The lack of creative destruction in healthcare systems makes innovation a cost driver

Creative destruction, a concept developed by the economist Joseph Schumpeter, describes the process by which new innovations displace and replace existing technologies, business models and structures. While this approach has driven significant efficiency gains across various industries, it remains largely absent in healthcare. The disproportionate rise in health expenditure relative to care output points to structural inefficiencies and untapped potential. A cross-sectoral comparison with telecommunications and banking shows that technological progress in those industries generated tremendous efficiency gains, as intense competition forced the creative destruction of inefficient structures. In healthcare, by contrast, additive and content-based innovations dominate: they supplement existing processes rather than replace them, increasing complexity and cost without generating efficiency gains. The primary causes are financial misalignment through cost-based reimbursement principles, fee for service mechanisms that favor low-value care, structural barriers such as capital investment lock-in and institutions’ cultural resistance to change. At present, creative destruction has little effect in healthcare because systematic mechanisms for de-implementing outdated processes are absent. To enable sustainable efficiency gains, three things are required: embedding cost efficiency as a governance criterion, realigning research and reimbursement incentives towards substitutive and process-based innovations and rigorously establishing de-implementation models. Without these reforms, the efficiency-enhancing potential of disruptive technologies, such as AI-assisted diagnostics, telemedicine and automated administrative processes will remain untapped.