Strategic positioning. Part 2: Positioning challenges in an evolving health care marketplace

Why is strategic positioning so important to health care organizations struggling in a managed care environment and what are the sources of value? In Part 1 of this article, entitled "The Sources of Value under Managed Care," the authors presented four sources of value relative to the evolution of the market from fee-for-service to managed care. These value sources are: (1) assets, (2) price/performance, (3) distribution, and, ultimately, (4) capabilities and brand equity. In this article, the authors further elaborate on the sources of value as the market moves beyond the historical fee-for-service position to a managed care marketplace. Part 2 presents the marketing and financial challenges to organizational positioning and performance across the four stages of managed care.     

Evaluating risk: global fees and episodic care

In 1999, two articles in The Physician Executive -- "Part I: Global Theory and the Nature of Risk (July-August)." and "Part II: Towards a Choice-Based Model of Managed Care (October-November)" -- outlined the flaws of orthodox managed care theory and highlighted the unique advantages of moving to a genuinely market-based model, which included the concept of direct contracting for integrated episodes of care. This follow-up focuses on comparing an episode contracting system to a traditional capitated program and outlines the features that make this approach much more attractive to physicians, payers, and most importantly patients.     

Should Firms Go “Beyond Profits”? Milton Friedman versus Broad CSR1

When attempting to articulate the nature and scope of corporate social responsibility (CSR), a variety of opinions emerge. The primary CSR issue appears to be: Should firms go “beyond profits”? In order to address this normative question, this article will explore the theoretical underpinnings of CSR and its practical application. Part one of the paper begins by discussing common CSR definitions. Part two outlines the CSR debate in terms of the “narrow view” of CSR (as represented by Milton Friedman) versus the “broad view” (i.e., beyond profits). Part three applies both the narrow and broad approaches to CSR in analyzing two classic business and society cases: (1) the Ford Pinto; and (2) Merck's river blindness pill. The article concludes with a proposed synthesis of the CSR approaches discussed.     

Medicare's ESRD Program, Part 1: Dialysis.

The federal End State Renal Disease (ESRD) program was created by statute in 1972 as a general population entitlement to be administered by Medicare. The program extends all Medicare benefits to patients, regardless of age, who are diagnosed as having ESRD, as long as they are fully insured for old age and survivor insurance benefits (Social Security), are entitled to monthly insurance benefits under the Social Security Act, or are spouses or dependent children of individuals with the foregoing Social Security benefits. About 7 percent of all ESRD patients are excluded from this entitlement by these criteria. The two major therapies embraced by the ESRD program are renal dialysis and kidney transplantation. In this first part of a two-part article, dialysis is the focal point. Kidney transplants will be covered in the May-June issue of Physician Executive.     

The systems revolution

In this paper the author brings together a number of ideas which are presented more fully in his forthcoming book—Redesigning the Future (John Wiley and Sons, New York): This synthesis amounts to a digest of Part 1 of that book. The article is organized into 5 parts: The Systems Revolution; The Self-Control Problem; The Humanization Problem; The Environmentalization Problem and Science in the Systems Age.     

Part 2, Conflict management. How to shape positive relationships in medical practices and hospitals

Managing workplace conflict is one of the most important, stressful, and time-consuming tasks faced by today's physician leaders. In Part 1 of this article series, the authors describe how to assess an organization's interpersonal dynamics. True change comes from interventions that help an organization to become a positive interpersonal culture, one that fosters cooperation and collaboration. Part 2 offers seven steps to solving the disruptive physician problem: (1) provide protection to complainants; (2) listen, empathize, and avoid communication triangles; (3) confront offenders with data, authority, and compassion; (4) if needed, get outside help; (5) offer workplace training and experiences that foster positive relationships; (6) follow-up; and (7) practice what you preach. The self-assessment and intervention guidelines discussed in this series of articles can help physician executive move beyond struggling with episodes of conflict to shaping stress-resilient medical organizations.     

Attracting qualified physicians to underserved areas. Part 1: Why has the U.S. experienced such difficulty?

With health networks searching for additional market share and with a projected 30.2 million to be enrolled in Medicaid HMOs by 2000, more health executives will be weighing various strategies of how to attract qualified physicians to practice in poor inner-city and rural areas. Most frequently cited as solutions are: supplying more physicians, encouraging more medical school graduates to pursue primary care residencies, and modifying the number of international medical graduates entering U.S. residency programs. Part 1 of this article reviews the efficacy of these approaches, while the second part, which will appear in the January/February 1999 issue, explores a more pragmatic option: to simply improve the working conditions and just pay substantially more to physicians who practice in "less desirable" locations.     

Do these guys know why they're applauding?

