Clayton Christensen on How Technology is Improving the Healthcare Industry | Big Think | Summary and Q&A

TL;DR

Hospitals often combine two different business models - solution shop and value adding process - resulting in inefficiencies and higher costs.

Key Insights

• 👨‍💼 Hospitals often struggle to efficiently integrate the solution shop and value adding process business models within their organizational structure.
• 🇨🇷 Separating these activities can result in better diagnosis and more cost-effective procedures.
• 😘 Business model innovation can lead to improved patient care at lower costs.
• 🌍 The National Jewish Medical Center exemplifies the benefits of a solution shop approach for accurate diagnosis and cost-effective treatment.
• 🏥 By charging for results instead of inputs, hospitals can align their pricing with value delivered to patients.
• 👨‍💼 Education and consulting firms also fall under the solution shop business model.
• 🈂️ Solution shops rely on fee-for-service payment models, while value adding process businesses can charge based on results.

Transcript

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Questions & Answers

Q: What are the two types of business models found in hospitals?

Hospitals include solution shop and value adding process business models. Solution shops diagnose problems and recommend solutions, while value adding process businesses fix or add value to a product.

Q: How do hospitals typically organize their activities?

Hospitals often combine solution shop and value adding process activities within the same organizational unit, leading to inefficiencies and difficulty in measuring quality.

Q: How can separating these business models benefit hospitals?

Separating solution shop and value adding process activities allows for better diagnosis and more cost-effective procedures. Providers can charge for results rather than inputs.

Q: Can you provide an example of how a business model innovation improved care and reduced costs?

The National Jewish Medical Center in Denver is an example of a solution shop that brought together different specialists to accurately diagnose pulmonary diseases. This approach was cost-effective and led to better care for patients like Dave.

Summary & Key Takeaways

• Hospitals are a combination of solution shop and value adding process business models.

• Solution shops diagnose problems and recommend solutions, while value adding process businesses fix or add value to a product.

• By separating these two types of activities, hospitals can improve diagnosis and reduce costs.