The Risks of Innovation in Health Care

Abstract Innovation in health care creates risks that are unevenly distributed. An evolutionary analogy using species to represent business models helps categorize innovation experiments and their risks. This classification reveals two qualitative categories: early and late diversification experiments. Early diversification has prolific innovations with high risk because they encounter a “decimation” stage, during which most experiments disappear. Participants face high risk. The few decimation survivors can be sustaining or disruptive according to Christensen’s criteria. Survivors enter late diversification, during which they again expand, but within a design range limited to variations of the previous surviving designs. Late diversifications carry lower risk. The exception is when disruptive survivors “diversify,” which amplifies their disruption. Health care and radiology will experience both early and late diversifications, often simultaneously. Although oversimplifying Christensen’s concepts, early diversifications are likely to deliver disruptive innovation, whereas late diversifications tend to produce sustaining innovations. Current health care consolidation is a manifestation of late diversification. Early diversifications will appear outside traditional care models and physical health care sites, as well as with new science such as molecular diagnostics. They warrant attention because decimation survivors will present both disruptive and sustaining opportunities to radiology. Radiology must participate in late diversification by incorporating sustaining innovations to its value chain. Given the likelihood of disruptive survivors, radiology should seriously consider disrupting itself rather than waiting for others to do so. Disruption entails significant modifications of its value chain, hence, its business model, for which lessons may become available from the pharmaceutical industry’s current simultaneous experience with early and late diversifications.