The Collapse of Complex Business Models —> *Simplified Health Care Delivery* Is it possible ? Amended 4/22/2010

When ecosystems change and inflexible institutions collapse, their members disperse, abandoning old beliefs, trying new things, making their living in different ways than they used to. It’s easy to see the ways in which collapse to simplicity wrecks the glories of old. But there is one compensating advantage for the people who escape the old system: when the ecosystem stops rewarding complexity, it is the people who figure out how to work simply in the present, rather than the people who mastered the complexities of the past, who get to say what happens in the future.


Very thought provoking article by Clay Shirky.

The examples given— the illustrated lack of flexibility, borne out of complexity— which will eventually set the stage for significant disorder or even collapse within the biz entities mentioned— is easily transferable to the debate/discussions we are having about our horribly complex and broken health care system. Phew…


When I lived and trained in Japan I was intrigued by the model of the University I was at. Many of the University systems in Japan (as I remember) function as a means of educating the youth from K through graduate school. The university system owns X grade schools spread over a wide area, which feed into a number of more centralized middle schools, then college and eventually graduate schools… why am I am mentioning this ???? Bear with me…
As Jay Parkinson and others always talk about, our current health care model was “invented” in the 19th century. It was primarily designed to isolate the sick from the healthy population. Massive buildings with thick walls and large open spaces inside housed those with (then) incurable diseases. The major killers of those times were TB, diarrhea, etc, etc…. Somehow the model stuck. The buildings are still around, but the spaces inside were turned into rooms. Now these buildings, and the enormous and complex infrastructure to maintain them are only truly necessary to care for the health care needs of perhaps 10-15% of the population. 90% of care in the US is consumed by 10% of the population…. or something close to that. Yet, these large, complex institutions; their ORs, ERs and OB suites are where the majority of us need to seek acute care. What other option do we have?

There has to be a simpler, more efficient way to offer care to the 90% of patients who do not need to go to the centralized, complex, huge, scary hospital… (scary was my son’s description).

Now let’s consider the University system model in Japan… Hospitals become the corporate headquarters (i see you grimmacing already) of a wide reaching “system” designed to efficiently and effectively manage the care of the patients within their catchment area.   Large, centralized institutions would be wise to entertain this or similar concepts. Why?

I agree that a significant part of the current problem with the delivery of health care comes from the fact that hospitals (and many physicians offices for that matter) have taken themselves out of the business of providing the procedures (interventions) that thousands want in favor of those that a few require. CVS’s Minute Clinic is a good example of how hospitals have walked away from revenues. As hospitals continue to build expensive infrastructure and spend millions on technology their per-procedure P&Ls cause them to excise low margin offerings in favor of one-off high margin procedures. What they fail to notice is that each time they do that, someone enters the market and makes much higher margins on the hospital’s low margin offering because they have much lower overhead. Soon those entrants will start moving aggressively upmarket, capturing other service areas, and leaving the hospitals with their high cost procedures. (assist from Paul Roemer)

Back to the concept… Small, wonderfully designed, welcoming acute care facilities for fractures, cuts bruises exist throughout the area around the mother ship (hospital).  Small, specialty specific centers concentraing on Cardiology services, Orthopedics, ENT, Opthomology, etc emerge along the fringe of the system to manage a significant percentage of the needs of the patients in their area.    Slightly more centralized, yet disbursed chronic care centers emerge.  These centers are tasked to actually monitor their patients to prevent deterioration, re-admission, etc to the point where the potential need for hospitalization is intercededThe Cloud, the internet and mobile technology will play a huge role in this space as well, but that is outside the scope of this article and best left to the likes of Jen McCabe, Jay Parkinson and Natalie Hodge… among others.

If patients require *small* or same day procedures they can go to a well designed, aesthetically pleasing, comfortable surgical centers, set up to care for the patient in an efficient, timely and profitable manner. 

The mother ship or central hospital located in the center of the care area in the meantime has been downsized to a realistic number of beds and services, and it has been re-tooled and recalibrated to care solely for those in need of complex tertiary level care. At any time, the centers in the outer rings can send patients to the hospital if the need arises.  The ER functions to care for those truly in need of this level of care.  The ORs manage the critically ill which will require hospitalization following their procedure.   

After the patient has recovered from their acute illness, or if long term chronic (inpatient) care is necessary, the patient is moved a smaller facility which is efficiently set up to manage this level of care and discharged from here or managed as an inpatient for their chronic disease state, where this style of institution has been extensively trained and staffed to deal with end of life care and associated issues. 

Of course there are numerous potential downsides to a centralized model like this, and the potential that it would breed the very complexities and inflexibilty Shirky writes about…. but there are also tremendous potential benefits, especially with regards to managing the supply chain (like Walmart) and perhaps more important, to the IT infra-structure.  All of these centers are inter-connected and function on the same cloud based platform. All physicians within the system are viewing the same data sets.  Exams wouldn’t be replicated, results will be immediately available to the care teams and the patients served by the system will have access to their data.

Sounds easy 🙂   I’ll let Jay focus on the financing mechanisms and “insurance” needs and how the healthy pay for their care. 

Don’t forget… our system is broken.  Layering increasingly more complex rules and regulations on top of  already complex rules and regulations will not fix it… nor will it engender physician support of any meaningful change.  We all need to work together to change the system for the better…. WE ARE  ALL PATIENTS !!!


About hjluks

A busy Academic Orthopedic Surgeon, Digital Strategist, Chief Medical Officer and father... intently and efficiently navigating the intersection of Social Media and Health Care.
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2 Responses to The Collapse of Complex Business Models —> *Simplified Health Care Delivery* Is it possible ? Amended 4/22/2010

  1. Natalie Hodge MD says:

    Thanks Howard, Here is a new CME talk I’m doing at academic Institutions Nationally to explain innovation to docs, differences in incremental innovation and disruptive innovation, and make the cost case for the latter… and creating an 80% reduction in the cost curve of your medical practice. Everyone likes to talk about cost. I like to talk about reducing PHYSICIANS cost curve.…Everyone please share with your facebook friends and twitter, if you think house calls and transparency might be a good idea… Everyone please meet up with us at in May in Rochester to talk about HOW and EXECUTION of cash service line in 2010. http://www.personalmedicine.comBest, Natalie

  2. Natalie Hodge MD says:

    Thanks Howard, The reality and simplicity of the PM Virtual office Service line is a exciting. I am doing a series of CME talks at academic institutions for physicians about innovation, incremental vs disruptive innovation making a case for the cost reductions of disruption. Everyone likes to talk about cost curve… I like to talk about Physicians making disruptive cost reductions FOR THEMSELVES. Here is a slideshare of the upcoming May event……as always, I look forward to everyone’s feedback… Please meet up with our team at in May to talk about EXECUTION and service line strategy for your organization. Best, Natalie

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