Identifying Ways That Health Systems Can Deliver Better Care at a Lower Cost

Dates of Project: October 2009–October 2011

Field of Work: Disruptive innovation in health care

Problem Synopsis: A disruptive innovation transforms or creates a market or sector by introducing simplicity, convenience, accessibility, reliability, and affordability for a product or service that was complicated, expensive, and often inaccessible. Within health care, integrated health systems—which are both insurers (payers) and providers of health care—have the most capacity for disruptive innovation. Integrated health systems are networks of managed care organizations and health care providers (e.g., hospitals and medical groups providing primary and specialty outpatient care) serving people enrolled in the managed care plans.

Synopsis of the Work: Researchers at Innosight Institute conducted case studies of seven integrated health systems to find out how their staffs thought, acted, and innovated and to identify ways that other health systems could deliver better care at a lower cost. At each integrated health system, they interviewed 15–25 leaders and reviewed accounting and operating data. They also corroborated information by using medical and lay literature. They published a summary report, Disruptive Innovation in Integrated Care Delivery Systems, and case studies on six of the integrated health systems; they were still working on the last case study as of January 2013.

Key Findings

• Scarcity often leads to disruptive innovation. When the supply of health care professionals, beds in a hospital, and other resources is insufficient to meet demand, there is less of a revenue threat and agreement that "good enough" is better than nothing. Once there is proof that an innovation works, it can be improved until it has the potential to be a disruptive innovation.
• Integrated health systems need to do a better job explaining the benefits of integration to consumers, insurers, employers, doctors, and hospitals. Focusing on the quality that integration leads to will build the willingness of doctors and hospitals to share risk and the willingness of consumers to choose integrated health systems.
• Many integrated health systems preferred a "mixed model" to full integration and used their integrated elements as a "test kitchen" for innovations. For example, some integrated health systems used patients in their health plans who used the medical group and hospital to pilot new approaches to care or payment.
• More patient engagement in their health, wellness, and health care is necessary before the benefits of integration can be fully realized.
  • When integrated health systems made price and quality information available, very few patients accessed this information.
  • The rates of obesity, diabetes, and high blood pressure did not decrease among patients who participated in sustained wellness and prevention efforts.

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