Disruptive Innovation in Healthcare: Examples From 3 Top Health Systems

Significant changes are occurring throughout the healthcare industry. As hospitals and health systems develop their strategies, they need to determine how to adapt to these changes to be successful in an environment that is moving from fee-for-service payments to pay-for-performance models. Some organizations have opted to hold back and learn from others before making a risky investment; and some simply modify existing systems. Others have engaged in disruptive innovation — a term coined by Clayton Christensen, the Kim B. Clark Professor of Business Administration at the Harvard Business School and thought leader in the area of innovation. Disruptive innovation transforms an existing market or creates a new market by making processes simpler and improving access.

Englewood, Colo.-based Catholic Health Initiatives, Salt Lake City-based Intermountain Healthcare and Appleton, Wis.-based ThedaCare have all employed disruptive innovation to improve quality and lower costs in the new healthcare environment. Here, leaders from each organization share some examples of how the system has created radically new models to disrupt unsustainable practices.

Catholic Health Initiatives

Juan Serrano is senior vice president of payer strategy and operations at CHI

Healthcare delivery infrastructure
CHI has created a new infrastructure for the delivery of healthcare that shifts the central focus from the acute-care hospital to outpatient facilities and the home. "The healthcare delivery infrastructure is being replaced, at least conceptually, by new structures that revolve around physicians and other primary care service providers having more direct responsibility for patient care," says Juan Serrano, senior vice president of payer strategy and operations at CHI. CHI has expanded its relationships with physicians and has acquired other ambulatory organizations, including a home care services organization, to offer more outpatient care. Focusing on outpatient care and care closer to home signals a shift from only treating sick patients to preventing sickness and maintaining people's health in addition to treating sick patients.

"We're organizing our physicians, hospitals and ambulatory healthcare delivery network providers into a more rational system. We're not waiting for people to become patients to serve them; we're establishing more robust relationships in our communities to help people achieve and maintain their care while ensuring that essential medical care is delivered in the most appropriate settings — even when that means arranging for care outside our hospitals and specialist services," Mr. Serrano says.

One of the keys to this new infrastructure is access to more data on patients that allows providers to manage population health. For example, CHI can access data on what services patients have accessed across the system, from their primary care physician to the emergency department to specific service lines.

Consumer orientation
Another disruptive innovation at CHI is an orientation toward patients as consumers and a greater connection between the system and community. "We are moving into a customer relationship management phase, investing time and energy resources in connecting with our patients and with consumers who are part of either employer groups or other defined populations that subscribe to our health system," Mr. Serrano says. "As we identify people who are affiliated with the health system, we are [forming] connections intended to help address barriers to care." For instance, CHI may help patients arrange transportation to a medical appointment or help navigate financial assistance programs to pay for medications.

Intermountain Healthcare

Dr. Lucy Savitz is , director of research and education of Intermountain Healthcare's Institute for Health Care Delivery ResearchIn June, Intermountain Healthcare received a $9.7 million, three-year contract from CMS through its Health Care Innovation Awards for a project titled "Disruptive Innovation @ Intermountain Healthcare."

"Through the shared accountability initiative, [the goal is] to really accelerate the transformation of healthcare," says Lucy Savitz, PhD, director of research and education of Intermountain Healthcare's Institute for Health Care Delivery Research.

Intermountain's project focuses on three areas: physician compensation modeling, patient activation and population management. While the health system has not developed a definitive reimbursement model for physicians, it will incorporate incentives for quality and service and will move away from a strictly fee-for-service system.

Patient activation
The patient activation part of the project focuses on engaging patients in their healthcare decisions. Intermountain will use a tool called Archimedes Indigo to give providers and patients access to patients' individual health information at the point of care. The tool will help patients visualize their condition and treatment options and will encourage their involvement in their own care.

