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Monday, May 9, 2011


We all know the current world in health care, do more and get paid more. Productivity of physicians is measured by billings and RVUs. Activity is key, value is believed to follow. What is unquestionable is this is a model to generate volume, particularly if there are no brakes on demand or supply. Volume it has generated and it does not take superior intellect to see where all this volume is leading. The health care business will bankrupt us.

There is also consensus that the basic volume business model must change. The devil is in the details. In order to transform the current system into the future system, we just need to make the system work when everything which is part of the current profit centers becomes a cost center.  How will that happen? How do you rewire the house when you can't turn off the juice?

Clayton Christensen's work would suggest that this cannot develop though evolution of the current business model. He describes how IBM has reinvented itself repeatedly. During the 1970s, IBM dominated the mainframe computer industry, but by the end of the 1980s, the mainframe industry was on the ropes. However, IBM morphed itself into a desktop computer company, creating a completely separate operating unit and business plan. Other mainframe computer manufacturers tried to get into the desktop computer business but they tried to squeeze it into their mainframe business model. They failed.

The lesson is simple. Any attempts to implement a "not by the click" business model within the current volume based model will be co-opted and fail to deliver. The new model will develop piece by piece outside of the current model. It will develop as an amalgam of minute clinics, concierge practices, and countless other innovations which we cannot yet envision. This creole simply cannot develop within the command and control ACO model or other commanding heights approach to health care innovation.

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