The Battle for Healthcare Information
A War Game
Boston
®
St. Mary’s Hall, Rm 110
Georgetown University
July 16, 2009
London
War games are a process to examine the near term
A war game is a
structured strategic
exercise to help you
anticipate competitive
moves before your
rivals make them.
1-3 year horizon…you know the players but may not
understand their strategies!
|
© April 3, 2009
| The Battle for Healthcare Information
2
Why this event…Why it works?
Why this event?
War games are typically private,
closed-door events run by Fuld &
Company for clients that need to
make critical, often high-stakes
decisions. This public war game
allows us to show you our
approach and demonstrate how
and why a war game is a very
effective vehicle for executives
who have to make critical
decisions
|
© April 3, 2009
Why it works?
It “stress tests” strategic reality
| The Battle for Healthcare Information
3
A “Stress Test”?
There are over 100 billion reasons why!
Lots of money on the table for the right solution: A recent Rand Corporation
study found that an effective electronic medical records system could
eliminate $162 billion in unnecessary expenses from America’s healthcare
system.
 Healthcare expense hyper
growth now pervasive
 The quality of care being
delivered today is increasingly
recognized as suboptimal
 In order for technology to
succeed here, we need a
learning healthcare system
–
–
Pay for What
Works
A system in which evidence emerges
as a natural by-product of the care
delivered
Delivering the right care, to the right
person, at the right time, for the right
price
|
© April 3, 2009
| The Battle for Healthcare Information
4
A Brave New World Of Future Partners
Ultimately, it’s about Co-opetition, not Zero Sum!
Payers
Pharma and Biotech
Diagnostic/Device
Patient
Providers
Technology Providers
Government Agencies
|
© April 3, 2009
| The Battle for Healthcare Information
5
We Have Come A Long Way Since 1949…
“As a time saver, a pneumatic tube
system will be included” …for the
purpose of distributing histories of patients
and other information that might be
needed, as well as a means of
communication between departments in
the teaching institutions.
– Dr. Ernest William Bertner, January 30, 1949,
first President of Texas Medical Center
|
© April 3, 2009
“Our recovery plan will invest in
electronic health records and new
technology that will reduce errors,
bring down costs, ensure privacy
and save lives…So let there be no
doubt: health care reform cannot
wait, it must not wait and it will not
wait another year."
- Prepared text of President Obama’s
address to Congress, February 24, 2009
| The Battle for Healthcare Information
6
Four Nationally Ranked Business Schools Competed
The Facilitator
The Schools
The Judges
“Students from Harvard Business
School and MIT's Sloan School of
Management were recently invited
to play a "war game.” The
organizer, Fuld & Company….In
the real world, the stakes are far
higher, but the basic analysis may
prove correct…”
|
© April 3, 2009
| The Battle for Healthcare Information
7
Industry Analysis in your Briefing Book
 Understand the overall industry picture
 Let the industry picture lead you to understand the competitors’ likely actions
 Use your understanding to help your company make better decisions
INDUSTRY
INDUSTRY
FORCES
TARGET’S
ACTIONS
|
© April 3, 2009
| The Battle for Healthcare Information
8
Gaining An Industry Overview: The Five Forces
Threat of
New
Entrants
The Industry
Bargaining
Power of
Suppliers
Bargaining
Power of
Customers
Jockeying for position
among current competition
Substitute
products
or services
|
© April 3, 2009
| The Battle for Healthcare Information
9
Porter’s Five Forces Model
 What makes one industry more profitable than another?
– Why is the market for drug therapies more profitable than the market for truck
transport services?
– Why is a technology based product like the desktop PC such low profit
business?
 Within an industry, why are some companies are more
profitable than others?
– Amgen had a higher rate of return than Wyeth
– Only Dell made money selling PCs until 2006; since then Dell hasn’t but HP
does
 And what is the “healthcare information industry??”
– Who are the competitors, suppliers, customers, potential new entrants, and
substitutes?
|
© April 3, 2009
| The Battle for Healthcare Information
10
Differing strategies separate participants in the
same industry
Differentiate
Be Low Cost
Focus (e.g., geographically
or on a market segment)
|
© April 3, 2009
| The Battle for Healthcare Information
11
Porter Four Corners Analysis – First Look
Drivers
At all levels of
management and in
multiple dimensions
Current Strategy
How the business is
currently competing
Future Strategy
• What will the company’s future strategy
be?
• Product
• Place
• Price
• Position
Assumptions
Held about itself and
about the industry
|
© April 3, 2009
Capabilities
Strengths and
weaknesses; core
competencies
| The Battle for Healthcare Information
12
Assumptions & Blind Spots
 All companies have assumptions, some explicit, some hidden
from view.
–
About the competitive arena -- competitors, customers, suppliers, regulators,
technology
 Corporate myths…
–
About the company’s own strengths, the validity of its practices, its traditions
 Corporate taboos…
–
Regarding assumptions that are supported at the top
 They built strategies partly on the basis of their assumptions
|
© April 3, 2009
| The Battle for Healthcare Information
13
An example...
