Adapted from The Innovator’s Prescription, PB: A Disruptive Solution for Healthcare, by Clayton M. Christensen.

In most industries, when radically new technology emerges that enables people to do things that previously were impossible, the technology is so expensive and complicated, that provision of the service must be centralized. The people and the problems flow to the technology, rather than vice versa.

Before the phonograph, for example, New Yorkers went to Carnegie Hall to hear high-quality music. They took their messages to the telegraph office so a skilled operator could send them. In the 1960s and 1970s we brought our computing problems in the form of punched cards to the corporate or university mainframe computing center, where an expert ran the job for us. In the 1970s and 1980s we took our originals to photocopying centers, where a technician who operated complex high-speed Xerox machines ran the job for us. People traveled to the downtown department store or a big shopping mall to buy what they needed, and then went home.

Modern health care is no different than how these other industries used to be. Our hospitals draw people with their illnesses to an expensive, central location. We collect blood and other fluid and tissue samples from dispersed doctors’ offices and transport them to a central laboratory where complex, high-speed equipment performs the required analysis. Imaging equipment like MRI and CT scanners are similarly centralized. The structure of today’s health-care industry is essentially structured around taking our problems to the solution.

In the other industries, disruption inverts this system, so the solution is delivered to the problem. Downloadable music on mobile devices brings high-quality music to where we live, work, and play. The telephone brought to our homes the ability to communicate instantly over long distances, and the mobile phone then brought this ability to our pockets and purses. The PC brought computing to our homes and offices, and notepads and handheld devices have since decentralized computing to wherever we are. Canon’s tabletop copiers put photocopying right around the corner from our offices, and all-in-one ink-jet printers have now brought copying home. And Internet retailing is bringing shopping to the people, rather than making people go shopping in a mall. In every case, the quality, convenience, and cost per unit consumed improved dramatically with disruption.

The first wave of disruption in the hospital industry will be the separation of business models into distinct institutions, each designed to serve different value propositions. The second wave will entail taking the solution to the patients, instead of taking the patients to the solution. In the office, while the patient is there, doctors and nurses will be able to do tests and procedures that today are centralized. And decision-making algorithms will disrupt solution shops, putting the perspective of the world’s most expert specialists into the hands of primary care physicians. Where the lack of technological progress limits the decentralization of these capabilities, connectivity in many instances will enable virtual decentralization—a movement commonly called telemedicine.

There will be an ongoing cascade of disruptions that will be required in order for health care to continue to become more affordable and accessible, without compromising on quality. Let’s start at the rearmost plane of competition. First, general hospitals need to create hospitals-within-hospitals, or others must build new institutions that are focused solely on solution shop or value-adding process business models. The solution shops can integrate optimally for the practice of intuitive medicine, while the value-adding process hospitals can optimally integrate the steps in their procedures. Then technology must be brought to large group ambulatory clinics, so we can begin doing in that setting the simplest of the procedures that can only be done in hospitals now. Those clinics then need to become increasingly capable of doing ever more sophisticated procedures, drawing into that setting more and more of the activities that have historically been done in hospitals.

While the ambulatory clinics are moving up-market, we must bring technology to small groups and individual doctors’ offices, so they can begin doing the simplest of things that today require a large ambulatory clinic. Then they too, enabled by technological advances, must be able to do progressively more sophisticated things, drawing procedures one by one from clinics into offices. And while doctors’ offices are moving up-market, we need technologies that enable us to do in the home the simplest of the things that historically had to be done in a doctor’s office; and so on.

To facilitate disruption, drug and medical device companies should focus their technology and product development efforts on bringing the location and the ability to provide care to the patient. These technological advances are critical to this transformation of health care.