If you care (or worry) about the crunch-time that’s beginning in medicine, read this post last Tuesday on the Harvard Business Review blog:
Creative Destruction Visits the Legal Profession
It has strong echoes of what I wrote last month in As the crunch hits, will the best survive? That post talked about how much pain there’s likely to be as we try to solve the $750 billion of unnecessary spending in US medicine. Until now I wasn’t aware of how much the legal profession has been hit by changing realities. Items from the HBR post:
- “In the ten years or so since running that course, the assumptions underpinning a lot of the business models at law firms have come unraveled. Just as we argued, a lot of the lower-end, but profitable, work is now being done by cheaper providers or has been automated”
- “Legal budgets have come under intense scrutiny as the Great Recession’s aftermath grinds on.”
- “And — gasp — lawyers are now realizing that if nobody is looking after the business end of things — ahem — in other words, being strategic, the entire operation can come to a crashing halt. Witness the spectacular bankruptcy of once high-flying Dewey & LeBoeuf.”
Yeah, the bankruptcy of a once-high-flying law firm. More:
- “The problems started to become urgent when young lawyers, armed with freshly minted degrees, either couldn’t get legal jobs or, worse yet, couldn’t get jobs at all.” Only 55% percent of 2011 graduates had a law-related job nine months after graduation.
Imagine if only 55% of med school graduates could find a job. Can’t happen, right?
That’s at the low end. And at the top?
- “Becoming a partner at a major firm used to be a guaranteed job for life, something like being a tenured professor. Yet, just as the Wall Street Journal reported on January 6, 2013, partners who aren’t bringing in business are themselves being let go.”
As I said in As the crunch hits, this prospect in medicine worries me because I want the best providers to be protected and even boosted as we go through these changes; I want patients and families to have the absolute best available, and I want the best to be rewarded for their “bestness.”
The situation isn’t exactly parallel – they’re both expensive high-training professions but medicine isn’t law – but the core structural issue is the same: there’s a limit to how much spending is possible, and when you hit that limit it hurts. Plan accordingly.
A lot of patients know that: they (we) hit that limit some time ago.
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A p.s. about the term “creative destruction”
As I wrote in November, “creative destruction” is a term from the 1940s, now used by the great cardiologist and visionary Eric Topol in his book Creative Destruction of Medicine. I don’t like the term much because it sounds destructive, when that’s actually not the point; not everything destroyed is due to creative destruction, just as not all innovations are disruptive.
The HBR post’s headline misuses the term. (Note: the post’s body doesn’t use the term – it may have been added by a headline writer.)
I checked with Topol today and he agrees. “Creative destruction” (coined by Austrian Joseph Schumpeter in the 1940s) is when the elements of value in an industry have been bundled together and get broken apart (“destruction”) so they can be combined (“creative”) in new ways. Hardly anything in the post is about that – it tells of:
- Sagging demand rooted in a sagging economy (which has nothing to do with the industry getting reconfigured)
- Lower-priced competition, which by itself is not Schumpetering – it’s just a lower-cost competitor doing the same work.
- Some services are getting automated (document search during discovery), but that’s just automation of one process in the same basic business model.
Executives who want to guide their ships through these turbulent waters need to understand what the terms actually mean. These aren’t airhead buzzwords, there’s a “there” there.
p.p.s. Topol’s TED talk
I don’t use the word “visionary” lightly. Have a look at Topol’s TED Talk The wireless future of medicine in 2009, more than three years ago, and see how much of it has become fleshed-out reality.
The guy’s bio is incredible – one of the ten most-cited researchers in the past decade, and much more. We need more vision like this that pans out accurately.
Wonderful commentary, Dave! Even though I know you don’t want the disruption to be painful for those impacted, hopefully via your efforts and those of people like Dr. Topol, we’ll increase awareness and people can react to mitigate the economic damage. I think Clay Christensen also talks about this subject quite well, e.g. in this TechCrunch piece “Clayton Christensen: “Disruptive Innovations Create Jobs, Efficiency Innovations Destroy Them””
http://techcrunch.com/2012/10/09/clayton-christensen-disruptive-innovations-create-jobs-efficiency-innovations-destroy-them/
That’s an AMAZING post, Paul – thanks – I can’t believe I missed it!
Everyone, get this, from that post:
“Christensen [of Harvard Business School] also said that he fears for the future of Harvard Business School and others like it, as this year the number of people that applied to two-year business schools dropped 22 percent.”
I hesitate to draw too broad a conclusion here about any seismic restructuring of where people go to get expertise, but this is eye-popping.
That whole post is really, really important for anyone who wants to understand the “there” there, as I said above. He talks about how IKEA hasn’t been disrupted in its 30 years because no other merchant has understood the “job” the consumer wants to get done: “I want to furnish this place today.” In medicine I’d guess that boils down to “I want my family to get well and stay well.”
And that’s why it’s so important for the good providers to be rewarded and for managers who want their institutions to prosper to think strategically, and in that context.
Agree? Disagree?
Dave, thanks for this. Re the law-medicine situations, the legal profession is different from the medical profession in one important aspect: lawyers usually are largely a service profession, i.e. they service corporations, govt, unions, etc etc These employers of lawyers
control their level of involvement in the purchasing entity, whether in-house counsel or retained outside counsel. So lawyers are largely dependent on the stability of their “client” to whom they offer their professional services. I’m excluding sole practitioners who are now almost extinct.
Medicine is quite different in offering critical services direct to the individual member of the public and interacting directly with him/her.
Your point re role of patients and families is excellent! Health consumers (all of us) have to be activated to protect and ensure the flourishing of quality doctors, once we’re informed on who they are, know what to look for, and are fully engaged with our healthcare provider team. NHMH – No Health without Mental Health (www.nhmh.org) is definitely working towards that goal: activating the public to GO to quality doctors, have a relationship that ENGAGES with them, and
then to “protect” them in sense of supporting health policy reforms that incentivize and reward doctors who offer accountable, quality care.
And a big part of that quality care is one that offers both behavioral and medical care in a coordinated fashion in the primary care setting.
Flora