A Framework for Competitive Intelligence

Between 2008 and 2018, health care will generate more jobs than any other industry (approximately 3.2 million), primarily as a result of the aging population; healthcare occupations are also among the fastest growing with over 50% new occupations being in health care.[1] The question is, will one Colorado hospital be in business to participate in this growth.

To remain viable in a highly competitive market, hospitals will need to create strategies that stand up to the continued financial pressures of the industry. Competitive intelligence must be part of those strategies. Since all hospitals are on nearly the same playing field, the challenge is to differentiate based on real, relevant, timely, and useful data.

This paper briefly describes what competitive intelligence is, then proposes a competitive intelligence initiative along with suggestions for a structural framework, scope, and individual skills and tools necessary to be successful.

What is Competitive Intelligence?

To ignore our environment or practice superficial reviews of our competition will surely keep us at a disadvantage. The risk to our business viability increases and our competitive advantage decreases without a constant vigil according to a systematic strategy.

Competitive intelligence is being alert for reliable information, gathering that information, and knowing what to do with it.  The process can include the collection, organization, analysis, understanding, interpretation and development of information which helps an organization differentiate itself from its competitors and reduce the risk of unknown actionable strategies. Johnson (2010) defines competitive intelligence as “… the purposeful and coordinated monitoring of your competitor(s), wherever and whoever they may be, within a specific marketplace.” [2]

We must understand what types of external events may impact our organization and what to do to prevent that impact. Next, collection of data is worthless without relevance, so we must convert the data into intelligent, relevant information. That involves collating, organizing, and integrating this new information with other related data points. Analysis should be performed by competent and trained strategist who understand both the big picture and the details. Finally, in order for the data to become useful and a competitive advantage, we must know how to interpret and communicate our findings.

Question types should address both the internal and external environments. The answers to these questions will change overtime, thus a repeatable, yet flexible process is necessary to ensure our information is relevant and current. Goodman suggests the following, not exhaustive, list:

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“Corporate Picture, Focus: Company & Competitors

  • When did this company begin? How did it develop?
  • Who leads this company?
  • What are this company’s plans?
  • What does expert opinion say about the company?
  • Who are the leading competitors?

Industry Environment

  • How did this industry begin? Major developments?
  • How are products made? Components relied upon?
  • Any multi-industrial linkages?
  • What technological developments will affect this industry?
  • How do I update these analyses?

Socio-Political Environment

  • What government or industry regulations affect operations?
  • What current or pending legislation will be affecting operations?
  • What market changes affect operations?
  • What economic indicators would affect operations?
  • What market barriers exist in U.S.? Internationally?” [3]

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Collectively, these types of questions can help keep a ‘finger on the pulse’ (no pun intended) of the hospital industry and marketplace.

Why is an Initiative Needed?

The hospital has experienced over a 20% reduction in outpatient cases since the beginning of the recession in 2008.[4] Sawyer (2006) indicates that hospital care is shifting from inpatient to outpatient.[5]

Challenges faced by the hospital are many and developing dynamic strategies to anticipate market risks is certainly a priority. Some examples of market risks include:

  • Physicians deciding on the flow of patients, many times without the patient making a choice
  • Managed care contracts dictating approved hospital (vendor) lists including agreeing or not to what types of procedures can be done by which doctors at which locations. (This one boggles the mind!)
  • Governmental regulations at both the state and federal level can affect the hospital’s accreditation and ability to market to new audiences (due to privacy laws etc)
  • The advent of the outpatient clinics (not all are connected with a local hospital) can take away business more so during a down economy

Many of these challenges represent a risk to the financial stability of the hospital and the business of the hospital may be in jeopardy, at least in the short term.

Initiative

The purpose of the competitive intelligence initiative is to protect the hospital from risks that may permanently impact the viability of the business and which help achieve the stated mission.

A successful competitive intelligence initiative encompasses a holistic view of the hospital and works in concert with and support of the mission, vision, and goals.  This is accomplished by successfully implementing a protection system that proactively monitors, collects, and communicates information to decision makers who can respond in a timeframe that mitigates the risk and/or creates an opportunity to promote the business.

The initiative scope is all internal and external risks to the hospital business.

The initiative should include these primary elements:

  1. Awareness and commitment of senior staff
  2. Identification of risk area that could most impact the business viability
  3. Formation of objectives to be accomplished including how to use the intelligence information when it is obtained
  4. Institutionalize the process, obtain the tools (software, metrics, mechanisms to collect data, etc), and select individuals with the key skills necessary to accomplish the objectives.
  5. Perform the actual gathering, storing, organizing, and reporting of the data become information taking into account event timing, currency of the information, and a process exception that allows for quick actions (the latter is particularly useful to manage disinformation and protect intellectual property or brand image).
  6. Communication of information to only the people with a need to know who are equipped to understand, interpret, and take action as needed
  7. Follow up and revitalization of the process in a way that considers new and emerging threats to the business.

Sikich (2003) recommends ten key actions to a company can take now and many of these are easily applied in the hospital business: [6]

  1. “Make your enterprise an unattractive target
  2. Revise employee screening processes
  3. Validate business, community, and government contracts
  4. Assess business continuity plans
  5. Train and education your workforce
  6. Equip your workforce
  7. Review leases and contracts for risk exposure
  8. Assess value-chain exposure to supply disruptions
  9. Review insurance policies and conduct cost/benefit analysis
  10. Communicate commitment”

The basic organizational structure should include representative members of the key staff and those who have a value to offer the process. In the case of the hospital, this should include the following identified individuals(by title only):

  1. CFO
  2. VP Technology
  3. Medical Director
  4. Director of Information Systems
  5. Safety Manager
  6. Associated staff of each above as needed to perform the data process steps
  7. Others as identified by the CEO

The general set of skills required by the team collectively includes project management, data analysis, metrics and statistics, marketing and business development, the ability to apply differential analysis of alternatives, and adept decision-making skills.

The above represents a preliminary suggestion to begin the dialogue necessary to complete a full competitive intelligence initiative.

Conclusion

The challenges facing the hospital industry may cause some to incur significant financial impacts. Understanding what those impacts are, how they are caused, and what preparations can help mitigate or reduce the effects can be accomplished with a robust competitive intelligence system.

Citations

[1] US Department of Labor, Bureau of Labor Statistics, (Feb 2010). Retrieved 7-17-10: http://www.bls.gov/oco/cg/cgs035.htm

[2] Johnson, Arik R., (2010). “What is Competitive Intelligence?“. Aurora WDC consultancy. Retrieved 7-16-10: http://www.aurorawdc.com/whatisci.htm

[3] Goodman, Richard A., (Jan 2010). “Competitive Intelligence“. Retrieved 7-16-10: http://www.anderson.ucla.edu/x14441.xml#A-1

[4] VP finance, Anonymous Colorado Hospital, Interviewed by Andy Amalfitano October 2009

[5] Sawyer, Mike, (Jan 2006). “Competitive Intelligence in the Healthcare Industry-Part One“. Southern Regional Health System. Retrieved 7-17-10: http://www.directionsmag.com/article.php?article_id=2087

[6] Sikich, Geary, W., 2003. “Integrated Business Continuity-Maintaining Resilience in Uncertain Times“. Penwell Corp Oklahoma 57-58, 138-139, Chapter 8

References

Apgar, David, 2006. “Risk Intelligence- Learning to Manage What We Don’t Know”. Harvard Business School Press Boston 51-52

Aware Inc. “A Brief Guide to Competitive Intelligence“. Aware Inc, Retrieved 7-17-10: http://www.marketing-intelligence.co.uk/resources/competitor-analysis.htm

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