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Steve Bailey

Unhealthy turf war

Email|Print| Text size + By Steve Bailey
Globe Columnist / January 18, 2008

CVS is coming - and Massachusetts' doctors know they have seen this plotline before.

"There is no reason for any individual to have a computer in their home," Ken Olsen, the great founder of Digital Equipment Corp., famously said. He later changed his mind, but too late to keep the personal computer from wiping his once-thriving Massachusetts minicomputer maker off the map. The big airlines may have more clearly understood the threat posed by Southwest Airlines' low-cost, no-frills service, but they also couldn't hold back the tides of change that were remaking their industry.

In the business schools, the personal computer and Southwest Airlines are taught as case studies of what has come to be known as "disruptive innovation." Now, with CVS Corp. poised to open as many as 30 medical clinics in their stores in the Boston area alone this year, local primary care doctors and neighborhood health clinics worry they could be next. They may be right.

Our mayor, letting his protectionist instincts on behalf of his beloved neighborhood health centers get the best of him, has all but threatened to turn off the water of any CVS store that opens a clinic in his town. "Allowing retailers to make money off of sick people is wrong," Tom Menino fumed last week. Where do you suppose the mayor buys his prescription drugs?

There is a simple reason medical clinics run by CVS, Wal-Mart, and other retailers have grown so fast: People like them. If you are a mom with a 6-year-old who has an earache, driving two blocks to the CVS on Saturday afternoon beats sitting in a hospital emergency room for four hours. The cost: about $59 to $69 at a CVS MinuteClinic, staffed by a nurse practitioner, compared to $150 or more for a similar visit to a doctor's office. People like convenience and affordability whether in healthcare or hardware.

America spends more money per capita on healthcare than any nation, but continues to lag behind many less affluent countries when it comes to benchmarks like infant mortality and life expectancy. The problem, says Harvard Business School professor Clay Christensen, is that so much of the money goes to maintain the status quo because it is given to organizations wedded to their current solutions, including the old delivery models.

Christensen literally wrote the book on the kind of disruptive innovation that the PC and Southwest Airlines represent. His landmark 1997 book, "The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail," turned Christensen into a rock star of the start-up revolution during the dotcom boom. Now in a book due out in August, Christensen and coauthor Jason Hwang examine how the disruptive innovation model can be used to cure what ails our healthcare system.

CVS's MinuteClinics get an entire chapter in the book. Physicians' associations typically oppose MinuteClinics on patient-safety grounds, Christensen and Hwang write. In about half the states, the business model is illegal because regulations mandate that doctors supervise nurse practitioners and physicians' assistants. But the regulations haven't caught up with the science, they say. Today, the diagnoses for a host of illnesses - from sore throats to ear infections to the flu - are precise and the therapies predictably effective.

"These regulations now trap care in high-cost models when there are much more affordable and accessible business models available," they write. "About $15 billion is spent each year in high-cost physicians' offices for the care of acute, rules-based disorders. Delivering even half of this care through a disruptive business model such as the MinuteClinic could easily save $7 billion a year. . . . A billion here and a billion there soon amounts to serious money."

In healthcare, like every other business, it is the customer, not the provider that matters most. Retail medical clinics, already in 25 states, are far beyond an experiment. This is, plain and simple, a turf war better not fought.

Steve Bailey is a Globe columnist. He can be reached at bailey@globe.com or at 617-929-2902.

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