Disrupting the hospital business model - Clayton's prescription

It is so nice to be able to make a new entry into my blog after a long period of hiatus.

The truth is, my new responsibilities at the new Jurong General Hospital has been keeping me extremely engaged. All exciting stuff and a marvelous learning experience, but more about it next time.

I am now catching up on my readings.  A key read is the Innovator's prescription by Professor Clayton Christensen from HBS.  Chapter 3 of his book focus on the theme of disrupting the general hospital that we have come to be familiar with.

Professor Clayton asserts that there are fundamentally 3 business models:

(a) the Solution shop - this is the sphere of intuitive medicine where "hypothesis testing" usually within the domain of diagnosis is carried out.  To facilitate discovery, highly skilled professionals are required and equipped with the most sophisticated technology.  It is little wonder here that the "value" of medicine is less clearly classified and the costs are much higher.

(b) The Value-adding Process (VAP) - once a definitive diagnosis is made, and it is clear what the patient needs then the next steps would be "how to fix the problem" effectively, affordably and conveniently.  Here trained healthcare professionals can follow a series of "proven value adding" steps to get the job done.

(c) Facilitated network - where multiple parties in the health eco-system are sufficiently capable to do their jobs, then what is needed to deliver value is to facilitate their effective interaction to deliver value.

Prof Christensen says in his book that because general hospitals tries to co-mingle the business models of solution shop and VAP services, there is substantial internal incoherence, escalation of costs and impossible to measure "value".  The current model of reimbursement in healthcare system whose payout is undifferentiated for services delivered through solution shops and VAP clinics serve to perpetuate this co-mingling.  

The proposed solution is to establish "Hospitals within Hospital" where integrated/ coherent solution shops eg. for treatment of Asthma like National Jewish Medical and Research Centre in Denver; and VAP specialised hospitals eg. The Aravind Hospitals in India for Eye surgery and Coxa Hospital in Finland for hip and knee replacement may be established.

General hospitals who try to be all-things-to-all people incur high cost of complexity.  General hospitals will always be needed, it is just that over time we will need lesser of them as the machineries of disruption begin to work.  As technology improves, more sophisticated care for more patients can be carried out in VAP hospitals with equal or better quality than general hospitals.

It will be interesting to see how this disruption to general hospitals will pan out in Singapore. It will be useful lessons for me as my team plans for JGH.