The Innovator's Prescription summary

Most business people know that market research is key and that companies will shell out big bucks to learn what their customers want. That’s because this knowledge helps businesses direct their energy toward a specific product category. But, however common this approach may be, it’s rather ill-advised.

Why?

OK, so you understand how the business-model innovation strategy works, but how could it transform health care?

By splitting the current pairing of general hospitals and general physicians into three distinct business models:

Before modern technology, doctors were unable to see what was going on inside a patient. Instead, they deduced whatever they could by conducting painstaking external examinations.

But today, instead of undertaking a time-consuming exam, doctors use machines that snap photos from inside the body. This process is cheaper, more effective and even simpler. Clearly, technological innovation has seriously improved healthcare.

So, you now know that technology is key to disruption because it cuts costs. But did you know that the way it cuts costs in health care is by producing an entirely different type of medical service?

The difference is between precision and personalized medicine and the more traditional intuitive medicine. But how does technology enable precision medicine?

Did you know that the modern-style hospital dates back to eighteenth-century Europe? Built, among other reasons, to handle leprosy and tuberculosis, these hospitals were originally just places for people to die. At the turn of the nineteenth century, however, they started to become respected places of scientific research.

But no matter how adept these hospitals were at treating tuberculosis in the early 1900s, or AIDS in the 1980s, the people who solved problems in the past aren’t necessarily the best problem-solvers of today. After all, the modern age poses different issues.

Hospitals aren’t places that have unsuccessfully combined two entirely incompatible business models. Physicians are guilty of the same and, just like hospitals, doctors need to separate their contradicting business models.

In fact, as it stands, the practice of physicians is not working. For instance, physicians are usually responsible for four areas: diagnosing and treating ailments that are generally associated with acute pain; overseeing patients with chronic diseases; conducting physicals as well as providing disease prevention; and preliminarily identifying diseases. It’s clear that the responsibilities of doctors are a mouthful – and that the model covers too many bases to ensure both affordability and accessibility.

OK, so now you know that disrupting the health-care system could bring major improvements. But such changes aren’t possible without a reimbursement system that enables them.

Actually, the current reimbursement system doesn’t work very well in general. For instance, the most common form of reimbursement, called fee-for-service, or FFS, means that, as a medical provider, the more services you offer, the more money you’re paid.