Cambridge Business Association
The Innovator's Prescription
Book

The Innovator's Prescription

A Disruptive Solution for Health Care

Clayton M. Christensen, Jerome H. Grossman and Jason Hwang
McGraw-Hill, 2008
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Editorial Rating

9

Qualities

  • Innovative
  • Applicable

Recommendation

Political fights over health care reform have generated countless pages of editorials, commentaries and polemics, and hundreds of hours of television and radio programming. However, the onslaught has included depressingly few carefully considered, thoughtfully presented proposals for holistic reform of the health care system. This book by Clayton M. Christensen, Jerome H. Grossman and Jason Hwang is one of a very small number to transcend agitprop and offer an intelligent way forward. Its thesis is that in the natural course of economic progress many changes will happen inevitably in the health care industry. The book explains that health care is not fundamentally dissimilar to other industries where “disruptive innovation” has brought efficiency, economy and quality. Since the health care industry is likely to follow, for example, the path of the computer industry, getAbstract suggests this book as a must-read for health care professionals, policy makers and anyone with an interest in the future of the field. Perhaps these ideas – or even the thinking provoked by disagreeing with some of them – could help shape a robust solution to a vexing global problem, if that solution survives the legislative process (evoking the old saying that you should never watch laws or sausages being made – alas, it’s too late for that).

Summary

Health Care Crisis

Health care has more than doubled as a share of America’s gross domestic product (GDP), rising from 7% in 1970 to 16% in 2007. Spending on health care has outstripped increases in overall spending by almost three percentage points. Health care is unaffordable to many Americans. Medicare expenses may overwhelm the federal budget in two decades. American businesses are losing competitive ground globally because they must shoulder health care costs. If municipal governments had to report their health care liabilities, their financial statements would clearly show them to be underwater. This is not simply an American problem. Other countries, such as Canada and the U.K., are facing health-cost related budget crises. Developing countries are in even worse shape.

In America, “fee-for-service reimbursement” is a fundamental driver of the health care cost predicament. Health care providers get paid when they supply products and services. In this scenario, suppliers drive demand. Approximately half of health care spending is a result of supply push, not demand pull. Most approaches to reform focus on improving parts of today’s system, but...

About the Authors

Clayton M. Christensen, also the author of The Innovator’s Dilemma, The Innovator’s Solution and Disrupting Class, is a professor at the Harvard Business School. The late Jerome H. Grossman, M.D., headed the Harvard Kennedy School Health Care Delivery Policy Program. Jason Hwang, M.D., is the co-founder and Executive Director, Health Care of Innosight Institute, a not-for-profit think tank devoted to applying the theories of disruptive innovation to problems in the social sector.

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