OK my #hcbiz friends, I have suggested reading for you and I strongly urge you to take me up on it. Software Eats Healthcare, For Dummies by Alex Danco has my brain going in high-gear tonight. It’s one of the more intriguing pieces I’ve ever read on healthcare innovation and what might be coming. I’ll do my best to summarize (at a very high-level) for those of you who don’t get through it ahead of our tweet chat (Wednesday 3/16, 12:00 EST, #hcbiz).

The playbook is based on the premise of Bundling and Unbundling: In short, you bundle things together to gain efficiency (i.e. individual doctors were bundled into hospital systems) and then as things progress someone unbundles those things and rebundles them in new ways that weren’t possible before (i.e. retail clinics). This is how disruptive innovation happens — how Google’s and Uber’s are born.

Alex believes software will eat the business of healthcare and lays out his playbook in two phases:

Phase 1: Doctor’s bundled into hospitals -> High-end unbundling attempted to spin out specialty surgery centers -> Incumbents blocked this where possible to prevent revenue loss -> EHRs made it easier to unbundle low-margin activities -> new models built up around those activities (i.e. Retail clinics)

Phase 2 (in progress): Patient profiles starting to come together (i.e. bundling everything into a longitudinal personal health record) -> Telemedicine is attempting to unbundle at the high-end -> Incumbents resisting it to preserve their business model -> (Prediction) HIPAA-compliant communication leads to next wave of unbundling of low-margin services (i.e. getting patients to eat healthier, exercise more, watch their blood pressure, and seek peer support groups) -> Common goals bundled into fee-for-value networks -> New, amazingly disruptive models arrive!

How software will eat healthcare. Image: Alex Danco

Again, go read the post. I promise it will be worth your time.

On Wednesday, March 16th at 12:00 EST the 5th installment of the Business of Healthcare chat will ask:

Q1: Do you agree that high-end “unbundling” attempts like specialty surgery centers have been successfully staved off by the incumbent health systems?

Q2: Is telemedicine’s upside potential limited by the same incumbent resistance, or does it have the potential to become truly disruptive?

Q3: What are the low-end jobs/tasks that are undesirable for the large health systems and therefore become good candidates to unbundle in the next wave?