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There is significant opportunity for health service providers to gain competitive advantage through the innovative use of strategic information systems. This analysis presents some key strategic information systems issues that will enable managers to identify opportunities within their organizations.
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Part 1 of this series organizes and discusses the sources of value against a background of an evolving managed care market. Part 2 will present, in more detail, the marketing and financial challenges to organizational positioning and performance across the four stages of managed care. What are the basic principles or tenets of value and how do they apply to the health care industry? Why is strategic positioning so important to health care organizations struggling in a managed care environment and what are the sources of value? Service motivated employees and the systems that educate them represent a stronger competitive advantage than having assets and technology that are available to anyone. As the health care marketplace evolves, organizations must develop a strategic position that will provide such value and for which the customer will be willing to pay.
Market competition and the rise of managed care are transforming the healthcare system from a physician-dominated cottage industry into a manager-dominated corporate enterprise. The managed care revolution is also undermining the safe-guards offered by medical ethics and raising serious public concerns. These trends highlight the growing importance of ethical standards for managers. The most comprehensive ethical guidance for health service managers is contained in the American College of Healthcare Executives' (ACHE) Code of Ethics. An analysis of the ACHE Code suggests that it does not adequately address several ethical concerns associated with managed care. The ACHE may wish to develop a supplemental statement regarding ethical issues in managed care. A supplemental statement that provides more specific guidance in the areas of financial incentives to reduce utilization, social mission, consumer/patient information, and the health service manager's responsibility to patients could be extremely valuable in today's complex and rapidly changing environment. More specific ethical guidelines would not ensure individual or organizational compliance. However, they would provide professional standards that could guide decision making and help managers evaluate performance in managed care settings.
Binding and competition of five Bacillus thuringiensis toxins--Cry1Ab, Cry1Ac, Cry1Ba, Cry1Ca, and Cry1Ea--for midgut binding sites from three pests, Spodoptera frugiperda, Diatraea saccharalis, and Diatraea grandiosella, were investigated as part of a strategy to develop tropical transgenic maize resistant to several stemborers. On S. frugiperda, Cry1Ab and Cry1Ac compete for the same binding site; Cry1Ba and Cry1Ca compete for a second binding site. Cry1Ea recognizes a third specific binding site in S. frugiperda and does not compete with any of the other toxins. On D. grandiosella and D. saccharalis, Cry1Ac competes with Cry1Ab and not with Cry1Ba and Cry1Ca. Cry1Ba and Cry1Ca recognize each a specific binding site and do not compete with any of the other four toxins. Cry1Ea does not recognize any binding site on Diatraea species. Combinations of toxins are proposed to develop transgenic maize resistant to the three stemborers while allowing resistance management.
This study examines the relationships among corporate board involvement, total quality management (TQM) adoption, perceived market competition, and the perceived effect of quality improvement (QI) activities for a sample of nursing homes in Pennsylvania. The findings of this study have several implications for healthcare managers interested in maximizing the effectiveness of QI efforts. Board involvement in quality improvement was an important predictor of QI outcomes in the areas of finance, resident care, and human resources. However, TQM adoption had a positive effect on human resources outcomes only. These findings suggest that board involvement in any organized form of QI may be more important than the adoption of a formal TQM program in the nursing home industry. TQM's emphasis on employee empowerment may account for its positive influence on human resources. Perceived competition was associated with better financial outcomes. Low-cost leadership can be a key to survival in more competitive markets, requiring a focus on efficiency and productivity issues in QI efforts. By focusing on process improvement, the facilities may achieve cost reductions that can result in an improved financial position. Facilities perceived to be in more competitive environments were also more likely to adopt TQM. This is consistent with the assertion by resource-dependence theorists that organizations facing competition for resources must be responsive to the needs of resource-providing constituencies.
