The Company has a competitive advantage when it has a better position than its rivals to insure clients and defend itself against competitive forces. There are many sources of competitive advantages: product development with the highest quality, providing superior service to customers, achieving lower costs in rivals, having a better geographical location, designing a product that has better performance than the brands of the competition.
Competitive strategy consists of what a company is doing to try to disarm rival companies and gain a competitive advantage. A company's strategy can be basically offensive or defensive, changing from one position to another depending on market conditions. Companies around the world have tried to follow every conceivable approach to beat their rivals and gain an edge in the market.
The three generic types of competitive strategy are:
- Strive to be the industry's leading producer of costs (The effort to be a low-cost producer) Seek to differentiate the product on offer from rivals (Differentiation Strategy) Focus on a more limited portion of the market rather than a complete market (Approach and specialization strategies).
To survive in the new market-oriented health system, providers and buyers will have to: measure, manage and understand results; identify and adapt best practices through the use of administrative and clinical benchmarking; and - implement and use Total Quality Management (TQM).
What to watch out for: Do not wait. Too many people are waiting to see what happens in Washington, DC, paralyzed to act. That would be a fatal mistake. In recommending speed, I am violating the advice of one of my favorite philosophers, Mae West, who said, "Anything worth doing is worth doing slowly." In this case, it pays to do this and pays to do it quickly. Health system providers can learn from the mistakes and lessons of the North American industry, which has often acted too slowly and waited too long.
Group Participation
As the measurement and management of results become closer to the medical process, they become even more critical to the joint participation of buyers and suppliers. There is a danger: Unless performance measurement is really understood, buyers (and hospital administrators) will use it as a whip or weapon of attack, and not as a tool for improvement. This could pit buyers against vendors, and the data would be neglected or ignored.
Information about results can also help improve the guidelines. 50 or more hospital asthma studies are currently underway, led by the American Group Practice Association (AGPA), to assess the impact of clinical practice guidelines on outcomes. Another study aims to measure functional outcomes in patients who underwent total hip replacement. The broader goal is "to integrate a quality management approach with routine medical practice." Most of the work to date is done in hospitals, but over time the results should include outpatients and longitudinal medical care.
Although not all issues related to the contracting of a health system based on the measurement of results were resolved, it is clear that this will occur. Most employers would rather have some type of information than none at all. In fact, it is already happening.
The Minnesota Blue Cross was the first in the United States to relate customer reimbursement directly to patient outcomes. And Hershey Foods used the hospital results published by the Pennsylvania Health Cost Containment Council to select a network of 1 0 hospitals. Some companies are using outcome data to bypass their managed medical organizations and make direct agreements with providers.
In addition, coalitions formed in Cleveland and Orlando collect and use outcome data.
In some states - Pennsylvania, Colorado and Iowa, for example - measurement of results is a requirement. Pennsylvania, through its Health Care Cost Containment Council, requires hospitals with 1 or more beds to collect and submit information to post on results and prices adjusted based on patient severity. MedisGroups is used as the gravity-adjusted measurement system.
Some hospitals had lower prices and lower than expected mortality, that is, better quality at a lower cost.
The message should be obvious to other hospitals:
- Determine your own processes for efficiency and effectiveness. Learn how other hospitals achieved those results; and adapt those processes and improve.
That is benchmarking.
- Take best practices as a reference
Expressed in a simple way, benchmarking is:
Continuous comparison of own practices and results with the best in different places:
In the company; Outside the sector; and national or foreign.
- Learn how to do it. Take measures that are at the height of the best or exceed them.
There are two broad types of benchmarking in health systems:
- Administrative benchmarking Clinical benchmarking.
Most of the benchmarking efforts made to date in health systems are "administrative", as they aim to achieve best practices in billing, admissions, scheduling, medical orders… Too much is aimed at seeking "best practices" only in other medical organizations, when best practices should also be sought in other industries, such as manufacturing, hotels, banks, utilities.
