Creating Healthcare Blue Oceans

Creating Healthcare Blue Oceans

The goal of any organization is to create sustainable competitive differentiation, by providing to customers what they value and want in ways that others can’t. One way to beat the competition, according to Kim and Mauborgne in their book Blue Ocean Strategy, is to stop trying to beat the competition. Instead, create uncontested market space to create and capture new demand. Thereby making the competition irrelevant.

The classic example of creating a blue ocean (referenced in their book) is Cirque du Soleil. From a group of 20 street performers who assembled in 1984, Cirque is now a major artistic entertainment company delighting almost 90 million spectators a year. The company looked at traditional circus acts like Ringling Brothers and transformed them into “Broadway meets artistic music and dance” experiences. While increasing customer value and ticket prices, they simultaneously eliminated the largest cost items of the circus, including the star performers and animal shows.

The driving forces for creating blue oceans should be apparent. Across categories, we’re faced with seemingly limitless offerings. More supply than could possibly be demanded. Global competition. More information at our fingertips. Too many brands that look, sound and function in similar ways.

This is the situation in healthcare. Many systems and hospitals are indistinguishable. And organizational-wide initiatives that focus on the safety, service and care of patients (functional benefits) do little to distinguish one hospital from another, as these are table stake improvements that all organizations focus on. Healthcare marketing practices don’t help distinguish either – as communications and outreach also tend to look and sound a lot alike.

But this doesn’t have to be the case. Every healthcare organization can create its own blue ocean. Because here’s the thing. It’s not carved in stone that blue ocean must equate to creating uncontested market space. Creating a stronger competitive position can be, and in many instances is, a more realistic agenda. Particularly in a down economy where companies need to do more with less. The size of the ocean doesn’t matter as much as the re-energizing and differentiating value it provides to customers.

The Blue Ocean book offers powerful tools for building a blue ocean strategy. One of them is the Four Action Framework, which guides companies in evaluating what they can possibly eliminate (based on what the industry takes for granted), reduce (well below the industry standard), raise (above the industry standard) and create (what the industry has never offered).

In the case of healthcare systems and hospitals, consider these factors in the context of how your organization, or the industry as a whole, tends to compete. Think broadly about the elements that make up your product, service and delivery. Look across:
• your industry and (more importantly) outside industries
• your strategic segments and customer groups (starting with employees)
• the scope, and delivery, of your product and service offerings
• your functional-emotional appeal to buyers
• the trends that affect business over time, etc.

Looking at these factors with a fresh and unbiased perspective, cross-functionally across the entire organization can unlock innovation that creates stronger market space and new value for customers. In healthcare, these innovations tend to come down to either clinical care (product) or providing care (service). Most likely, given that product is easily replicated over time (e.g. new machines, treatments), these innovations will likely reflect better ways to serve, and enhance the experience of being, a patient.

The starting point, however, must be your brand promise. You need this focus in order to create innovations true to who you are and how you’re perceived, and that employees are aligned around and equipped to deliver.

Here are a few examples of healthcare organizations that have created their blue oceans. Some are game-changing, while others have helped companies carve out stronger competitive spaces. All have delivered greater value for customers:

• Mayo Clinic Health Manager; a free tool that creates the ability for people to easily manage their families health online.
• HelloHealth; a new company mixing office and online visits to give people personal attention from their neighborhood doctor when and how they want it.
• Parrish Medical Center in Titusville, FL., who chose to compete to improve their culture and the engagement of its employees (who worked together to eliminate over million in hospital costs).
• Highmark, a Pennsylvania insurer who rolled out the nation’s first prepaid gift card designed specifically for healthcare expenses.
• InstyMeds™, the health care industry’s first fully automated ATM-style dispenser of prescription medications.

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