Assignment: Incentives for Doctors

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Assignment: Incentives for Doctors

Assignment: Incentives for Doctors

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Before the changes at Kaiser Permanente, incentives for doctors were misaligned with the goals of better health care. Its IS Strategy Triangle was out of alignment at that time. Its organizational strategy (e.g., a “fix‐me” system) was not supported by the IS strategy (e.g., tracking and reporting billable procedures). Neither the organizational strategy nor the IS strategy adequately supported their purported business strategy (helping patients at lower cost). For Kaiser Permanente, success could be achieved only by specifically designing all three components of the strategy triangle to work together.

Of course, once a firm is out of alignment, it does not mean that it has to stay that way. To correct the misalign- ment described earlier, Kaiser Permanente used on‐line services to enable quick communications between patients, physicians, and care providers. Further, it changed its bonus structure to focus on health rather than billing amounts. The new systems realign people, process, and technology to provide better service, save time, and save money.

What does alignment mean? The book Winning the 3‐Legged Race defines alignment as the situation in which a company’s current and emerging business strategy is enabled and supported yet unconstrained by technology. The authors suggest that although alignment is good, there are higher states, namely synchronization and convergence, toward which companies should strive. With synchronization, technology not only enables current business strategy but also anticipates and shapes future business strategy. Convergence goes one step further by exhibiting a state in which business strategy and technology strategy are intertwined and the leadership team members operate almost interchangeably. Although we appreciate the distinction and agree that firms should strive for synchronization and convergence, alignment in this text means any of these states, and it pertains to the balance between organizational strategy, IS strategy, and business strategy.3

 

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