Strategic planning for health care markets: a framework and case study in analyzing diagnosis related groups

The sweeping changes in the health care industry, of which implementation of the prospective payment system (PPS) is one, put heavy demands on hospital administrators to "manage" their portfolio of health care products and services. The authors discuss the implications of PPS and other changes in the industry for strategic planning and present a framework based on an efficiency/profitability matrix. The framework can assist hospital managers in gaining strategic insight into their current portfolio and can guide their efforts in determining future product/service portfolios. A case study demonstrates the application of the proposed framework.