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What You Don't Know

During a cross country flight a couple of weeks ago, I watched an in-flight movie called Gene Hackman plays the former President of the United States.
by Wallace Weeks

During a cross country flight a couple of weeks ago, I watched an in-flight movie called “Mooseport.”

Gene Hackman plays the former President of the United States. In one scene, he senses trouble is brewing because he has unwittingly asked his opponent's girlfriend on a date. So, he directs a staffer to “Tell me what I didn't know and when I didn't know it.”

For us, the trouble on the horizon is not about whom we date (I hope), but the reimbursement cuts we face and the methods that payers will use to effect the cuts. As a result, some providers are working to change product mix while others are working to change payer mix, and still others are trying to grow all lines and all payers. One of the effects of these changes is likely to be increased rivalry.

In the past few weeks while conducting research to help a company develop new strategies, however, we learned that many providers don't know much about their market — and know even less about their rivals. For those who may respond that the rivals are likely to be equally uninformed, that is true. But it is also true that the better-informed, better-prepared company will achieve more.

Recently we interviewed 69 CEOs or marketing managers of independent providers from 13 major U.S. markets. In these markets, there are a total of 6,187 provider numbers, or an average of 475 in each area. The provider numbers are assigned to DME businesses, not pharmacies or optical companies. Some companies have multiple provider numbers, but probably not more than 75 in each market.

Each of the CEOs/managers was asked to name the five largest independent providers in their market. On average, they could only identify 1.3 rival providers. Ten of the 69 could not identify even one independent provider. Keep in mind that, on average, each company has 400 rivals to choose from. Of course these key executives knew which of the national providers were in their market. But only

  • 39 percent were able to estimate the sales of any rival;

  • 30 percent were able to estimate the number of employees of any rival;

  • 52 percent were able to estimate the number of branches of any rival;

  • 29 percent were able to associate any rival with any managed care organization.

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