Chief medical editor's corner of the world
Sitting down with Clayton Christensen

Clayton M. Christensen is the Harvard Business School professor who is best known for naming and popularizing the concept of "disruptive innovation," which he outlined in his best-selling 1997 book, The Innovator's Dilemma. Forbes calls him one of the most influential business theorists of the past 50 years. Dr. Christensen's counterintuitive theory explains why so many successful businesses eventually fail. Although they continue to develop "sustaining" innovations that improve their most advanced products for their best customers, the industry leaders are eventually disrupted by innovations that combine new technology with a new market model and network. Personal computers, cell phones, digital music, and digital cameras are all examples of how expensive and exclusive products eventually became simpler, cheaper, and more accessible as they displaced the original industry leaders in the process. A number of Dr. Christensen's lectures are on YouTube and are worth viewing.
A natural question is when and how an expensive and established industry, such as American healthcare, will experience disruptive innovation. Dr. Christensen and two physicians analyzed this question in the 2009 book The Innovator's Prescription. Their recommendations for new market models are very provocative and controversial, but it is refreshing to see a non-partisan analysis by a non-stakeholder who is focused on making care cheaper and simpler to access for all patients. I met and heard Dr. Christensen speak in San Francisco last April, after he had just been featured in the March 2011 issue of Forbes. Go to www.forbes.com and enter Dr. Christensen in the search box to read this article chronicling his survival of a heart attack, lymphoma, and a stroke in the past 3 years. Along with having undergone surgeries for a retinal detachment and cataract, these experiences give him a unique perspective with regard to both healthcare reform and medical device innovation. He was kind enough to allow me to interview him subsequently for EyeWorld, and with the help of Faith Hayden, EyeWorld staff writer, a synopsis of our discussion is transcribed here.

David F. Chang, M.D., chief medical editor

World-renowned innovator and author discusses the FDA and disruptive innovation

Dr. Chang: As a patient, you have undergone both retinal detachment and cataract surgery. How did these personal experiences impact your understanding and appreciation of medical device innovation in ophthalmology?
Dr. Christensen: One of the things is wow, would I love to meet the first person to cut into another person's eye. The technology is absolutely extraordinary. Outcomes that were unthinkable 30 years ago are commoditized today so that many more people have access to great care. The medical device innovation is the "Intel inside" of every procedure.
Dr. Chang: Compared to Europe, gaining FDA approval for a medical device takes much longer and is far more expensive. The risk for venture capital investment due to regulatory uncertainty is higher than ever. How much does this impede or threaten to derail the innovation cycle in medicine in the U.S.?
Dr. Christensen: The standard in use at the FDA is often not to promote patient health. Instead, it works to preserve the health of the existing providers of products and services. It truly imposes an onerous tax on patients, even while it withholds better products. I believe that if you put a lens on and looked at the FDA's process, it's an excruciatingly interdependent process. If you change this you've got to change that, and so on. So any improvement that anyone tries to make in the FDA process is excruciatingly complicated, costly, and difficult to accomplish. Microsoft Windows Operating System is a proprietary architecture. To add 20 lines of code you've got to change 20 million lines of code. So when they add new features to it, it could take them 4 years to make sure the new features don't screw up something else. I think that's what's happened with the FDA. In response to problems with devices or drugs, it has created this system that's about as flexible as Microsoft Windows. Simply saying we need to change the way we do things—the problem is, because of the FDA's interdependent architecture, it's actually really hard to do this. If there was a way to modularize the system, you could take the most egregious pieces and swap them out and replace them with something that functions better. This is how I would think about it. Almost always when a regulation is changed it never changes as the result of a head-on attack. Instead, the innovator goes out to the periphery, beyond the reach of the regulators. For example, Southwest Airlines wanted to get off the ground in the late 60s and early 70s, and the Civil Aeronautics Board in Washington had to approve any new route that any airline wanted to do. They wouldn't approve low-cost airlines because of course it was directly against what the major airlines would want to happen. So Southwest kept its routes inside of Texas and California because if it wasn't interstate then the federal agency had no jurisdiction over it.
Dr. Chang: For Medicare patients the cost of all surgical implants and devices is bundled into one capped procedural fee. Our government cannot afford the escalating costs of more expensive technology. However, patients who want and can afford to pay extra for certain elective technologies are prohibited from doing so. Does this lack of a free market ultimately doom innovation in medical devices?
Dr. Christensen: The last time a government tried to bless its citizenry by dictating process and the bundling of products was the communistic government. The regulation is always invoked in the name of the patient or the customer. But in reality it ends up supporting the existing providers. A good example is in finance. Up until the mid 1970s there was a rule in banking called regulation queue. It was put in place during the Great Depression to prevent banks from competing against each other and meant that banks couldn't pay interest on checking accounts. What a wonderful regulation—banks could get your money but were prevented from giving you interest. The way it got broken was Merrill Lynch created this idea where you could write checks on a Money Market Fund. Because it was not a commercial bank, it could do this outside the reach of the bank regulators. Then Fidelity did the same thing, and the money just flowed out.
Dr. Chang: Your research has sought to differentiate between sustaining and disruptive innovation. Please describe the difference and what a disruptive innovation in cataract surgery might look like.
Dr. Christensen: Innovations that drive companies up the trajectory of performance improvement are said to be sustaining innovations. These innovations help the leaders make better products that they can sell for higher profits to their best customers. Generally, truly new technologies emerge from the players sustaining innovation. But their business model doesn't allow them to go down to the bottom to make it more affordable and accessible to many more people. A disruptive innovation is one that transforms a product or service so that a much larger population of less-wealthy people now are able to own and use the product—or to enable providers that have less training to do more sophisticated care. The equipment and the processes that enable this are, in my language, disruptive. The Aravind Hospital in India only does eye surgery in a very standardized way that in theory is high quality and very low cost.
Another good example is MRI technology. These machines cost $1 to $3 million a piece. Sustaining innovation that improves the top-of-the-line machines is important because there are a lot of worthwhile things the best MRI models can do. But if there ever emerges a way to utilize MRI technology through a platform where a machine costs $200,000 instead of $2 million, that would change the world. It's disruptive. So the product technology comes from leaders like General Electric. But the disruptive business model that can deploy it is not what you get from the existing leaders. The reality is if you make technology so affordable and simple that a larger population of caregivers is able to provide care, then that technology makes it standardized.

Because of Dr. Christensen's work, many leading companies now try to anticipate how their business or industry could be "disrupted" in the future. In this context, Dr. Christensen and I also discussed the femtosecond laser for cataract surgery. At first glance, this would appear to be a classic "sustaining" innovation—a more advanced technology that companies (and surgeons) sell to their highest end customers but that is not affordable for everyone. However, there is the danger that it could become a "disruptive" innovation if it somehow enabled non-cataract surgeons or providers with lesser training to do the surgery in a way that would lower the overall cost of treatment. Besides the technology, obvious changes in the healthcare model would also be required—which organized optometry is already pursuing.