Unpredictable market renders past strategies ineffective

November 1, 2008

Unfortunately, healthcare's complex business model, dynamic technology and regulatory changes, and potential for market disruptions render conventional strategic planning processes and financial decision-making tools less effective.

Tremendous flux and uncertainty in today's U.S. healthcare market are making it difficult for health plans to develop and implement strategies to achieve sustainable competitive advantage.

Strategic flexibility

The potential severity and convergence of these and other issues over the next three to five years may compel health plans to redefine their role and differentiate their value proposition to attract and retain members and compete profitably in the future. Unfortunately, healthcare's complex business model, dynamic technology and regulatory changes, and potential for market disruptions render conventional strategic planning processes and financial decision-making tools less effective.

Deloitte has identified five scenarios that are expected to impact the healthcare industry and should be addressed using the Strategic Flexibility framework. The challenge for executives is to build a portfolio of options-an optimal strategy for each of these possible futures:

With Strategic Flexibility, plans can realize the benefits of commitment without relinquishing their ability to respond to change as well as better position themselves to compete effectively no matter what the future holds. Strategic Flexibility is yielding important insights.

John Bigalke is vice chairman, U.S. health sciences and government leader, Deloitte & Touche USA LLP.

Erin Reuss-Hannafin is principal, Deloitte Consulting LLP.