Strategic Analysis for Healthcare Chapter 5 Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

Strategic Industry Map Before you can begin to analyze the strengths of your organization and develop corresponding strategy, you need to understand the industry in which you operate. To begin, many strategists will use a strategic industry map. The industry map allows you to view your industry by size and category. Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

Strategic Industry Map The industry map attempts to capture a snapshot of an entire industry in a way that allows for one quick glance to provide a high level of information. First, a matrix is created. The matrix will have two axes with two variables. Typically, one axis will have some combination of price/quality/image, and the other axis will have some measure of product mix. The analyst chooses any labels felt to be appropriate. Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

Beginning of a Strategic Industry Map High Price / Quality / Image Medium Low Private Practice Healthcare Systems Product Mix Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

Strategic Industry Map Each industry segment is represented by a circle on the matrix, and each circle is placed at the appropriate intersection of the two axes. The size of each circle represents the size of the industry segment relative to the other segments. The example industry map displays the different size, quality, image, and product attributes of major players in healthcare. Note that the circles represent industry segments, not specific organizations. Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

Strategic Industry Map of the Healthcare Industry High Concierge service Teaching hospitals (tertiary care facilities) Specialty surgical providers Healthcare systems Local acute care hospitals Price / Quality / Image Free-standing surgery centers Medium Chain providers (Wal Mart, etc.)- Urgent care providers Low Specialty Healthcare Broad-Category Healthcare Product Mix Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

Strategic Industry Map Notice the area in the map that represents the intersection of low price and specialty care. Is there a business opportunity there for an entrepreneurial provider? At one time there was. When that corner of the map was unfilled, stores such as Wal-Mart, CVS, and Walgreens saw a demand for primary care and developed local walk-in clinics at many of their locations. Time will tell how such efforts are received, but initial signs suggest they are successful. Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

Blue Ocean Strategy Kim and Maugborgne (2005) identified wide open gaps in the industry map as “blue oceans”—uncontested spaces where no one competes. “Red oceans” are places where competition already exists and has left “blood in the water.” “Blue ocean strategy” involves seeking out uncontested market space and providing new market offerings. Under those circumstances, the lack of competition can lead to quicker market dominance and higher profits. Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

Exercise Break into groups of 5–8 and think of a healthcare organization. Then: 1. Identify the industry your organization is a part of and title your map appropriately. 2. Identify the appropriate axis labels to use on your map, such as price vs. breadth of product mix. 3. Identify the market segments within the market. Note that you are identifying market segments, not brands. 4. Identify the size of each of market segment. 5. Identify the attributes of each segment. 6. Place each market segment on the map, using the size of the circle to represent the size of the segment in dollar volume. Use the location on the map to correspond to the attributes you identified. Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.

Exercise After completing the map of your industry, answer the following questions: Do you begin to see any weaknesses in the industry? How about opportunities? Are there any “blue oceans”? Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.