In the ‘60s, Hoffman-LaRoche built itself
on the success of Valium. The company
had 3 explicit strategic assumptions:
• A drug that isn’t going to be a blockbuster isn’t worth our
attention
• All new products must come from our own labs
• There’s nothing to be learning by hiring executives from other
drug companies
What conditions made these assumptions right for the time, and
why did those conditions change? How did Roche respond?
|
© April 3, 2009
| The Battle for Healthcare Information
14
Porter Four Corners Analysis
Drivers
At all levels of
management and in
multiple dimensions
Current Strategy
How the business is
currently competing
Future Strategy
• What will the company’s future strategy
be?
• Product
• Place
• Price
• Position
Assumptions
Held about itself and
about the industry
|
© April 3, 2009
Capabilities
Strengths and
weaknesses; core
competencies
| The Battle for Healthcare Information
15
War Game Format
Prior to Session
Interviews
w/ client &
external
isources
Briefing Book
for particpants
Three to five weeks
Two Day Session (Typical)
Intro by
sponsor &
Fuld
facilitator
Team
breakouts
(Output is
usually the
team's
strategy
Team
breakouts
(Usually 4
Corners
Analysis)
Team
presentations
& critiques
Scenario
presented
by the
facilitator
Scenario
presented
by the
facilitator
Team
assignments
Team
Breakout
Sessions
(Response
to the
scenario)
Team
presentations
& critiques
Team
Breakout
Sessions
(Response
to the
scenario)
Team
presentations
& critiques
Summary,
decisions &
follow-up
assignments
Team
presentations
& critiques
Post-Session Action
Summary &
recommendations from Fuld
|
© April 3, 2009
| The Battle for Healthcare Information
Follow-up
review with
client
16
Rules for Round 1
 Each team will work on its own. You may email questions to myself or Dr.
Alemi for clarification.
 The first task for each team is to build a strategy for the company it
represents. Start with the company’s drivers, assumptions, current strategy
and capabilities. The output should be a Four Corners analysis of the firm,
concluding with a 2010-2011 strategy in the market for the healthcare
information.
 Once you complete the Four Corners analysis, you should be able to
answer the following questions:
‒ What will your company’s future strategy be?
‒ What makes you think you can implement it?
‒ What do you think the responses of the other players will be?
You will be presenting your analysis to the other teams and the judging panel
via a YouTube video, and each of them will have an opportunity to question
your analysis, so be prepared to defend it.
|
© April 3, 2009
| The Battle for Healthcare Information
17
Judging Criteria
You will be judged by:
 Insight
– How well do you understand the dynamics of the business and the company you
represent?
 Accuracy
– How well does your proposed future strategy reflect the realities of the company’s
drivers, current strategy, resources and assumptions?
 Creativity
– What intellectual sparks have you generated in creating your company’s future
strategy, and in defending your conclusions?
 Foresight
– How well have you done at thoughtfully looking into the future of the on-line
search business?
|
© April 3, 2009
| The Battle for Healthcare Information
18
Rules for Round 2: Disruptive Scenario
The facilitators will announce a scenario – “Gore Wins Physics Nobel for
Inventing Internet, Sues Google for Royalties” -- and we will provide some
realistic details.
Your team should focus on what its own strategy will be in response to the
scenario we present.
Teams are free to negotiate a deal with each other within the constraints of
anti-trust rules. You can’t agree to divide up markets or fix prices, but you
could agree to acquire or be acquired, or to partner or license your products.
Remember that the time is limited, so you can’t spend too much time
negotiating, even if you think there’s something to negotiate about.
Your team’s output should be a modified market strategy responsive to the
change reflected in the scenario.
Consider the likely actions of the other players and be prepared to explain what
you think they will do in response to your team’s strategy. Be prepared to
defend the responses you have crafted.
|
© April 3, 2009
| The Battle for Healthcare Information
19
|
© April 3, 2009
| The Battle for Healthcare Information
20
Some of the Action in April…
 Microsoft tries to make a
deal with Kaiser.
 This happened for real a
month later…
 With the same result.
|
© April 3, 2009
| The Battle for Healthcare Information
21
And The Winner Is… ?
At the end of the game, we
will determine the winner
based on the best all around
strategy:
• Kim Slocum – former corporate strategist
at AstraZeneca and incoming HIMSS
officer
 Brett Davis – IBM Senior Executive in
Life Sciences
 Wayne Rosenkrans – former corporate
strategist at AstraZeneca, Chairman of the
Personalized Medicine Coalition,
Distinguished Fellow at MIT
|
© April 3, 2009
?
| The Battle for Healthcare Information
22
And The Winner Is… ?
Based on these criteria:
Insight
Accuracy
Creativity
Foresight
?
Good luck!
|
© April 3, 2009
| The Battle for Healthcare Information
23