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DPI Client Interview
Digital Healthcare Solutions (Pty) Ltd.

	Hennie du Plessis CEO, Digital Healthcare Solutions (Pty) Ltd.

Every CEO who has piloted a company through a merger knows how daunting the challenge can be. History is littered with those who have tried and failed. HP and Compaq. MCI and WorldCom. The list goes on.

One of the reasons many of the ventures never achieve the expected “synergies,” is that the integration efforts are generally directed at merging operations, while there is often less effort applied to merging the strategic thinking that will meld the two operations into one cohesive whole.

Not so with Digital Healthcare Solutions, which came into being in early 2001 with the merger of Comparex’s QEDI and Bytes Technology Group’s MediSwitch Holdings. In the past four years DHS has achieved exceptional results, building a commanding position in the market for healthcare industry software.

One of the catalysts of that success was the recognition by DHS management, early on, of the need for a methodology that would enable the newly formed group to create a unified strategy for the future. They decided to use DPI’s Strategic Thinking Process to accomplish this goal.

Second, when we talked about DPI’s concept of the Driving Force, we identified with it intellectually. We thought it was a very interesting way of understanding what our combined businesses were all about, because we had not had that conversation at that point.

Strategic Thinking is a critical thinking process developed and refined over the last twenty years by DPI. This unique approach intrigued the DHS team in part because it would enable the company’s management to forge their own strategy by debating all the relevant issues with the assistance of a skilled facilitator. From this they expected a strategy that would be well understood and agreed upon. Further, and perhaps more importantly, they expected it to bring them a clear action plan with responsibilities, timelines for completion, and a management process to keep the implementation on track.

As CEO Hennie du Plessis explains, “The merger really highlighted for us the need to put a business strategy in place that would respond effectively to the expectations of the shareholders and would also ensure that this new entity, as a merger, would become an effective player in the market.

“We decided to use the Strategic Thinking approach for several reasons,” du Plessis says. “First, DPI insisted on a company-wide preparatory phase that enabled us to gather strategic and operational data we would use in the process. We felt that would begin to create involvement and participation.

“Second, when we talked about DPI’s concept of the Driving Force, we identified with it intellectually. We thought it was a very interesting way of understanding what our combined businesses were all about, because we had not had that conversation at that point.

“Thirdly, the process would result in a list of Critical Issues that we would work on to make the strategy successful. I saw that as a mechanism that would make the strategy stick. In my experience as a manager, that is always the most difficult thing to get right—to put a strategy together that doesn’t sit in a book on your shelf, but actually lives as part of your operational management. Too often these exercises involve a group of executives going off for a few days and talking about the future, but then coming back only to say, ‘Okay, but what the heck do we do now?’ So I think several pieces of the DPI philosophy appealed to us intellectually because we had struggled to that point to come up with a definition of the business that spoke to all of us at the management level. And the obvious advantages of an effective implementation approach were very appealing to us.”

So in November 2001, Hennie du Plessis and more than twenty members of his management team undertook the Strategic Thinking Process, guided by DPI Partners Greg Carolin and Rex Glanville.

I think several pieces of the DPI philosophy appealed to us intellectually because we had struggled to that point to come up with a definition of the business that spoke to all of us at the management level. And the obvious advantages of an effective implementation approach were very appealing to us.

As the process progressed, various work groups were able to systematically dissect and evaluate a wide range of internal and external factors that would create “pictures” of what the company currently looked like, in order to project various future strategic profiles. At the core of the process was the decision by management as to which of ten possible Driving Forces the company would pursue. The Driving Force is a set of unique capabilities that are at the center to the company’s competitive advantage and drive all future decisions about products, customers and markets it will pursue and not pursue. Recognition of the need to support this Driving Force allows management to make better and faster decisions about allocation of resources on an on-going basis.

DHS consists of two basic businesses, each originating with one of the merger partners. One supplies practice management software for physicians, which enables them to keep patient records, bill for their services, and other related needs. The other part of the business offers electronic “switching” software called Switch.™ Switch allows the convergence of electronically prepared claims, and translates claim data from the format it is created in into a format required by the payor to process for payment. Though the two businesses play in the same general space, it was not immediately apparent how best to leverage these two capabilities for the most effective unified business model down the road.

Consequently, when the DHS team reached the Driving Force phase of the process, a lively discussion ensued.

Says du Plessis, “There was quite a debate. We realized that the selection of a single Driving Force for both businesses would be fundamental to our strategy going forward, so we needed to reach a consensus. To do so for two businesses that are similar but certainly very different in terms of the business model, products and services, proved to be quite a challenge. It was the kind of debate we needed at that point because it forced us into a conversation about the very nature of our business which we had not had before.”

The decision involved envisioning the probable end result—what the business would ultimately look like—of each Driving Force. Because it would have a direct effect on the scope of all future products and customers, difficult choices needed to be made. The process facilitators played a crucial role in helping participants to look objectively at the facts and come to conclusions that would hold up over time.

“The outside facilitators bring a degree of objectivity and the ability to be brutally frank about where they see holes in your thinking, that you couldn’t have if, say, the CEO were to facilitate. You’re far better off with someone who first of all has mastered this process, and who isn’t intimately involved in the business or doesn’t have a vested interest in protecting their position or steering the participants toward a particular conclusion,” du Plessis says. “Greg and Rex were very effective at keeping the process honest.

“In the end we found the synergy we were looking for. We decided on Market Category as the Driving Force, which we felt would create the synergy between the various components of the business. We defined the Healthcare Industry as the market category. We would then supply IT and related business products and services, which leverages the technologies of both merger partners, to the healthcare industry as opposed to, say, just doctors. So that opened the possibility for us to speak to the requirements of the funder or payor customers on one end of the spectrum, as well as the healthcare practitioner on the other end, and other suppliers in the market in-between. This is exactly what has happened in our business since then. Adopting that Driving Force enabled us to develop our ability to speak in a unified way to those various categories and players in the whole market much more effectively.”

