Creative Destruction in Anatomic Pathology

PATHOLOGISTS MAY BE FAMILIAR with the economic theory of “creative destruction.” They are aware of how “creative destruction” is at work transforming and reshaping both the anatomic pathology marketplace and the clinical lab testing marketplace.

Economist Joseph Schumpeter first used the term in his 1942 book Capitalism, Socialism and Democracy. He described how constant innovation and entrepreneurial activity continually eroded the market strength of leading companies. This quote from his book captures the concept of creative destruction:

“The opening up of new markets and the organizational development from the craft shop and factory to such concerns as US Steel illustrate the process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one … [The process] must be seen in its role in the perennial gale of creative destruction; it cannot be understood on the hypothesis that there is a perennial lull.”

Economists have recognized the essential truths in Schumpeter’s concept of creative destruction. The incessant innovation he described is why the United States has seen such retailing juggernauts as Montgomery Ward, Kmart, and Sears achieve market dominance, then decline. Currently the retailing champ is Wal-Mart, yet innovations and energetic entrepreneurs are already at work creating retail enterprises that will eat away at Wal-Mart’s dominance.

Another feature of creative destruction is that it is painful. Leading companies, as they lose their edge to the up-and-coming innovators, must lay off employees, close facilities, and downsize. Schumpter observes that this pain is generally short term and is a source of economic vitality for the capitalistic economy, because it means that employees will learn new skills and capital is being redirected toward more productive enterprises.

Why is creative destruction the topic of today’s opinion and commentary? Because, as I read the 15 key trends in anatomic pathology presented on the pages that follow, I can see the forces of creative destruction at work. A growing number of pathologists are experiencing financial pain as the economic position their group practice has enjoyed in recent decades comes under attack from innovators and entrepreneurs entering the anatomic pathology marketplace. Yet it is this incessant innovation that infuses new energy into anatomic pathology and continually raises its value proposition to the healthcare system.