EHRs: Costly replacement or ‘disruptive innovation’?

May 14, 2014

The Protecting Access to Medicare Act of 2014 largely preserves the status quo for physicians and their Medicare patients, but many believe the health care model is ripe for disruptive innovation.

Dr. DowlingOn April 1, 2014, President Obama signed into law the Protecting Access to Medicare Act of 2014, which delayed planned cuts to the Medicare fee schedule under the sustainable growth rate formula for at least the 10th time and delayed for at least 1 more year (until October 2015) the implementation of ICD-10.

Either event alone would have been “disruptive” for health care providers and their Medicare recipients; many believe that the U.S. health care system is specifically unprepared for ICD-10 (http://ow.ly/wPMED). Electronic health record implementations themselves have been characterized as disruptive. Yet others believe that problems in our health care system will never be adequately addressed until the industry is truly “disrupted.”

Clay Christensen is credited with coining the theory of “disruptive innovation,” and his book, “The Innovator’s Dilemma” should be read by anyone with more than a passing interest in innovation. Disruptive innovation is something that introduces “simplicity, convenience, accessibility, and affordability where complication and high cost are the status quo” (http://ow.ly/wPMOP). The launch of the personal computer in the computer industry is an example of how innovation disrupted a legacy business model by companies that sold mainframes and, later, minicomputers.

Christensen believes that disruptive innovation is applicable to health care as well, and provides some examples in his book “The Innovator’s Prescription.” Complexity and high cost characterize the status quo in health care, making it ripe for disruption.

Many believed that health information technology-including EHRs-would be the “technology enabler” that would transform health care delivery. In an excellent article from August 2013, Ben Wanamaker and Devin Bean of the Christensen Institute explain why that has not happened (http://ow.ly/wPMZE). EHRs have the potential to be disruptive, they explain, but they have been “crammed into sustaining business models and used as an expensive sustaining innovation to replace paper records.”

Hospitals and physician practices are locked in a fee-for-service business model. Hence, EHR users have no reason to use EHRs any differently than they used paper records-to support the existing billing and reimbursement system by which they are paid. The EHR has become an expensive replacement instead of a disruptive innovation.

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Change in model may precede disruption

Wanamaker and Bean offer some recommendations to the industry and the user community to improve EHRs, including thinking beyond meaningful use and replacing processes beyond the clinical encounter. Yet these are likely to be modest changes until parts of the health care business model are disrupted from fee for service to something that is simpler, lower cost, and less regulated. In “The Innovator’s Prescription,” Christensen et al explain what those business models might look like based on the patterns of disruption in other industries.

Bottom line: The Protecting Access to Medicare Act of 2014 largely preserves the status quo for physicians and their Medicare patients, but many believe the health care model is ripe for disruptive innovation. Health care information technology is a tool with the largely unrealized potential to improve health through innovation, but it is currently coupled to a legacy business model that rewards legacy processes. Once the business model changes, the EHR may become a true enabler of disruptive innovation.UT

Recommended reading

Christensen, Clayton M. The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail. Boston: Harvard Business School Press, 1997.

Christensen, Clayton M, Jerome H. Grossman, MD, and Jason Hwang. MD. The Innovator's Prescription: A Disruptive Solution for Health Care. McGraw-Hill, 2009

Lynn, John http://www.emrandehr.com/2014/04/28/ehr-is-not-disruptive-and-never-will-be/(accessed 4/29/2014)

Clayton Christensen Institute http://www.christenseninstitute.org/why-ehrs-are-not-yet-disruptive/ accessed 4/29/2014

Protecting Access to Medicare Act  https://www.govtrack.us/congress/bills/113/hr4302/text (accessed 4/29/2014)

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