at lower cost – and how? – Can we harness technology to make health care simple?
• Approach: – Summarize fundamental theories; Illustrate; Apply
Laptops
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The general process of becoming affordable and accessible
Mainframe
Minicomputers
Smartphones
Desktops
Slide rule
1. First bring the problem to the solution. 2. Then bring the solution to the problem.
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7%
4% 12%
8%
18% 22%
% of tons
Stee
l Qua
lity
1980 1975 1985 1990
25–30% 55%
Little boys beat giants by disruption
How the health care industry is trying to improve health care
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Self-serving language
Self-serving data
Self-serving
expertise
Preserve or grow my piece
American Hospital Association
Self-serving language
Self-serving data
Self-serving
expertise
Preserve or grow my piece
American Medical Association
Our historical attempts to improve health care as a system, and our fortunes within that
system, have been self-defeating.
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Self-serving language
Self-serving data
Self-serving
expertise
Preserve or grow my piece
AMA
Self-serving language
Self-serving data
Self-serving
expertise
Preserve or grow my piece
AHA
Self-serving language
Self-serving data
Self-serving
expertise
Preserve or grow my piece
APhA
Self-serving language
Self-serving data
Self-serving
expertise
Preserve or grow my piece
Etc.
Our work around the Tower of Babel construction site is slow.
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Diff
eren
t mea
sure
O
f Per
form
ance
Time
Per
form
ance
Time
Pocket radios
Portable TVs
Tabletop Radios, Floor-standing TVs
Path taken by vacuum tube manufacturers
Expensive failure almost always results when disruption is crammed into direct competition with established technology
Path being taken by: •Electric vehicles •Solar electricity •Wind power •Biofuels
Surg
ical
su
ites
High-speed multi-channel
testers
Imaging: MRI, CT, PET Scanners
Specialist physicians
Personal physicians
Nurse practitioners
Pharmacists
Clinics
Offices
Homes
The decentralization that follows centralization is only beginning in healthcare
1. Bring the problem to the solution. 2. Then bring the solution to the problem.
Retail Clinics
Family care
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Enablers of Disruption
A new “value network” – a new system of suppliers and distributers
Business model innovation •Lower-cost venues of care •Lower-cost care givers
Government-paid systems are similarly stymied by their silo structures: Canada, Germany, Netherlands
The structure for 90% of Americans drives caregivers to defend and strengthen their silos. They cannot drive care towards
lower-cost caregivers and lower-cost venues of care.
•Kaiser Permanente, Intermountain, Geisinger •Employer-provided care
•Sweden, Finland
Those with a system perspective find that patient health and the drive to lower-cost venues of care and lower-cost caregivers improve profitability.
Probabilistic pattern
recognition Rules-based
Intuitive, trial-and-error
problem- solving
Synthetic fibers: Nylon Polyester Acetate Kevlar
Infectious diseases; Cervical
cancer
Bipolar disorder; Seizures asthma
Scientific progress that commoditizes expertise plays a critical role in disruption
Empirical medicine
(Evidence-based medicine)
Precision medicine
(Personalized medicine)
Intuitive medicine
(symptoms < diseases)
We’ll do anything for
anybody.
• Overhead = 85% of total
• Overhead increases 30% for each doubling of complexity
• Variable quality
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lishi
ng D
ept.
Annealing furnace
Turning machines
Tapping equipment
De-burring
Cut
-off
saw
s
Shipping Department Office area Storage
Hobbing department
Boring machines
Stamping machines
Assembly
Shouldice Hospital: Hernia surgery
Dave Snow, asthma CEO, Medco
National Jewish Medical Center Pulmonary & Respiratory Diseases
No model can do everything for everybody.
