Richard Townsend was recently elected Director General of Liberty Medical Foundation (LMF), a non-profit HMOs. Partly due to the rapidly changing competitive environment, LMF has faced serious financial problems in the past two years. Mixed problems include low morale among doctors and staff and reduce patient satisfaction. Townsend will present to the board two strategic decisions that he sees for maintaining LMF alive. One option involves LMF restore its low cost items that originally attracted so many of its members. Inexpensive LMF, high performance positioning has historically been its competitive advantage. Restoring inexpensive position would exercise prior authorization requirements, dramatically reducing the number of physicians and staff, as well as copying other cost-saving measures that the non-commercial use SCR. Another option is to radically change the positioning of the LMF so that it is the quality and service leader. This option assumes that customers will be willing to pay a premium for excellent service. Any of these options will require fundamental changes in the culture of LMF's. "Hide
by David Caldwell, Robert Pearl, Davina Drabkin, Charles A. O'Reilly Source: Stanford Graduate School of Business 13 pages. Publication Date: December 28, 2004. Prod. #: OB43-PDF-ENG