STUDENT ESSAY

Sustainable Competitive Advantage for Accountable Care Organizations

Macfarlane, Michael Alex

Health Management and Informatics, University of Missouri, Columbia

For more information about the concepts in this essay, contact Mr. Macfarlane at [email protected]. Mr. Macfarlane is the first-place winner of the graduate division of the 2014 ACHE Richard J. Stull Student Essay Competition in Healthcare Management. For more information about this competition, contact Sheila T. Brown at (312) 424-9316.

Journal of Healthcare Management 59(4):p 263-271, July–August 2014.

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Abstract

EXECUTIVE SUMMARY

In the current period of health industry reform, accountable care organizations (ACOs) have emerged as a new model for the delivery of high-quality and cost-effective healthcare. However, few ACOs operate in direct competition with one another, and the accountable care business model has yet to present a means of continually developing new marginal value for patients and network partners. With value-based purchasing and patient consumerism strengthening as market forces, ACOs must build organizational sustainability and competitive advantage to meet the value demands set by customers and competitors.

This essay proposes a strategy, adapted from the disciplines of agile software development and Lean product development, through which ACOs can engage internal and external customers in the development of new products that will provide sustainability and competitive advantage to the organization by decreasing waste in development, promoting specialized knowledge, and closely targeting customer value.