As the healthcare marketplace, characterized by declining revenues and heavy price competition, continues to evolve toward managed care, teaching hospitals are being forced to act more like traditional industrial organizations. Profit-oriented behavior, including emphases on market strategies and competitive advantage, is now a necessity if these hospitals are going to survive the transition to managed care. To help teaching hospitals evaluate strategic options that maximize financial effectiveness, this study examined the financial and operating data for 100 major U.S. teaching hospitals to determine relationships among competitive strategy, market environment, and financial return on invested capital. Results should help major hospitals formulate more effective strategies to combat environmental turbulence.
The backlash against managed care has pressured health plans to reexamine their approaches to controlling utilization and managing their members' health care needs, but how much has really changed? Interviews with health plans and others in twelve nationally representative markets suggest that the changes are significant. New and refined disease management programs are improving the care experience of participants with certain prevalent chronic illnesses, while utilization management changes are reducing the administrative burden for providers. Still, disease management programs will need to greatly expand in scope and scale if plans are to succeed in addressing the complex health care needs of aging populations and those with chronic diseases.
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For hospitals to survive the challenges of their turbulent environment, they must build stronger links between their planning and budgeting processes. Hospitals have traditionally experienced a gap between their long-range plans and short-range budgets. This article examines the scope, nature, and causes of this gap; clarifies the need to bridge this gap; and then discusses three major initiatives (missing links) to bridge the gap. Implications of these missing links for the hospital's board, physicians, managers, and systems are also described.
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In this article the results of an empirical investigation of the marketing function in U.S. hospitals are reported. The relationship between hospital marketing orientation and hospital performance is examined. Results of the study indicate that substantial evidence exists to conclude that marketing is effective in the health care industry. Marketing failures in hospitals seem to be related to inappropriate marketing organization and inadequate top management support.
The management of chronic gastroesophageal reflux disease (GERD) has both been simplified and immensely improved by the development of modern medical therapies. These are built entirely on the concept of profound acid inhibition, which is very successful in a substantial proportion of GERD patients. Despite the efficacy of proton pump inhibitors (PPIs) some failures are unavoidable, and some patients experience incomplete control of major GERD symptoms on ordinary dosing of PPIs. Although the safety profile of PPIs is very reassuring, some people express some concern about the safety of drug treatment extending beyond 10 years especially when alternative therapeutic strategies are available. Some patients complain of alleged respiratory complications to severe reflux, and in those situations as well as in cases with e.g. Barrett's esophagus, a complete control of reflux also incorporating the duodenal components in the refluxate may be warranted. In all those situations antireflux surgery can be considered indicated for the treatment of chronic GERD and thus be looked upon as complementary to medical therapy. Furthermore, some patients who have their GERD symptoms under control on PPIs still want to have an operation to avoid dependency on drugs. Hence in none of these clinical situations does antireflux surgery play a competitive role in relation to medical therapy. However, in the very few randomized clinical trials in which a head-to-head comparison has been completed between medical and surgical therapy, the latter has been found to be somewhat more effective in terms of reflux control. The other side of the coin is that antireflux surgery has some side effects that signify the importance of this surgery being performed in specialized centers.
In the early 1990s, virtually all HMOs reported healthy profits, especially in markets with low managed care penetration. However, a recent survey has revealed that HMO operating margins experienced sharp declines in 1995. Some reasons for these declines include: more competition as the healthcare marketplace has become more saturated with HMOs; aggressive price negotiations by employers; and rising HMO medical and administrative expenses. The study also revealed that all types of HMOs experienced operating margin declines, demonstrating that organizational structure was an unlikely contributing factor.
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Hospital executives, steeped in hospital business traditions, sometimes fall victim to those traditions when planning their managed care strategies. They may fail to sufficiently evaluate their hospitals' market position or set appropriate priorities for their various business strategies. They may not recruit individuals with managed care expertise, develop effective marketing plans, or construct realistic physician networks. Some hospital executives may be ill-equipped to deal with cultural clashes and reluctant to share control of their managed care organizations with physicians. Or, they may not always understand the true nature of the arrangement they have entered into, the information and technology needs of the arrangement, and their own strategic advantages. Today's hospital executives must plan their managed care strategies carefully and execute them intelligently to ensure success.