Disrupting hospitals require separating the business models of "Solution Shop" for intuitive medicine, and "Value Added Process" clinics for diseases where precision medicine is available.
Specifically, for chronic diseases, what is needed is the development of coherent solution shops to come out with focused diagnosis of what cause the disease, valued-added process clinics to address diseases where rule-based therapy is available; and the creation of the right incentives for patients and providers to ensure that therapy and behavior changes so necessary for managing chronic illnesses, are complied with.
Disruptive Innovation require 3 enablers:
(1) Techonology
(2) Business Model
(3) Value Network.
Value Network, in clayton's words "is the context within which a firm establishes its business model, and how it works with suppliers and channel partners so that together they can respond profitably to the needs of a class of customers".
The innovative disruptions for hospitals and the management of chronic diseases require the context of a NEW value network to work effectively.
NEW value network because when disruptive innovators attempt to commercialise their innovation within the established value network, that system either rejects it or co-opt the potential disruption, forcing it to conform to the existing value network in order to survive.
Clayton asserts that the mechanism that governs how players act and interact is reimbursement. Current mode creates an interdependent, mutually reinforcing bond between players in the current value network and unfortunately funnels volume to the highest business cost provider because they are the most comprehensive. Money still makes the world go round!
Only a few players can play the role of integrator of various players in healthcare to create a NEW value network. Clayton's book proposes that (a) Fixed Fee Providers and (b) large employers are the best candidates to perform the role of integrator to bring this about.
Why Fixed Fee Providers/ Health Systems?
Examples include Kaiser Permanente in California, Intermountain Healthcare in Utah, Geisinger Health System in Pennsylvania, Via Christi Health System in Kansas, and Veterans Health Administration.
I. They have a long term view and willing to spend money today in order to save money tomorrow
II. Make money by keeping members well, no sick
III. Has electronic medical record of patients to know and care personally
IV. Be in geographic positions where care can be provided conveniently
V. Capable of implementing the needed changes with decisiveness
For the same reasons, large employers are also in the position to be good integrators to create a new value network. Examples in the US are Purdue farms, Toyota, Pitney Bowes, Sprint, general Mills and Qualcomm.
Clayton went on to propose that as large employers begin to do so, it almost appears that the old mantra of "stick to your knitting" and focus on core competencies may be violated. He clarified that vertical integration in a supply chain happens because employers cannot at this time be assured of cost and performance effective services from other health stakeholders. They need to play an orchestrating role to bring about disruptive innovation. When the system settles down and employers can now expect healthcare for their employees to be low cost, high quality and conveniently accessed, the company can then get back to their knitting.
Based on the discussion in this chapter, it is quite obvious to me that Jurong General Hospital can play the role of "integrator" of healthcare players in the population in the west (see point above about "geographic position") to create a new value network and in the process "disrupt" the way healthcare has been provided in Singapore.
Onwards to chapter 4 tomorrow, "Disrupting the business model of the physician practice (Specialist Outpatient clinics in Singapore context)"...
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