For example, for a patient with diabetes, the tool would use the patient's data to estimate the likelihood of developing other health complications and the likelihood of different interventions to prevent these complications. The tool may show that quitting smoking may reduce the patient's risk of death by a certain percent, and taking fish oil may reduce the risk by a different percent, Dr. Savitz says.

"It helps the patient understand what the patient's role is in shared accountability in a way that's not just general statistics; it looks at what is your risk based on your data," she says. "It makes it more real, and the information more accessible. It helps take the dialogue in joint treatment planning between the physician and the patient to another level."

Population health management/Hot spotting
Another focus area of Intermountain Healthcare's innovation project is population health management and "hot spotting" — identifying health trends in the community and implementing solutions to improve health. For instance, Intermountain identified a geographical area that included a senior center that had a large number of people go to the emergency department. To reduce the number of potential unnecessary ED visits, Intermountain plans to staff an advanced practice nurse at certain hours at the center to provide easy access to care.

"It's really thinking about healthcare differently," Dr. Savitz says. "We're not just thinking about healthcare; we're thinking about wellness. We're not just thinking about patients; we're thinking about people."

As with CHI, increased access to data is one of the drivers of the disruptive innovations at Intermountain Healthcare. "The thing that's different this time around than in the early '90s when we bent the cost curve is a better data system," Dr. Savitz says. "We're looking at taking the data system to the next level and employing it to our work moving forward." Data plays a key role in patient activation, as it helps analyze an individual patient's data and puts it in the context of risks for additional health problems and options for reducing risks. In the hot spotting project, data enables Intermountain Healthcare to identify and address patterns of care.


Jenny Redman-Schell is COO for physician services at ThedaCare.ThedaCare was one of the first healthcare organizations to adopt Lean management as a method for process improvement, which is an example of disruptive innovation because it takes a new approach to improving care. Lean principles of process mapping, eliminating non-value-added steps and simplifying practices are based on the Toyota Production System and methods used in the manufacturing industry. By adapting this approach to healthcare, ThedaCare was able to make significant improvements in quality of care and cost.

Today, ThedaCare continues to employ disruptive innovation as a strategy for improving care. One example is its redesign of primary care, which began in 2007. In the redesign, providers at ThedaCare's primary care offices changed their workflow to provide lab results for patients at the point of care. A medical assistant does the lab draw on site and the results are processed within 15 minutes, which allows the provider and patient to discuss the patient's results and plan of care in one visit. Prior to this redesign, patients would have to come in for separate appointments to have a lab draw and discuss the results.

"It's a revised flow that really concentrates on the patient experience," says Jenny Redman-Schell, COO for physician services at ThedaCare. "We're making sure that we're identifying any waste within the process of the primary care office visit and trying to remove those wastes."

In addition, the primary care office staff schedule the patient's subsequent appointments during the same visit instead of leaving the responsibility of coordinating that care to the patient. The new process not only makes the provider visit more convenient for the patient, but it also increases the likelihood that the patient will follow through with his or her plan of care.

The key changes in the primary care redesign were adding on-site lab tests and processing within 15 minutes as well as ensuring patients leave with a plan of care. To implement the on-site labs, ThedaCare collected data on the most common labs at each office and acquired technology to perform those labs. "The lab work is something that we have not seen across the country at all, so for us to be able to draw the lab and process it within 15 minutes to get it to the provider is pretty transformational," Ms. Redman-Schell says.

Disruptive innovation — why it works
CHI, Intermountain Healthcare and ThedaCare's disruptive innovations uproot existing systems in favor of new approaches that simplify processes and reach new markets. These organizations recognized the need for a complete overhaul of healthcare delivery models instead of tweaks to the current system due to the rising cost of care. These health systems have become models of what can be accomplished through disruptive innovation.

More Articles on Innovation in Healthcare:

7 Hospital and Health System CEOs: What Disruptive Innovation Means to Me
"Future of the Hospital" Game Aims to Foster Innovation in Healthcare

5-Item Checklist for Spreading Innovations, Evidence-Based Practices

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