It’s hard to have a conversation about technology without bringing up health care. We talk about handheld devices to carry out physician consultations; a recent article estimates that by 2020 more than 100 million wearable sensors will be in use worldwide; the volume of health data that can be collected and processed is staggering. Many in the field believe the Internet of Things will dramatically change how health care is consumed in the near future.
While the proliferation of gadgets will drive consumers to take more ownership of managing their health, leaders of health care institutions need to recognize that innovative business models, not technology, will drive adoption and transformation.
The evolution of handheld devices gives us an example. In the early part of the last decade, people predicted that devices would change the world. They sure have, but not always in the ways experts predicted. The real catalysts have been innovative business models that redefine how gadgets deliver value: Consumers chose smartphones to replace previous generations of products because smartphones made life simpler and more productive.
By introducing new ways to embrace emerging solutions in care delivery, hospitals and physicians are well-positioned to significantly reduce the cost of care while meaningfully improving its quality.
Framework for adoption
The jobs-to-be-done framework, first proposed by Clayton Christensen of the Harvard Business School, posits that consumers purchase products as solutions to jobs they need to complete. A job as a motivation for purchase is a much stronger predictor of consumption than a consumer’s need. A job is also circumstance-dependent, meaning a consumer’s purchasing behavior is dependent on the situation: I need a quarter-inch drill because I need a quarter-inch hole.
Consumers are always seeking solutions that are simpler, more affordable and more accessible than the alternatives. An innovative technology can certainly make a product simpler, but it takes an innovative business model to make something more affordable and accessible.
Smartphones successfully replaced traditional cellphones, cameras and music players partly because one device could handle three functions previously offered by three separate devices but also, more important, because apps and connectivity could be purchased to enhance user experience and device performance. Indeed, smartphone manufacturers’ business model of employing a technological innovation to deliver affordable software and internet access allowed consumers’ jobs to be accomplished much more effectively.
Two jobs addressed by disruptive innovation
Assuming the current health care system will remain intact in the foreseeable future, consumers will seek disruptive innovations to address jobs unfilled by the clinical environment: diagnostics and prevention.
Increasingly, diagnostics is becoming a job that consumers would like to address, as the current model of performing even the most routine diagnostics in physicians’ offices has limitations. Effectively and precisely diagnosing a disease is the first step toward finding a treatment or cure, yet society wastes billions of dollars in mis-diagnosis and late diagnosis.
Consumer-friendly technology may overcome this hurdle. Today, sophisticated wearable sensors and even genetic tests are directly available to the public. The emerging opportunity for health care institutions is to channel patient information to the appropriate care providers so that the most valuable part of the process — a physician’s interpretation and recommendation — can be quickly accessed.
The other job for many consumers is chronic disease prevention. As science has become more successful at treating the symptoms of diseases, the number of people with chronic diseases continues to grow. Thus, the only way to curb the cost of chronic diseases, such as diabetes, heart disease and obesity, is aggressively investing in prevention. In a future environment where maintaining health and preventing disease are rewarded, consumers might become interested in products or services that promise to keep them well. Again, data interpretation and risk profiling can best be performed by the experts and physicians at health care institutions.
New business models to improve patient care
When we talk about innovative business models, we refer to models that will reduce the cost burden on the current health care system by providing affordable access to simple but effective technology. To that end, it is often disappointing to encounter reviews and analysis from health care experts who position potentially consumer-friendly health care solutions, such as big data, sensor technology and point-of-care tests, as ways to identify new revenue opportunities for hospitals. Although better screening increases patient volume and associated revenues, truly game-changing solutions need to reduce the costs of disease management and patient volume, enabling a new model to improve patient care.
Affordable sensor technologies that allow consumers to monitor general health and periodic anomalies, such as fever and malaise, could be extremely effective in addressing health issues and reducing costs from late discovery. Some deadly diseases, such as colon cancer, can be easily treated and cured if diagnosed early but are generally fatal and expensive if diagnosed late.
A new wave of consumer diagnostics that incentivize prognosis of potentially expensive diseases could gain substantial market traction. With reimbursement moving toward value- and outcome-based models, the strategic opportunities for health care institutions are found in managing and guiding consumers bombarded with data and devices.
On the prevention side, health care institutions can demonstrate even greater value by keeping generally healthy populations away from hospital beds. Today’s sensor technologies, which have already reached their potential, can be effective. Collecting streams of activity data, including blood pressure, sleep patterns and mobility, can effectively monitor and prevent hypertension, diabetes and obesity. Fixed-fee insurance models based on a pay-for-outcome or pay-for-value method could use these tools to create financial rewards for participants. Emerging internet-of-things solutions have the potential to make diagnostics a process-driven center of efficiency.
Standardizing care will help
As consumers have successfully consolidated personal electronics into a single device, all of our health care sensors and tools will also consolidate under a single product platform, sooner rather than later; we can wear only so many wrist and ankle bands. In such a contracting environment, what drives adoption is how the consolidated device can be delivered affordably and what will drive consumers to pay for it and its attendant services. Blocks of data are interesting, but without associated analysis and recommendations, users will not find them valuable. Physicians and hospitals are natural epicenters for this value creation.
One of the biggest challenges of the current health care system is a lack of standardization. We are headed in the right direction, but health institutions can accelerate the paradigm shift by figuring out how to manage the explosion of technology.
Spencer Nam, MBA, is a senior research fellow in health care at the Clayton Christensen Institute for Disruptive Innovation in Lexington, Mass.