What the heck does the inside of an iPhone have to do with healthcare reform?
Well, according to Harvard Business School professor Clayton Christensen, quite a bit actually. Take a tiny screwdriver and (carefully) open up the Apple (NASDAQ:AAPL) device. What you’ll see is an assembly of coordinated and interdependent components. Compare that to the modular assembly of a Dell (NASDAQ:DELL) computer. Components come from different manufacturers who act independently of each other rather than as part of a system.
“Ninety percent of healthcare is like a Dell,” said Christensen, speaking at the SAS Health Care & Life Science Executive Conference in Cary, North Carolina.
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Christensen’s analogy isn’t perfect. For one thing, both Apple and Dell companies source their components from multiple vendors. But Christensen’s broader point is that the different components for Apple products works as a unified system. Consumers can’t swap out components. But Dell computers are all put together differently.
The unified system does a better job of controlling costs, Christensen argues. Health systems, such as Kaiser Permanente in California and Geisinger Health System in Pennsylvania, take a broader and more comprehensive view of healthcare. Because these systems view illness as a cost that they must cover, they see prevention of illness as a way to cut those costs. The components of a modular system don’t look at illness in that broader context. They make money by providing treatment. To them, treatment is a revenue opportunity.
Christensen believes that technology will also play a key role in driving down healthcare costs. Here he uses the broader computer industry to make his point. In the earliest days of computers, the machines were big, expensive and limited to the government and universities. As technological advancements improved computing power, mainframes led to desktop computers. Laptop computers followed desktops. For many consumers these days, a smart phone is the first choice to meet their digital needs.
While technological advances have made computing power more affordable and more accessible, Christensen said these changes are just beginning in healthcare. He envisions technology allowing all participants of the healthcare system, including patients, to do more sophisticated things. And just as computers became more available to the masses, Christensen believes healthcare in turn will also become more affordable and accessible.
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Christensen’s comments were met by a mostly receptive audience of healthcare and IT professionals gathered for the SAS conference. But one IT vendor told me he sees some obstacles for Christensen’s vision. As technology drives procedures away from doctors, physicians will be ceding opportunities to make money. They’re going to want to know what’s in it for them. For them, and for others, losing revenue opportunities will be tough medicine.
Christensen argues that new technological advances will present more opportunities for primary care physicians. He also cautions against expecting healthcare to become more affordable by hoping that the expensive stuff of today becomes cheap later on. After all, no one these days is using a cheap mainframe computer. That’s true. But healthcare technology doesn’t seem to follow the same trajectory as consumer technology. We’re not using the expensive medical stuff of years ago. It’s been replaced by newer expensive stuff. Time will tell if medical technology follows Christensen’s charted path. Christensen has offered his diagnosis and prescription. Now it’s up to the patients to take it. Some are already seeking second opinions.
