The Battle for Healthcare Information A War Game

®

Boston

London

The Battle for Healthcare Information A War Game

St. Mary’s Hall, Rm 110

Georgetown UniversityJuly 16, 2009

2| © April 3, 2009 | The Battle for Healthcare Information

War games are a process to examine the near term

A war game is a structured strategic exercise to help you anticipate competitive moves before your rivals make them.

1-3 year horizon…you know the players but may not understand their strategies!


Why this event…Why it works?

Why this event?

War games are typically private, closed-door events run by Fuld & Company for clients that need to make critical, often high-stakes decisions. This public war game allows us to show you our approach and demonstrate how and why a war game is a very effective vehicle for executives who have to make critical decisions

Why it works?

It “stress tests” strategic reality


Pay for What Pay for What WorksWorks

A “Stress Test”? There are over 100 billion reasons why!

Healthcare expense hyper growth now pervasive

The quality of care being delivered today is increasingly recognized as suboptimal

In order for technology to succeed here, we need a learning healthcare system

– A system in which evidence emerges as a natural by-product of the care delivered

– Delivering the right care, to the right person, at the right time, for the right price


A Brave New World Of Future PartnersUltimately, it’s about Co-opetition, not Zero Sum!

Pharma and Biotech

Providers

Payers

Technology Providers

Diagnostic/Device

Patient

Government Agencies


We Have Come A Long Way Since 1949…

“As a time saver, a pneumatic tube system will be included” …for the purpose of distributing histories of patients and other information that might be needed, as well as a means of communication between departments in the teaching institutions. – Dr. Ernest William Bertner, January 30, 1949, first President of Texas Medical Center

“Our recovery plan will invest in electronic health records and new technology that will reduce errors, bring down costs, ensure privacy and save lives…So let there be no doubt: health care reform cannot wait, it must not wait and it will not wait another year."- Prepared text of President Obama’s address to Congress, February 24, 2009


Four Nationally Ranked Business Schools Competed

The Schools The Facilitator The Judges

“Students from Harvard Business School and MIT's Sloan School of

Management were recently invited to play a "war game.” The organizer, Fuld & Company….In the real world, the stakes are far

higher, but the basic analysis may prove correct…”


Industry Analysis in your Briefing Book

Understand the overall industry picture

Let the industry picture lead you to understand the competitors’ likely actions

Use your understanding to help your company make better decisions

INDUSTRY

INDUSTRY

FORCES

TARGET’S

ACTIONS


Gaining An Industry Overview: The Five Forces

Jockeying for position among current competition


Porter’s Five Forces Model

What makes one industry more profitable than another? – Why is the market for drug therapies more profitable than the market for truck

transport services?

– Why is a technology based product like the desktop PC such low profit business?

Within an industry, why are some companies are more profitable than others?

– Amgen had a higher rate of return than Wyeth

– Only Dell made money selling PCs until 2006; since then Dell hasn’t but HP does

And what is the “healthcare information industry??” – Who are the competitors, suppliers, customers, potential new entrants, and

substitutes?


Differing strategies separate participants in the same industry

Differentiate Be Low Cost

Focus (e.g., geographically or on a market segment)


Porter Four Corners Analysis – First Look

Future Strategy

• What will the company’s future strategy be?

• Product

• Place

• Price

• Position

DriversAt all levels of

management and in multiple dimensions

Current StrategyHow the business is currently competing

AssumptionsHeld about itself and

about the industry

CapabilitiesStrengths and

weaknesses; core competencies


Assumptions & Blind Spots

All companies have assumptions, some explicit, some hidden from view.– About the competitive arena -- competitors, customers, suppliers, regulators,

technology

Corporate myths…– About the company’s own strengths, the validity of its practices, its traditions

Corporate taboos…– Regarding assumptions that are supported at the top

They built strategies partly on the basis of their assumptions


An example...

