Is There a Blue Ocean Strategy for the Health-care Industry?

It is the object of calls for reform on the presidential campaign trail. Its medical errors come under scrutiny on CBS News’s “60 Minutes.” It undergoes the Michael Moore treatment in such biased films as “Sicko.” Yes, health care in America looks like it needs a fresh prescription.

“Like it or not, our health-care system has become a price-driven commodity business,” says Florida-based corporate strategist Dr. Sarah Layton. “Blue Ocean Strategy – an approach which creates brand-new market space where no competition yet exists based on creating value — is not prevalent in this industry. Nevertheless, it is possible in any industry — even in healthcare with its regulations and constraints.”

So, how can Blue Ocean Strategy come to health care?

“It just takes thinking along the right pathways to determine how to break out of the old competitive Red Ocean and into a new Blue Ocean with no competition,” Layton contends. “I believe that the health care sector can be ripe for those organizations that have the creativity and wherewithal to leave their competitors behind and launch in a new direction.”

The Blue Ocean Strategy concept originated from the research documented in the “Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant.” The cornerstone of Blue Ocean Strategy is value innovation, according to Layton, which creates unprecedented value for the customer while simultaneously creating high profits for the company.

The business strategist finds that there is hope for the health care business. Here are examples of organizations which Layton sees as demonstrating a Blue Ocean Strategy:

“NovoNordisk, the diabetics care company that reconstructed the traditional market boundary which had a focus on the physician (the influencer) and started focusing on the diabetic (the user). The result is that NovoNordisk has become a diabetic care company rather than just a provider of blood sugar testing equipment and supplies. When someone is diagnosed with diabetes, that patient will go to the resource that can provide the best information and care, NovoNordisk.”

“One trend on the horizon is the prevalence of women as chief health officers,” Layton says. “Women are making the majority of healthcare decisions today. So, having a CHO who can speak effectively with women can potentially reach many more of them.”

“There is this particular mental health care company worth noting,” she says. “Life Spring: after going through the Blue Ocean Strategy process, it realized that out-of-pocket cost, community reputation for quality and expertise, appointment availability, good locations and facilities and friendly and caring staff became the short list of values they most wanted in a mental health facility.”

“A fresh prescription requires new thinking,” Layton says. “Blue Ocean can give health care the fresh water it needs today.”

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Posted by Dr. Sarah Layton in Blue Ocean Strategy, Governance, Strategic Planning on March 18, 2008.

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