Abstract: A number of typologies have been developed in the strategic management literature to categorize strategies that an organization can pursue at the business level. Extensive research has established Porter's generic strategies of (1) cost leadership, (2) differentiation, (3) differentiation focus, (4) cost focus, and (5) stuck-in-the-middle as the dominant paradigm in the literature. The purpose of the current study was to research competitive strategies in the Israeli ambulatory health care system, by comparing managerial perceptions of present and ideal business strategies in two Israeli sick funds. We developed a unique research tool, which reliably examines the gap between the present and ideal status managerial views. We found a relation between the business strategy and performance measures, thus strengthening Porter's original theory about the nonviability of the stuck-in-the-middle strategy, and suggesting the applicability Porter's generic strategies to not-for-profit institutes in an ambulatory health care system.