Competitive Advantage? What &%#@^* Competitive Advantage?!

If you don't read Running a Hospital, put down the Forbes and start off your day with a cup of java and the always-visionary Paul Levy.

Levy, President and CEO of Beth Israel Deaconess Medical Center in Boston, recently posted here asking for input on how to position his facility against the competition.

As evidenced by Paul's posting, BIDMCs administration has done significant deep-dive strategic thinking, positioning themselves as an "'Avis' to {Partners HealthCare Systems} 'Hertz.'" BIDMC has "adopted a plan to position ourselves as a low-cost and high-quality provider in this region."

If you tend to glance down your nasal passages and flare those orifices when hospital operations is tagged "the business of caring," I warn you - stop reading now.

You can squint those orbicularis oculi all you want - but believe it or not(!), hospitals are businesses, with fiscal as well as socio-ethical responsibility to care for clients, shareholders and community stakeholders.

This means profit and loss, people. This means periodically evaluating your facility relative to the competition. If you're doing this - wonderful. You get a gold star - keep up the good work.

If however you're an administrator with the following issues swirling in your left hemisphere, keep reading:
  • Price Transparency: Should we make this available to consumers? Or, if we've slapped this information up on our website, how are people using it? How many views and unique visitors does this section have per week? Per month? What conditions garner the most interest (are our conditions hyperlinked so this can be tracked with any degree of specificity?)
  • Price Competitiveness: How do our prices for 'common' conditions, DRGs and procedures stack up against those regional players we consider competition? (Note: If you're pensively wrinkling your brow over how to define your 'competition,' ignore the rest of this post and figure that out pronto).
  • Service Line Evaluation: What do we offer currently that our patients and staff are proud to talk about? What are we thinking of offering in the future? Is this feasible given what other hospitals in the area are offering? What are our current environments of excellence? Should we pump more funding into current centers of greatness or do we want to focus on 'weak' spots in the market?
  • Defining Competitive Advantage: What advantages do we have relative to other facilities? Are we providing what people want? Do we have a laser eye clinic? Are we working towards magnet status? What are the selling points that make patients want to come see us, or, alternately, choose to see the competition? Is our competitive advantage comparative, differential, or a combination of the two?
All these tricky evaluations beg the question - exactly what is competitive advantage?

The gospel according to Investopedia defines competitve advantage thusly:

"An advantage that a firm has over its competitiors, allowing it to generate greater sales or margins and/or retain more customers than its competition. There can be many types of competitive advantages including the firm's cost structure, product offerings, distribution network, and customer support.

The more sustainable the competitive advantage, the more difficult it is for competitors to neutralize the advantage.

There are two main types of competitive advantages:
1. Comparative
2. Differential

Comparative advantage, or cost advantage, is a firm's ability to produce a good or service at a lower cost than its competitors, which gives the firm the ability to sell its goods or services at a lower price than its competition or generate a larger margin on sales.

A differential advantage is created when a firm's products or services differ from its competitors and are seen as better than a competitor's products by customers. "

I know, I know. "But Jen!" you're thinking..."anyone with a dictionary, an internet connection, or a library card can figure this out!"

Of course that's true. So why are you spending time reading this blog rather than drawing up a detailed evaluation of your %$#@ competitive advantage?!

1 comment:

Anonymous said...

Thanks, Jen.

(Just linked yours to mine.)