The Sources of Value Under Managed Care (Part 1: Strategic Positioning‪)‬

HEALTH CARE TODAY IS INCREASINGLY BECOMING A commodity world. That is, health care services are reaching an equality of quality. High levels of clinical skill and sophisticated technology can now be found in the community hospital, where it used to be the domain of a few major tertiary providers. Competing in a commodity world requires that health care executives think of value, not cost-cutting. The difference is huge, of course. Value considerations encompass a variety of strategies and options with respect to positioning the organization in today's competitive marketplace. Such thinking requires an overview of both the market and the organization's capabilities. Our focus here is on value positioning, not planning, so this is not a paper on how to plan, what goes into strategic planning, or what strategic planners ought to do. Positioning an organization to compete effectively is a matter of appreciating what's important to an organization's success, when there are others in the market providing services competitive with our own. It is a topic of particular importance to health care today since this industry is in the midst of two strategic revolutions: one internal and one external. The internal revolution is the accelerating shift of managerial responsibility from traditional administrators to physicians, and the external shift is the change from earlier to later stages of what is being called managed care. Its simple and basic. Since the external marketplace (what we need to do) and our internal organization (how we choose to do it) need to be linked: physicians need to focus on the sources of value to themselves and their organizations in order to see the managed care environment as a field of opportunities instead of a field of threats.