Thursday, March 13, 2014

Who is buying? Who is paying? Who is selling?... Problems with economic modeling of surgical innovation

With the rise of technology, new paradigms for describing innovation have been developed in the business literature.  Specifically, the concept of “disruptive innovation” as defined by Clayton Christensen has become particularly helpful and widely-applied.  Disruptive innovation describes an innovation which topples the industry leaders, causing a significant change in market share.  This innovation usually start in an emerging market, are often inferior to the existing options, but offer superiority in terms of price and access.    As a disruptive technology grows and improves, it eventually becomes a direct competitor to the standard of care, and soon surpasses it.

A fundamental issue arise when this paradigm is applied to surgical innovation.  The theory of disruptive innovation requires acceptance of a number of economic laws that are simply not applicable to surgery  One, that a buyer (patient) has the ability to choose between treatment options, and that these decisions are educated by cost, safety and effectiveness. If true, innovation’s successfulness would be based on the number of patients buying that procedure . However, most surgical diseases require prompt surgical intervention for cure, leaving little room for supply/demand and cost considerations to play any role in a patient’s decision making. Additionally, surgeons cannot present all treatment options (as defined by every possible permutation of each stage of procedure and peri-operative care).  Rather, as is necessary for surgical safety, a surgeon presents a single surgical plan which they have mastery of, and perhaps one alternative non-surgical option.  Therefore, while patients may choose which surgeon or health care system they present to, they do not choose the surgical procedure performed nor the surgical devices used.  While patients (via their insurers) provide payment for surgical services, this payment does not bear influence over adoption of new innovation- thereby breaking the rules of market adopting of new innovation.  One could argue that patients do have significant choice and power to exert financial influence over surgical innovation, but this is only true once and innovation is widely accepted.  For example, a patient may choose between open, laparoscopic or robotic cholecystectomy  but currently none of these are innovative; they are widely accepted standard treatments.   The long road from early innovation to standard of care treatment, is not driven by patient preference as innovations in early stages are not universally offered.  This is in stark comparison to innovations in non-medical field where all products are available to any customer anywhere, anytim.  It's also distinctly different than the medical field, where any FDA approved medication is directly  and widely advertised to consumers.

If surgical innovation isn’t driven by patient choice, what is it driven by?   The true market place for innovation is actually surgeons “selling” to other surgeons.  That is, an innovative product, procedure or system is pioneered by one “seller” surgeon, results are published in surgical journals and presented at surgical conferences where “buyer” surgeons may decide whether they plan to incorporate the new innovation into their practice .  This separation of surgical service provided (ie- patient/insurer pay surgeon for cholecystectomy) and surgical innovation adopted (ie- one surgeon “buys” and innovation from another after hearing compelling research that it is superior) disrupts theability of market force to drive innovation. Until a surgical practice is so widely accepted that patients have heard of it and seek out surgeons able to perform it, market forces are separate from innovation.

What is “disruptive innovation” in the surgical field, if the market-force-based definition cannot be applied?  The heart of disruptive innovation is an innovation that is cheaper and more available than alternatives, and requires less expertise and less resources to achieve similar outcomes.  The major shift from open to laparoscopic surgery , or laparoscopic to endoscopic surgery , may seem like a model of disruption, but it fails to meet the definition.  While laparoscopy is often more cost-effective than open surgery, it is not more available (especially in developing countries), and it requires higher levels of expertise and more resources;  the exact opposite of disruptive technology.  Similarly, robotic surgery compared to laparoscopic surgery requires additional training and more resources.   These all qualify as sustaining (not disruptive) technology as defined by incremental improvements of known procedure that improve patient care.  Sustaining technology improves patient care and outcomes, and my goal is not to undermine or minimize its important role.  However, disruptive technology causes profound changes in patient care that revolutionize care. 

If surgeons are both the buyers and sellers of innovation, what are the valued factors of an innovation that make it an attractive product?  Surgeons highly value improved patient outcomes, especially in the short term (such as decreased peri-op pain).  Additionally, surgeons value solutions that save time in the operating room (ex- laparoscopic fixation devices) and innovations that predict  post-operative prognosis and complications (ex- better staging, prediction or poor outcomes).  Innovations that surgeons would likely NOT adopt are those that increase access by reducing the level of training required to perform a procedure (ex- procedures that can be performed by ER doctor, IR doctor)

Share you thoughts!  What innovations would you adopt? Why?