The MinuteClinic Disruption

The Boston Herald ran a story over the weekend about Rhode Island-based CVS’s plans to locate low-cost health care clinics in retail stores in Boston. I’m sure CVS knew they were in for a fight considering the lengths many Rhode Island primary-care physicians have taken to block their efforts to do the same here in our state.

From the article Competition won’t ail you:

“Boston Mayor Thomas Menino is concerned about CVS’s plans to locate low-cost health care clinics in retail stores in his city. Limited service medical clinics run by merchants in for-profit corporations will seriously compromise quality of care and hygiene, he has said.”

The idea of the MinuteClinic is as much a mindset problem as it is a financial threat. The model runs counter to everything a physician has been trained for. Another problem – most physicians don’t want to be businesspeople and this is a real business conundrum. Following a disruptive strategy involves fear, risk and potential cannibalization—the mindset being that current customers (or patients as the case may be) are the lifeblood of the company (physician practices) and they must be protected at all costs. Of course in the end, these fears usually become self-fulfilling prophecies.

Clay Christensen is one of our research advisors here at the Business Innovation Factory. He would emphatically say don’t bother fighting the disruption. But he’ll also tell you that if you answer the disruptive threat, you shouldn’t invest your dollars in trying to advance your existing business model to please your existing customers in your existing value network. In so doing, you force the disruptive technology to compete on a sustaining basis, and will nearly always fail.

Clay suggests shifting responsibility for answering the disruptive threat to an autonomous organization that can then frame it as an opportunity. A new organization can pursue alternative channels, utilize different suppliers, and employ different services. Most importantly, they can do this without hindering their current, and most likely profitable value network while also giving their new growth ventures a solid foundation for success.

What does that mean for a primary-care physician’s practice? Here’s what Innosight (the consulting firm founded by Clay Christensen) has to say:

“In reality, these clinic’s present a good growth opportunity, but it will require significant change in one that requires a significant change in business practices vs. operating the sort of doctor’s office to which they are accustomed. Predictably, rather than seeing local doctors seize the opportunity, we are witnessing new specialists such as CHD Meridian and Whole Health Management ride the disruptive wave.”

Without a doubt, this story will be one for the record books. It’ll be fascinating to watch it play out. (Even though we all know the ending.)