The Intemational Benchmarking Clearinghouse of the American Productivity & Quality Center helped 30 hospitals establish a benchmark for the admission process, comparing their processes not only with other hospitals, but also with Marriott, Avis and American Airlines, all companies that have similar processes of "admission". By going out of the box and observing similar processes, hospitals were able to come up with innovative ideas.
Clinical benchmarking, although not yet widely used, will grow for the same reasons as administrative benchmarking: the need to learn from the best practices of others.
Benchmarking helped providers identify others who use similar processes and who are achieving superior results. This information can be obtained from the literature, the word or, even better, from databases that have extensive information on results.
There are two stages in clinical benchmarking:
- Identify the best performing hospitals for a given diagnosis and treatment Study and understand how those responsible for that best performance achieved superior results.
Outcome information is often concentrated at the wrong end of the distribution: the worst cases. The tendency is to punish the worst performers, rather than using the information to improve. Clinical benchmarking focuses on the opposite end of the distribution: the best.
Using clinical benchmarking in this way allows for several desired improvements:
- You learn from the best, which is very attractive to doctors; or higher goals are set, knowing that others will achieve those goals; and - the reference standard becomes a source of motivation for professionals to participate in improving the clinical process… Implement a TQM program
TQM and Results Management are mutually supportive disciplines, says Paul Ellwood of Jackson Hole Group. Both disciplines seek improvement. But it doesn't always happen that way. A research project conducted in 1991, published in the Health Care Management Review in the same year, investigated whether outcome measurement was actually used in 31 hospitals that had reported severity-adjusted outcome measurements. The results were:
- 45% adopted the status quo and used outcome measurement to isolate themselves from change; 35% began to exercise administrative control of medical quality by monitoring physicians with outcome information, and 20% aimed to manage quality and price through informed discussion and open to complex medical issues by professionals and administrators. Why did only 20% use outcome measurement to achieve true improvement? Because the results were not complemented by a TQM philosophy or environment, that is, there was no internal support mechanism or people who believed in it, who were involved or who accepted the measurement of results.
Some mistakenly believe that doctors will not support TQM and benchmarking. Wrong. When informed and involved, and the goal is not to punish but to improve, clinicians are keen supporters of applying TQM and benchmarking. This occurs in places like Intermountain, Henry Ford Health Systems and the Mayo Clinic. Resistance emerged when doctors are not involved, are not informed, and are not partners in the process. Do you blame them
Theoretically, TQM should precede results and benchmarking, so that when the data is collected, analyzed and used, it will have the support and acceptance of everyone - doctors, nurses, managers, technicians, all employees, even patients -. But if this is possible, don't wait. Go ahead with results measurement and management, but use them as a model of a total approach that drives the creation of a true TQM program, with physician involvement.
TQM, complemented by clinical and administrative benchmarking, has incredible potential. According to MediQual in Westborough, Massachusetts, if all hospitals had to move to higher reference levels, it could generate annual savings of US $ 100 billion nationwide. Patients would receive better care. Suppliers would offer better quality, achieve lower costs, and earn more money. Magic? No. The market.
An advice
Restoring the health system to a market system, driven by price and quality, may be our only attempt for a long time. If this does not work, we will probably face a nationalized health system where there is only one payer, a centralized government system with global budgets. It will not work. In the REDS film, Louise Bryant spitefully denounces the failings of socialism in the Russian revolution of 1917. “Jack, nothing works! It just doesn't work!
Health system reform "will not work" either if control is maintained. Why am I so strict? In my 18 months as administrator of a national price control system, my reading of 40 centuries of failed price controls, my 17 years of managing a quality and productivity center and as one of the creators of the Malcolm Baldrige National Quality Award and Intemational Benchmarking Clearinghouse, I am absolutely convinced that government controls over the health system "are not going to work!" The market does.
- Low Cost Leadership A broad cross-section of the market Costs lower than competitors A good basic product with few superfluous elements Cost reduction without sacrificing acceptable quality Transform product characteristics for low cost Economical prices / good value
