A Disruptive Solution for Health Care

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But by specifically targeting these customers who have been excluded from the traditional marketplace, disruptive business models can first establish a foothold outside the normal competitive space before moving in to compete against the incumbent firms.

Consider tools made by SimulConsult, which help physicians make diagnoses that previously required referrals to costlier specialists. SimulConsult's online medical-decision support tool analyzes information from physicians about a patient's condition, and then suggests likely diagnoses, based on information about diseases collected in a wiki-like fashion from a large peer-reviewed community of experts. Similar systems for consumer use are being developed to help patients decide when it's time to seek medical care.

Similarly, we expect health IT to make its initial impact not via a nationwide, interoperable system based on open standards, but rather in the nonconsuming periphery of the health-care provider value network. Retail clinics, fitness centers, nutrition stores, health spas, beauty centers, and alternative medicine facilities are all entities that are typically excluded from discussions about health IT, but they have strong incentives to move upmarket and mesh their offerings and data systems with traditional providers. These business models also often work outside of the constraining environment of insurance and reimbursement, dealing directly with patients and through cash transactions. This creates fertile ground for personally controlled electronic health records, as patients would have much greater reason to manage their data in addition to their dollars.

Forget the Top-Down Approach

A growing number of health information systems, such as PAMFOnline from Palo Alto Medical Foundation, already give patients electronic access to their data. The systems let people retrieve test results, verify prescriptions, and double-check doctors' recommendations online. Now mainly used for one-way communication, these tools will eventually give patients greater leeway to contribute to the data themselves. Google (GOOG) and Microsoft (MSFT) have created tools that help patients generate and maintain health records online, removing one of the biggest obstacles to switching providers.

Upgrades to our health IT infrastructure will happen soon; the advantages of business models that employ innovative health data models make this a certainty. But while the government tries to implement a universal solution from the top down, it will quickly discover that homegrown solutions are already bubbling up in all sorts of places.

Christensen is the Robert and Jane Cizik Professor of Business Administration at Harvard Business School and co-founder of Innosight and Innosight Institute. Hwang is a doctor of medicine and Senior Strategist for the Healthcare Practice at Innosight and Executive Director of Healthcare at Innosight Institute. They are co-authors, with the late Jerome Grossman, of The Innovator's Prescription: A Disruptive Solution for Health Care