In the ‘60s, Hoffman-LaRoche built itself on the success of Valium. The company had 3 explicit strategic assumptions:

• A drug that isn’t going to be a blockbuster isn’t worth our attention

• All new products must come from our own labs

• There’s nothing to be learning by hiring executives from other drug companies

What conditions made these assumptions right for the time, and why did those conditions change? How did Roche respond?


Porter Four Corners Analysis

Future Strategy

• What will the company’s future strategy be?

• Product

• Place

• Price

• Position

DriversAt all levels of

management and in multiple dimensions

Current StrategyHow the business is currently competing

AssumptionsHeld about itself and

about the industry

CapabilitiesStrengths and

weaknesses; core competencies


Interviews w/ client &

externalisources

Prior to Session

Three to five weeks

Two Day Session (Typical)

Teambreakouts(Usually 4CornersAnalysis)

Intro bysponsor &

Fuldfacilitator

Summary,decisions &

follow-upassignments

TeamBreakoutSessions

(Responseto the

scenario)

Teambreakouts(Output isusually the

team'sstrategy

Scenariopresented

by thefacilitator

Teampresentations

& critiques

Teampresentations

& critiques

Teampresentations

& critiques

TeamBreakoutSessions

(Responseto the

scenario)

Teampresentations

& critiques

Teamassign-ments

Post-Session Action

Briefing Bookfor particpants

Summary &recommend-

ations from Fuld

Follow-upreview with

client

Scenariopresented

by thefacilitator

War Game Format


Rules for Round 1

Each team will work on its own. You may email questions to myself or Dr. Alemi for clarification.

The first task for each team is to build a strategy for the company it represents. Start with the company’s drivers, assumptions, current strategy and capabilities. The output should be a Four Corners analysis of the firm, concluding with a 2010-2011 strategy in the market for the healthcare information.

Once you complete the Four Corners analysis, you should be able to answer the following questions:

‒ What will your company’s future strategy be? ‒ What makes you think you can implement it?‒ What do you think the responses of the other players will be?

You will be presenting your analysis to the other teams and the judging panel via a YouTube video, and each of them will have an opportunity to question

your analysis, so be prepared to defend it.


Judging Criteria

You will be judged by:

Insight– How well do you understand the dynamics of the business and the company you

represent?

Accuracy– How well does your proposed future strategy reflect the realities of the company’s

drivers, current strategy, resources and assumptions?

Creativity– What intellectual sparks have you generated in creating your company’s future

strategy, and in defending your conclusions?

Foresight– How well have you done at thoughtfully looking into the future of the on-line search

business?


Rules for Round 2: Disruptive Scenario

The facilitators will announce a scenario – “Gore Wins Physics Nobel for Inventing Internet, Sues Google for Royalties” -- and we will provide some realistic details.

Your team should focus on what its own strategy will be in response to the scenario we present.

Teams are free to negotiate a deal with each other within the constraints of anti-trust rules. You can’t agree to divide up markets or fix prices, but you could agree to acquire or be acquired, or to partner or license your products. Remember that the time is limited, so you can’t spend too much time negotiating, even if you think there’s something to negotiate about.

Your team’s output should be a modified market strategy responsive to the change reflected in the scenario.

Consider the likely actions of the other players and be prepared to explain what you think they will do in response to your team’s strategy. Be prepared to defend the responses you have crafted.



Some of the Action in April…

Microsoft tries to make a deal with Kaiser.

This happened for real a month later…

With the same result.


And The Winner Is… ?

?At the end of the game, we will determine the winner based on the best all around strategy:

• Kim Slocum – former corporate strategist at AstraZeneca and incoming HIMSS officer

Brett Davis – IBM Senior Executive in Life Sciences

Wayne Rosenkrans – former corporate strategist at AstraZeneca, Chairman of the Personalized Medicine Coalition, Distinguished Fellow at MIT


And The Winner Is… ?

?Good luck!

Based on these criteria:

InsightAccuracyCreativityForesight

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The Battle for Healthcare Information A War Game

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