To understand the implications of that decision, it is useful to look at the impact that the selection of two of the other nine Driving Forces might have had.

“If we had chosen Customer Class,” says du Plessis, “it may have taken our focus away from our core businesses, which is supplying and supporting software for the doctor community, and switching services for doctors and medical payors or insurance companies. If we had followed that route, we would have been looking for other needs of these customers beyond the types of services we now provide, and that might have taken us into areas where we lack capabilities and distracted us from developing our core business. If we had selected Product—software for doctors—as our Driving Force, that would have been too narrow, given the dynamic nature of the market and because there are other software needs in the healthcare chain besides those that only serve physicians.”

The decision to pursue the Market Category definition led to a commitment to develop certain Areas of Excellence that would give substance to the business concept.

We’ve seen a year-on-year improvement not only in turnover, but also in profits—in excess of twenty percent operating profit as a percentage of sales last year. So the business has returned the yield that the shareholders were looking for. The success we have seen over the last three or four years has certainly been the result of extraordinary teamwork and very disciplined operational management.

“The three areas we chose to concentrate on developing were Knowledge of the Market, Product Excellence, and Customer Care,” du Plessis states. “I remember quite distinctly that at the point when we debated this, it was really quite revealing and insightful. We realized that to be successful at this business, we would have to understand the healthcare business much better than we did at the time.”

This realization led to a set of Critical Issues, or initiatives, geared to understanding the needs of the entire spectrum of customers, and then developing and enhancing products or services that would best meet their evolving needs.

One Critical Issue was the creation of a cadre of “customer liaison officers,” a group of former pharmaceutical salespeople who knew the doctor community well. Their task has been to visit with a prescribed number of doctors on a three-month cycle to learn about the physicians’ IT needs.

“This has made a huge difference, not only in our image with those customers, but also in terms of the intelligence we were able to bring back and apply to the business in terms of the types of products and features and characteristics, and value-adds we could build in. We’ve certainly seen the results of that very positively throughout the business.”

On the issue of Product Excellence, the two most successful efforts have been the development of a world-class IT infrastructure that provides parallel, redundant handling of data, assuring needed reliability, and the introduction of the best practice management systems in product development.

“It took us two years, and it was completed in spite of having two different and disparate switching systems. It was a serious challenge, but again, our focus was very important and it gave us the right result. I don’t think any of our competitors could hope to duplicate this,” du Plessis explains. “We were also, through better management, able to substantially improve the stability of our software products.”

Similar concentration on the Customer Care front has brought outstanding results. By utilizing an outside auditor who surveys 500 customers every three months, DHS has been able to identify problem areas and service opportunities.

Says du Plessis, “I cannot begin to explain to you the focus this has brought to our customer call centers. It has made an enormous difference in our ability and determination to bring excellent service to the market. In one area of the business we saw customer loyalty numbers, measured by the willingness of customers to recommend us to colleagues, double within six months. In another area where we had good numbers to begin with, we’ve seen a thirty percent improvement in a six-month period. This has also enabled us to identify opportunities to improve relations with our other channel partners who play an important role in implementing our Market Category strategy.”

The Internet is of course a crucial part of the strategy of an IT-based company such as DHS. To take a more systematic approach to assuring that their Internet strategy would support their business strategy they decided to use DPI’s e-Strategy Process. After taking a comprehensive look at their Internet presence and possible ways to make it more effective, several possibilities rose to the top.

I have no doubt that what we have done with DPI has created the context for strategic thinking that we didn’t have before. It gave us a common vocabulary, understanding and commitment to the plan that was never there before. More importantly, it allowed us to create the operational focus to complete the nuts and bolts of the merger, and deliver a strategy that has made the merged business a successful enterprise.

“We emerged from the e-Strategy Process with ten candidate projects,” says du Plessis, “at least three of which became very serious initiatives afterward. One has become so important that it has become a serious part of our strategy now.”

One of the most compelling parts of e-Strategy is the Killer.com module in which teams envision an Internet-based business model designed to put them out of business.

“There was a part of that model that we looked at and said, ‘My goodness, if we could do that, we would rewrite the rules completely.’ We’ve been working on that for a year and a half. It’s not completed yet but it’s getting there. Some things are falling into place in communications technology that will help us to make that a reality.

“We manage these and other Critical Issues diligently as part of regular management meetings to ensure effective and ongoing implementation of the strategy down to the operating company level. In each of those businesses, in their monthly management meetings, they are devoting probably three-quarters of their time to monitoring Critical Issues implementation. We have found that we sometimes need to adjust as we learn more, but this keeps the focus on the end result. One of the most important things that DPI does is to put together this process for monitoring and guiding progress on the operational end,” du Plessis states.

DHS today is a major force in its market, with a commanding two-thirds share in its software products, and handling over half of all electronic claims generated in South Africa. The financial results have been excellent.

Says du Plessis, “We’ve seen a year-on-year improvement not only in turnover, but also in profits—in excess of twenty percent operating profit as a percentage of sales last year. So the business has returned the yield that the shareholders were looking for.

“The success we have seen over the last three or four years has certainly been the result of extraordinary teamwork and very disciplined operational management. And I have no doubt that what we have done with DPI has created the context for strategic thinking that we didn’t have before. It gave us a common vocabulary, understanding and commitment to the plan that was never there before. More importantly, it allowed us to create the operational focus to complete the nuts and bolts of the merger, and deliver a strategy that has made the merged business a successful enterprise.”

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