Growing market share and value together

Competing takes effort. When hospitals compete for market share, it also takes an investment that may or may not produce profits in the long run. In the past, that business model has served the victors well. It isn’t the only option, though.

It has been almost two decades since Harvard University business guru Clayton Christensen published the book, “The Innovator's Dilemma.” It became the bible of entrepreneurs looking for growth opportunities, especially in emerging markets. It also may have been the springboard for the term “disruptive technologies,” which is all but a cliché now.

The book was based on research that showed how established businesses, following best practices, are blindsided by start-ups that identify and try to serve untapped markets. These are not necessarily big markets, but markets that provide a foothold for launching a product that ends up taking market share from established business.

The Blue Ocean strategy described at the MedAxiom Cardiovascular Service Line Symposium last week offers a similar strategy, with a twist. It promotes finding uncontested markets and creating and harnessing new demand. In the Innovator’s world, big business—the shark—notices at some point and a bloodbath ensues, often with the more agile small fry winning the fight.

Blue Ocean makes competing irrelevant. The sharks recognize they don’t have a barracuda’s chance in you-know-where of catching up.     

With a Blue Ocean mindset, hospitals can devote resources into building a program rather than in head-to-head marketing battles with their neighbors. Aurora Saint Luke’s Medical Center Vice President Bradley B. Kruger, MA ED, MBA, discussed how his Milwaukee center expanded its liver transplant program by first building a novel initiative around undiagnosed hepatitis C.

They carried lessons learned from that success to their transcatheter aortic valve replacement program. With a you-can’t-catch-us lead, they decided they should re-evaluate the practice of “stealing patients” from referring hospitals and instead work with them to establish a continuum of care, according to Kruger.

Competition can drive up costs and lower value, which is at odds with the goals in today’s value-based healthcare reform. The lack of competition, which could happen in the Blue Ocean world, can do the same. If those who apply the Blue Ocean strategy to healthcare can control their inner shark, then this strategy might lead to a win-win not just for hospitals, but for payers and patients, too.

Candace Stuart

Editor, Cardiovascular Business