Hwang: Take healthcare out of the hospital

Jason Hwang’s prescription for healthcare reform can be boiled down to a simple axiom: Take healthcare out of the hospital.

The internist and executive director of healthcare at the Innosight Institute told attendees at the 2009 Connected Health Symposium that healthcare is too expensive and inaccessible for too many people, because the system’s hospital-centric business model isn’t sustainable.

Instead, Hwang called for a new model that recognizes the increasing role technology plays in our society.

“Patients want to and are capable of playing a more integral role in their own care,” said Hwang, suggesting that providing more care outside the hospital can help make healthcare more efficient and accessible at a lower cost. Patients are already taking advantage of new technologies to manage their own healthcare.

“Doctors ignore this trend at their own peril,” Hwang said.

Describing them as institutions that have been tasked to handle more than was ever intended, forcing them to carry huge overhead and adding costs to the healthcare system, Hwang said hospitals should not be the center of the healthcare system.

“There are a multitude of reasons why the healthcare system is broken,” he said from the stage of the Imperial ballroom at Boston’s Park Plaza hotel. Flanked by large projection screens, Hwang dismissed the usual arguments about the cost of healthcare: Doctors make too much money, private insurance is too large and too many lawyers are involved. Instead, he said, “the problem is more systemic. We are continually treating the symptoms and not the underlying diagnosis.”

To support a re-imagined healthcare system, Hwang, co-author of “The Innovator’s Prescription: A Disruptive Solution for Health Care,” applied the theory of disruptive innovation first introduced by Harvard Business school professor Clayton Christensen. Hwang worked with Christensen and the late Jerome Grossman of Harvard’s Kennedy School of Government to produce the work.

Disruptive innovation, according to Christensen’s website, “describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves ‘up market,’ eventually displacing established competitors.” Ultimately, businesses that were once dominant but failed to respond to market forces can end up, as Christensen puts it, “on the bottom of the heap.”

The current hospital-based healthcare system, Hwang said, is going through a similar process as developing technologies are being plugged into outdated business models, making healthcare less accessible to more people.

Using the development of the personal computer industry to illustrate the disruptive innovation theory, Hwang highlighted the milestones that moved the industry from room-sized mainframes to pocket-sized smart phones. Mainframe computers were originally so large, expensive and sophisticated that only a few customers could afford them,

“Only large corporations and educational centers could use them,” Hwang said. “That added cost and inconvenience drove innovation.”

Like the mainframe computer, which centralized computing power, the hospital-centered healthcare system is being supplanted by innovative devices and technologies operating outside of the hospital environment.

“All these functions that used to be done outside the hospital are now centralized in the hospital business model,” Hwang said. “It tries to do everything for everybody, but as a result struggles to do any of them very well.”

The effect is an expensive system carrying a large overhead in order to be prepared for any contingency that walks through the door. This system keeps the hospital continually struggling for financial viability, he said.

Hwang described the hospital as a series of linkages and hand-offs that can increase the potential for problems at the intersections between hospital staff.

“Departments don’t really work as teams, but shuttle the patient from one department to the other,” he said, adding that managing the entire process adds another tier of costs.

“The story we often tell is about diabetics being empowered by technology to do more and more care for themselves. Obviously, outcomes tend to be better when [diabetics] are more engaged with their health,” Hwang told MassDevice after his speech. “So we’ve armed them with glucose meters, insulin dosages that they’re allowed to adjust on their own and an easy ability to get syringes in pharmacies. All of that goes to de-centralizing care.

“The physician isn’t even involved in most of that day-to-day care. We can do that for more and more chronic diseases, providing we use technologies in that fashion.”

Take physician house calls as an example. Once a commonplace, they became increasingly rare as healthcare was concentrated in large hospitals. But the trend back to doctors making house calls seems to have returned, albeit in a slightly altered fashion where de-centralization has again taken hold.

“As you change the care-giving venue, you also usually change the profession of the person providing the care,” Hwang observed. “Specialists have become generalists and more care is being given on an outpatient basis. Duties once performed by physicians are now the domain of physicians-assistants and nurses.”

These are all signs of disruptive innovation in its early stages, he added.

Hwang emphasized new trends in online healthcare that bring caregivers together with patients. These services usually charge a fee for membership or per transaction, offering patients and caregivers the opportunity to meet online to discuss medical strategy. They can also provide a setting to make contact with others who have the same conditions, facilitating an exchange of ideas and experience.

Hwang cited online communities such as Facebook, Geisinger Health System and programs at National Jewish Health in Denver as examples of innovative business models. These communities use fixed payments based on established processes that remove some of the diagnostic guesswork, Hwang said.

Confronting the question of online medical misinformation, Hwang urged his colleagues not to sit on the sidelines.

“It’s happening anyway,” he said, “but if we ignore the trend, there will certainly be more misinformation out there.

“Disruptive innovations are most appealing in times of financial crisis,” Hwang said, “If you think about how the history of healthcare has evolved, things like Kaiser Permanente came out of the Great Depression. I think it’s a great opportunity for entrepreneurs who can find a more affordable way to do the things we already do today.”