Dr. Michael Porter, Dean of Strategic Thinking
A few weeks ago, while researching information on strategy in the healthcare market, I noticed that Dr. Michael Porter, Professor at Harvard Business School, had been conferred an honorary doctorate by KU Leuven, one of the world’s oldest Universities – founded in 1425. Dr Porter, years ago, described 5 forces that define competition within an industry. Using this framework, companies can develop strategies to successfully compete in their respective markets.
“Redefining Healthcare: Creating Value Based Competition based on results”
Watching a video made to commemorate the event, Mr. Jan De Witte, current CEO of BARCO (the company where I started my career) praised Michael Porter’s book: “Redefining Healthcare: Creating Value Based Competition based on results”. Time to play catch-up.
Michael Porter wrote the book back in 2006, and mentioned that at that time, healthcare was competing on the wrong premise. He identified that most players were focused on zero-sum competition rather than competition which results in providing improved value to the customer (the patient).
Today’s environment (2020)
14 years later, after a few recent healthcare experiences, I must say that from a ;patient’s point of view things have not improved much. From a professional perspective however, I can see how the various players are starting to adjust to a world more aligned with what Mr. Porter describes: competition based on value – whereby value is measured across an entire episode of care:
- HTA’s gain more say
- CMS searches for alternate value-based payment plans
- HEOR becomes an ever more important part of market access
- MedTech companies consider expanding clinical trials to also capture HEOR data
Back in 2006 Michael Porter suggested several avenues of thought for suppliers of the Healthcare market. I’ll mention three of them below:
Compete on delivering value over the entire cycle of care.
It does not matter that your device improves value delivered during a very specific segment of the value care cycle, if the remainder of the chain consumes all the value added. At least not once the final goal is reached, and patients can look at value across the entire cycle of care.
Understanding the cycle of care, understanding the speed at which the market is moving to the ideal place is paramount to setting short and long-term strategies.
Experience tells me this is often overlooked. Clinical studies are expensive and time-consuming. But many companies still only focus on collecting clinical data. Few gather the economic data generated in the process.
The clinical data is absolutely necessary to be allowed to commercialize the product. Clinical data combined with credible economic data is how companies can make a sales argument.
Compete on results
Ensure your device delivers the very best results. Sometimes that may mean that you restrict the use of your device to only those patients where you have verified best results.
There are opportunities for companies in MedTech to develop short and long-term strategies that envision a future value-based healthcare system. Companies that know where the path is leading, maintain an understanding of current progress and stay a step ahead of change will fare best.