Contained in Title IV, Section 6102, of the Omnibus Budget Reconciliation Act of 1989 are more than 21 pages of legislative language designed to require the Health Care Financing Administration (HCFA) to set all physicians' fees for services delivered under Part B of Medicare commencing January 1, 1992, and phased in over the following four years. In addition, balance billing dollar limits keyed to the regulated rates are set forth, as are "Volume Performance Rates of Increase," a reincarnation of a vehicle previously known as "Expenditure Targets."     

Health care futures, Part 1. The emergence of the new health care consumer. Panel discussion

In Part 1 of this second annual panel discussion, six experts examine the new health care consumer. The whole concept of the patient as consumer still makes people uneasy when it's applied to health care. Whether you prefer consumer, customer, purchaser, end-user, ultimate buyer, or beneficiary, one thing's for sure: Many of us are as different from the bygone patient as an HMO is from the general practitioner who made house calls. One of the reasons for many Americans' new interest, knowledge, attitudes, and expectations about health and health care is the Internet, the second topic in this discussion. In Part 2, physician executives from the three leading physician practice management companies (PPMCs) join Jeff Goldsmith, Barbara LeTourneau, and Uwe Reinhardt for a spirited exchange about this burgeoning new industry in the American health care sector. They will tackle questions such as: Are PPMCs delivering what they promise? What will separate successful PPMCs from the rest? Can PPMCs meet Wall Street's earnings expectations and also help physicians deliver better care? When PPMCs win, who loses? And, what roles will physician executives play in PPMCs?     

The new production theory for health care through clinical reengineering: a study of clinical guidelines--Part I

Drucker writes that the emerging theory of manufacturing includes four principles and practices: statistical quality control, manufacturing accounting, modular organization, and systems approach. SQC is a rigorous, scientific method of identifying variation in the quality and productivity of a given production process, with an emphasis on improvement. The new manufacturing economics intends to integrate the production strategy with the business strategy in order to account for the biggest portions of costs that the old methods did not assess: time and automation. Production operations that are both standardized and flexible will allow the organization to keep up with changes in design, technology, and the market. The return on innovation in this environment is predicated on a modular arrangement of flexible steps in the process. Finally, the systems approach sees the entire process as being integrated in converting goods or services into economic satisfaction. There is now a major restructuring of the U.S. health care industry, and the incorporation of these four theories into health care reform would appear to be essential. This two-part article will address two problems: Will Drucker's theories relate to health care (Part I)? Will the "new manufacturing" in health care (practice guidelines) demonstrate cost, quality, and access changes that reform demands (Part II)?     

Vertical integration in petrochemicals—2. Strategies and problems

In Part 1 of this series of three papers, the methods of measuring vertical integration and related concepts were discussed. Part 3 will describe the analysis of some 10 large chemical companies and the problems of developing and interpreting the data. In this Part 2, the conditions under which companies become vertically integrated are discussed. It is helpful to do this in two ways, looking first towards the suppliers, ‘upstream’ or backwards, and then towards the customers, ‘downstream’ or forwards. Some of the concepts have already been developed in the literature, others have arisen in debates with marketing colleagues over many years and it is not now possible to make detailed acknowledgments.     

But 'twas a famous victory

The Omnibus Budget Reconciliation Act of 1989 sets forth the basic parameters for physician payment reform. The program requires the Health Care Financing Administration to (1) set (regulate) all physicians' fees for services delivered under Part B of Medicare commencing January 1, 1992, with a four-year phase-in period, (2) limit the dollar amounts of balance billing by tying those amounts to the regulated rates, and (3) establish "Volume Performance Standard Rates of Increase" (previously known as "Expenditure Targets") as a mechanism for attempting to regulate the quantities of services delivered.     

Attracting qualified physicians to underserved areas. Part 2. Pay physicians more to practice in underserved areas.

With health networks searching for additional market share and with a projected 30.2 million to be enrolled in Medicaid HMOs by 2000, more health executives will be weighing various strategies of how to attract qualified physicians to practice in poor inner-city and rural areas. Most frequently cited as solutions are supplying more physicians, encouraging more medical school graduates to pursue primary care residencies, and modifying the number of international medical graduates entering U.S. residency programs. Part I of this article, which appeared in the November/December issue of The Physician Executive, reviewed the efficacy of these approaches. The second part explores a more pragmatic option: to simply improve the working conditions and pay substantially more to physicians who practice in "less desirable" locations. Although this idea is consistent with economic principles, drawbacks must be considered, such as: (1) the American taxpayers' reluctance to finance a more costly health care delivery system for the poor; (2) the inherent conceptual difficulties of a capitated Medicaid HMO serving as the linchpin for organizing, financing, and delivering care for the underserved; and, (3) many providers being expected to react in a fairly litigious manner to such an approach.     