Fee For service
• Consulting firms • R&D organizations • Diagnostic & intuitive activities of hospitals
solution shops
Fee For outcome
• Manufacturing • Education •Construction • Medical procedures
process Businesses
We need solution shops for disorders that today are determined by symptom, not the cause:
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• Type II diabetes • Obesity • Depression • Schizophrenia • Bipolar disorder • Epilepsy • Parkinson’s
disease
• Crohn’s disease • Arthritis • Chronic back pain • Ulcerative colitis • Alzheimer’s
disease • Multiple sclerosis
110 1
General Hospital ShouldiceHospital (hernia repair)
$970 $700 Cost of supplies & direct labor
$6030 $1600 Overhead burden
$7,000 $2,300 Total cost for equivalent length of stay
Service families offered
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Sources & magnitude of cost differences: process vs. general hospitals
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Retail Process clinics will disrupt primary care physicians’ practices, pushing them up-market to
disrupt specialists.
Business model innovation is key to improving quality and reducing costs.
Hospital industry was established when: • Transportation was costly • Doctors were inexpensive • Each community needed a
hospital • Though they were called
“General Hospitals,” they actually were focused because most diseases were acute
The world has changed. The industry’s paradigm has not. • Transportation is cheap and
pervasive. • Doctors are costly • Most diseases are chronic • Most hospitals try to do
everything for everybody • 90% of all costs in the hospital
are overhead – inherent to the business model
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Market Understanding that Mirrors how Customers Experience Life
“The customer rarely buys what the company thinks it is selling him” - Peter Drucker
Diabetes companies typically have targeted customers who don’t own the job of keeping healthy.
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Patient
Family caregivers
Help him feel that he’s in
trouble!
Productivity Absenteeism
Disability
Health Retention Profitability &
competitiveness
Employers
Business models for adherence in chronic care
Degree to which behavior change is required Minimal Extensive
Mot
ivat
ion
to
adhe
re to
ther
apy
Strong: quickly feel
consequences
Weak: Complications
are deferred
Type I Diabetes
Addictions Type II Diabetes
Asthma
Congestive heart failure
Obesity Hypertension
Osteoporosis
Cancer HIV
Myopia Crohn’s disease
Chronic back pain
Ulcerative colitis
Infertility
Business models for ongoing care
Degree to which behavior change is required Minimal Extensive
Mot
ivat
ion
to
adhe
re to
ther
apy
Strong: quickly feel
consequences
Weak: Complications
are deferred
Type I diabetes
Addictions Type II diabetes
Asthma
Congestive heart failure
Obesity Hypertension
Osteoporosis
Cancer HIV
Myopia Crohn’s disease
Chronic back pain
Ulcerative colitis
Infertility
Doctor’s office User Networks
Employer- Managed Care
with HSAs
Pharmacy- based care
Better science and the pursuit of profit will enable pharmacies to provide more and better care.
Degree to which behavior change is required Minimal Extensive
Mot
ivat
ion
to
adhe
re to
ther
apy
Strong: quickly feel
consequences
Weak: Complications
are deferred
Type I diabetes
Addictions Type II diabetes
Asthma
Congestive heart failure
Obesity Hypertension
Osteoporosis
Cancer HIV
Myopia Crohn’s disease
Chronic back pain
Ulcerative colitis
Infertility
Pharmacy- based care
Outsourcing often sets in motion disruptive business model liquidation
Mother boards
Computer assembly
Supply chain & logistics
Product design
Brand
Dell AsusTek
Simple circuit boards
Mother boards
Computer assembly
Supply chain & logistics
Product design
Brand
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Wall Street Analysts
Pharmaceutical Cos.
Petroleum Majors
Auto companies
IT departments
Customer Supplier
Bloomberg
CROs.
Halliburton, Schlumberger
Tier One Suppliers
TCS, Infosys, Wipro
Physicians Pharmacies
Outsourcing often sets in motion disruptive business model liquidation
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Three levels in the architecture of a job
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What’s the job-to-be-done? (Each job has functional, emotional & social dimensions)
What experiences in purchase & use must we provide to do the job perfectly?
What and how to integrate?
Targeting the job enables precision in product development
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Product category
Too many features; wrong
features
Customer category
One-size-fits-none product
Job to be done Proper
integration of all needed experiences