AHA: Christensen Cautions Hospital Leaders on Costs

The complexity of this plant is what drove the overhead costs so high, he explained.

"The plant wasn't inefficient, but the overhead exists because of complexity involved in promising that they would do anything for anyone," he said. "You have the same proposition. No matter what's wrong with you, bring it here."

As a consequence, the overhead costs are enormous.

One of Christenson's colleagues tried to figure out how many pathways patients could go through at UC Irvine. He found 110, "but it's infinite numbers, really."

He argued that most hospitals need to "fragment themselves. You can only address overhead through simplification."