I want to talk a bit about disruptive innovation, which is an important player in the reshaping of industries. Disruptive innovation generally requires three elements, which I am going to define below.
- A new technology which allows something complex to be done more simply
- A business model which emerges to take advantage of the new technology
- A network of suppliers/enablers which supports this model
For further reading, specifically concerning D.I. in healthcare, I will refer you to Professor Clayton Christensen’s superb book, The Innovator’s Prescription.
Considering Proxiderm, the wound closure device I discussed previously, some elements of the disruptive process can be seen. The device allows wounds to be closed in a simpler manner than skin grafts, or regional/distant flaps. Some may argue that a multistage Proxiderm procedure is not “simpler” than a single stage graft or flap, and that may be true, depending upon the wound in question. With Proxiderm, elements #1 and #3 are at least partly true. It’s not a perfect example of the disruptive innovation concept, since the device supports, but does not redefine reconstructive surgery.
The disruptive element is that Proxiderm can be easily handled by a general or specialty surgeon with reasonable skill. In other words, many wounds which might have required the services of a Reconstructive Plastic Surgeon can be handled by the patient’s primary surgeon.
Rural centers using Proxiderm may avoid transfers to tertiary centers for definitive wound closure in some cases.
Although this example is a minor one, healthcare is poised for numerous disruptive innovations. As these take hold, they will continue to transform the field in ways that would have seemed impossible just a few short years ago.
Manhattan’s St. Vincent’s Hospital has been closed due to an inability to find a solution to its $700M debt. This venerable institution has treated people in need predating the sinking of the Titanic. In fact, it treated victims of that 1912 disaster. But ultimately, it could not keep itself from sinking under the debt caused in large part by the cost of providing uncompensated care.
With St. Vincent’s closed, nearby hospitals will receive those patients and hopefully, the effect on patients will be minimal. Bellevue Hospital reportedly saw a 13% increase in its E.R. visits in the week prior to the closure of St. Vincent’s.
The problem is that a large proportion the emergency patients served by St. Vincent’s were either uninsured or underinsured. Now, those patients will be absorbed by the surrounding hospitals. So those institutions will have to offset these costs as best that they can. For institutions already at financial risk, this will be an unwelcome burden.
Emergency care in America is mandated, but not funded, through the EMTALA law. The law has a noble purpose, but presents a great risk to hospitals. A hospital that cannot manage the cost of emergency care will face the risk of closure. Surrounding hospitals will then take on the losses experienced by the first failed institution. Unless this problem is addressed, what was seen at St. Vincent’s (and is currently playing out in Miami), will continue at other medical centers. Patients are already being harmed by this problem, though fortunately not on a widespread or routine basis – yet.
Kenneth Cohn MD, MBA, FACS made an excellent point in the first slide of his healthcare reform overview when he stated “Uncompensated care is never free”.
The cost of uncompensated care is an operating expense that is getting more and more difficult to offset. The addition of better paying service lines is not an automatic answer, because it can result in community oversupply and a misallocation of resources. Increased efficiency is very important, but can only go so far. Recovery of costs from emergency patients is increasingly difficult in a tough economy.
Without a serious discussion regarding unfunded emergency care, we will likely see additional hospitals go the way of St. Vincent’s.
Maintaining a properly functioning emergency care network is a critical goal of our healthcare system. The current system is not working, and patient safety demands that the issue not only be addressed, but solved.