Are Health Care Homes Classic Market Disruptors?

Disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market-leading firms, products, and alliances.  But the proposer of this theory laments that it is often misunderstood and therefore misapplied.   Check out Clayton Christensen’s comments in the Harvard Business Review. 

While not an expert on disruptive innovation theory I have pondered what application it has in healthcare reform and more specifically Health Care Homes.

I have observed the following:

  • HCHs are to focus on patients with complex care needs and these patients are characteristically less preferred than other patient groups who are easier and quicker to treat  i.e. an under-exploited market
  • Activity based payment systems such as MBS items reward volume over the value of care provided,  making patients with complex disease-difficult conditions less attractive.  The new payment systems being piloted in HCHs may present opportunities for value-based care to be better rewarded and incentivised than it has in the past. i.e  a new value- based revenue stream 

In my experience (and it would be good to know yours) I am seeing younger GPs expressing interest in the HCH concept. These are early career GPs looking to establish a practice (and a business) in urban areas that seem increasingly saturated with GPs.  They are looking for creative ways to get a “foothold” so to speak.   Many are overseas trained GPs who have experience of other models of GP care.

So, and as consistent with disruptive innovation theory,  these GPs trying to establish their patient clientele, are looking to the under-served complex needs patients – those less preferred by established GPs.  Some of the established GPs are more than happy for their most complex patients to be transferred to the care of other GPs with an interest in this group.  As one GP rather candidly said he was used to colleagues ‘sloughing-off” difficult patients to the newcomers!

The new block funding arrangements currently being piloted under the HCH initiative may assist these entrepreneurial GPs to create good financial returns by tapping into this under-served ‘market’ and drawing down on the new and more flexible revenue  streams.

The new ‘value network’ that the theory speaks of would be the patient referral networks that need to be established to deliver the higher quality, more comprehensive and purposefully integrated care required for HCH enrolled patients.  Allied health providers participating in these new ‘value networks’  will also benefit commercially one would think.

Notwithstanding the commercial benefits, the GPs I have spoken to are also enthusiastic about the opportunity to provide better care to their sickest patients- wins all round for GPs, allied health providers, patients and indeed the taxpayer!

It is noteworthy that the larger corporates have shown an interest in the HCH pilots.  Presumably they are alert to both the threats and opportunities.

Another interesting insight provided by a GP friend was that having an enrolled patient population allowed him to establish a quantifiable and saleable ‘asset’ that he could on-sell when it comes time to put his practice on the market.  This was a major consideration in his decision to participate in the HCH pilots.  Smart business thinking!

Thought starters:

  1. Are you observing elements of disruptive innovation as a result of the Health Care Home initiatives?
  2. Do you think that HCH participants are conscious of their “disruptive” effect?
  3. How might an understanding of the theory be used to support the HCH initiative in:
    • Recruiting participant GPs
    • Recruiting participant patients
    • Activating the wider referral network beyond the practice itself (i.e. the value network)
    • Understanding  and mitigating the actions of those who might resist the reform
    • Understanding how digital technologies might be deployed under the new model of care