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Strategy in Medical Information Services: Where and How to Add Value

During this presentation participants reviewed the general principles of strategy, considered a model to make strategic decisions, and then discussed where and how to add value within the medical information services arena. The presentation concluded with a general discussion of a marketing plan for a Medical Information department.

Essentially, strategy is a plan that integrates a department’s major goals, policies and actions . It considers such aspects as ‘Where is the Medical Information unit today’? ‘Where is it going in the future’? and ‘What is required to get there’? Competitive strategy focuses on the differences among firms: ie how can we perform better than our rivals; how can we add more value to our organisation than our competitors.

Competitive advantages can normally be traced to one of three roots: 1. Superior resources, 2. Superior skills and 3. Superior position.

In a previous article (ARCS Newsletter April 2002) we reviewed the work of Michael Porter of Harvard University, who has written extensively on strategy. He outlines the competitive forces that operate within business; namely:

Bargaining power of suppliers
Bargaining power of buyers
Threat of substitutes
Threat of new entrants
Intensity of rivalry among competitors

Through understanding each of these forces, managers and strategists are able to prepare their departmental plans by focusing on those aspects that have the greatest impact on the business.

In applying Porter’s strategic model to the Medical Information department it was determined that the Suppliers and the Buyers have the most influence on the department.

The Suppliers of the raw materials to the department could be any of the following: data from clinical trials, the Cochrane library, Medline, investigators, study coordinators, the analysis of complaints, data from the Internet, literature searches, supply of materials from head office and other affiliates, information obtained from sales reps, pharmacists and the public. Internal labour is also an important supplier (medical information managers, associates, assistants).

Similarly, the Buyers of the services of the department could be: patients, doctors, healthcare professionals, tender boards, chief pharmacists, consumers, caregivers, consumer groups, other departments within the company eg clinical research, sales, marketing, health economics, government, PBAC, overseas affiliates and co-marketing/co-promotion partners.

Although New Entrants, Substitutes and Rivalry may have an impact on the unit, it is the Suppliers and Buyers that have the most impact, and it is these two groups that the strategist should focus on. If the former three groups were of importance then this would change our entire analysis and strategy.

The next step is to further segment these groups to identify the most significant. In deciding which Supplier groups to target we ask the following questions:

“How much influence do these suppliers have over our business?”
“What determines their bargaining power?”
“Can they threaten to withhold supply?”
“What are the business consequences of them withholding supply?”
“If they withheld supply what would we do?”
“How can we build relationships with them?”
“What do we need to do to influence them?”

After this analysis we determine that the Suppliers that have the most influence on our business are the investigators, study coordinators, head office and internal labour.

Naturally this will differ between companies, as different competitive forces operate.Now that we have identified our top suppliers we need to determine how they think. It is only through understanding how they think can we exchange true value with them.

Perhaps the suppliers think along the lines of:

“I want to do a good job”
“I feel involved in supplying clinical data”
“I feel part of the pharmaceutical industry”
“I supply a service”
“I like being acknowledged for my contribution”
“I am going to threaten to raise the price of supply”
“I am going to threaten to withhold labour”
“I am going to threaten to reduce the quality of goods or services if I don’t get paid more”

Through in-depth market research techniques it is possible to obtain a more complete understanding of the ‘psychographics’ of the Supplier groups.

Similarly for the Buyers - in deciding which groups to target we ask the following questions:

“How much influence do these buyers have over our business”?
“Can they threaten to stop buying? Will these future needs change”?
“What are the business consequences of them no longer requiring the services”?
“If they stopped buying what would we do”?
“How can we build relationships with them”?
“What do we need to do to influence them”?

We determine that the Buyers that have the most influence on our business are the patients, doctors, consumer groups, and Government.

Again, as we move to understand how these buyers think, the following responses may be elicited:

“I need assistance and advice”
“I require quick delivery”
“I need results”
“I want reassurance”
“I need a feeling of belongingness with the provider”
“I am trying to force down prices”
“I demand better quality”
“I demand better service”

Therefore after the analysis of these forces, the Medical Information department can then determine: where it should be adding value; what are the needs of these groups; how do these groups think; what do these groups want, and what aspects of the service they most value.

Value is therefore added by offering a better service. A better service is a combination of an organisation’s structure, systems and culture and an understanding of how the customer is thinking.

1. Structure

The strategist would then determine what structure is optimal in delivering value to Suppliers and Buyers and could consider such issues as: Roles and accountabilities - who does what and why? Organisational cross-functional teams and moving knowledge through the organisation; Partnering with customers, B2B (employees in hospitals) and B2C (advisers within consumer groups).

2. Systems

Similarly, the issues surrounding the systems required to deliver value to Suppliers and Buyers could include consideration of A. Knowledge repositories eg internet, intranets, data warehouses, customer knowledge bases; B. Building networks: so that people can find each other (mapping sources of internal expertise); web conferencing/streaming technology, digital whiteboards, virtual private networks and C. Technologies to facilitate collaboration (groupware); interorganisational e-business systems; digital help-desk (chat rooms, company-sponsored forums); order management systems; and call centers.

3. Culture

However it is the culture of the department that is critical in delivering true value to Suppliers and Buyers. The key to adding value is Customer Relationship Management and having a culture that supports CRM. CRM is not about technology; it is about knowing your customers and knowing how your customers think. Only then can you add value to their processes.

The result of this analysis is essentially the marketing plan for the medical information department. Marketing is about exchanging value - ie we have a service to offer, we understand the market’s needs and we offer our service to meet their needs.

We have therefore looked at the market place and have determined who has the most strategic influence on the Medical Information department (ie Suppliers and Buyers). We have worked out where they are and how they think. As such we can offer them a valued service and we do this by combining the department’s structure, systems and culture. Central to this is developing a culture that is aligned to offering value to customers.

Additional Reading: Competitive Strategy: Techniques for analysing industries and competitors. Michael E. Porter. The Free Press 1980, revised 1998.

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By Dr Glenn Carter, Managing Director of Pharmaceutical Professionals, a Sydney professional services company.

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