Book Reviews

Books reviewed:
Office International Des Epizooties (World Organization for Animal Health) World Animal Health in 1998, Part 1: Reports on the Animal Health Status and Disease Control Methods and Tables on Incidence of List A Diseases and Part 2: Tables on the Animal Health Status and Disease Control Methods
Peter Sedlmeier. Lawrence Erlbaum Associates, Mahwah Improving Statistical Reasoning: Theoretical Models and Practical Implications
Andrew Ford. Island Press Modeling the Environment. An Introduction to System Dynamics Modeling of Environmental Systems
Jacob I. Bregman. Lewis Publishers, Boca Raton Environmental Impact Statements, Second Edition     

Rational and non-rational planning

People's views on planning differ widely, as this article demonstrates. Within the broad field of planning, strategic policy-making is becoming ever more important. The authors aim to discuss a number of well known concepts, methods and theoretical approaches as they appear in the business and management literature of planning. In Part 1 they indicate the variety of planning attitudes and discuss why planning is necessary and what it entails. In Part 2, with the aid of conceptual frameworks, they discuss various planning approaches and new developments and end with an examination of rational planning and strategic policy making.     

Does the internet change how we die and mourn? Overview and analysis

The article outlines the issues that the internet presents to death studies. Part 1 describes a range of online practices that may affect dying, the funeral, grief and memorialization, inheritance and archaeology; it also summarizes the kinds of research that have been done in these fields. Part 2 argues that these new online practices have implications for, and may be illuminated by, key concepts in death studies: the sequestration (or separation from everyday life) of death and dying, disenfranchisement of grief, private grief, social death, illness and grief narratives, continuing bonds with the dead, and the presence of the dead in society. In particular, social network sites can bring dying and grieving out of both the private and public realms and into the everyday life of social networks beyond the immediate family, and provide an audience for once private communications with the dead.     

Health care futures. Part 2: The future of physician executives? Panel discussion

What is the future of health care in America? This is Part 2 of The Physician Executive panel discussion that explores the future of health care in America. To narrow this ambitious focus somewhat, the future is defined as five to 10 years hence. In Part 1, which was published in the May/June issue, Russell C. Coile, Jr., Barbara LeTourneau, MD, MBA, FACPE, James Reinertsen, MD, Uwe Reinhardt, PhD, Marshall Ruffin, MD, MPH, MBA, FACPE, and David Vogel, MS, shared their opinions about what the future holds in managed care, information technology, and biotechnology. In Part 2, Susan Cejka, Barbara LeTourneau, MD, MBA, FACPE, John Henry Pfifferling, PhD, Uwe Reinhardt, PhD, and James Todd, MD, share their views on the future of medical education and physician executives.     

Information technology enters the doctor's office: Part I--Six design and implementation lessons

Because of a trend toward increased cost escalation outside of the hospital, in the ambulatory care setting, Metropolitan Life Insurance Company initiated an Ambulatory Utilization Review ("AUR") program in 1986. This is an overview of the lessons learned since that time. Some of what was learned was simply--or not so simply--"how to," the subject of this first article in a two-part series. Once this deceptively difficult technology was understood, there were two additional categories of lessons to learn: the extent of expected program results and some unexpected results. This second set of lessons is reviewed in Part II of the article.     

An Improved Randomized Approximation Algorithm for Max TSP

We present an O(n³)-time randomized approximation algorithm for the maximum traveling salesman problem whose expected approximation ratio is asymptotically , where n is the number of vertices in the input (undirected) graph. This improves the previous best.Part of work done while visiting City University of Hong Kong.     

A Probabilistic Arsenic Exposure Assessment for Children Who Contact Chromated Copper Arsenate (CCA)-Treated Playsets and Decks, Part 2: Sensitivity and Uncertainty Analyses

A probabilistic model (SHEDS-Wood) was developed to examine children's exposure and dose to chromated copper arsenate (CCA)-treated wood, as described in Part 1 of this two-part article. This Part 2 article discusses sensitivity and uncertainty analyses conducted to assess the key model inputs and areas of needed research for children's exposure to CCA-treated playsets and decks. The following types of analyses were conducted: (1) sensitivity analyses using a percentile scaling approach and multiple stepwise regression; and (2) uncertainty analyses using the bootstrap and two-stage Monte Carlo techniques. The five most important variables, based on both sensitivity and uncertainty analyses, were: wood surface residue-to-skin transfer efficiency; wood surface residue levels; fraction of hand surface area mouthed per mouthing event; average fraction of nonresidential outdoor time a child plays on/around CCA-treated public playsets; and frequency of hand washing. In general, there was a factor of 8 for the 5th and 95th percentiles and a factor of 4 for the 50th percentile in the uncertainty of predicted population dose estimates due to parameter uncertainty. Data were available for most of the key model inputs identified with sensitivity and uncertainty analyses; however, there were few or no data for some key inputs. To evaluate and improve the accuracy of model results, future measurement studies should obtain longitudinal time-activity diary information on children, spatial and temporal measurements of residue and soil concentrations on or near CCA-treated playsets and decks, and key exposure factors. Future studies should also address other sources of uncertainty in addition to parameter uncertainty, such as scenario and model uncertainty.