November 10, 2010 10:00 ET

Sg2 Tackles Business Model Transformation as a Path to Growth

Sg2 Partners With Dow Corning's XIAMETER® Brand to Uncover Innovative Practices to Address Health Reform Challenges

SKOKIE, IL--(Marketwire - November 10, 2010) -  As health reform legislation continues to create market shifts in policy, demand and technology, care providers must respond by reinventing themselves to maintain their competitive position. The Sg2 Design Forum, comprised of a select group of forward-thinking health systems, recently collaborated with the XIAMETER brand from Dow Corning, a global market leader in silicone, to uncover strategies for successful business model transformation and reveal learnings that can be applied to the health care industry. 

Over the past decade, Dow Corning Corporation successfully responded to dramatic market changes by creating a new business model branded as "XIAMETER." Customers needed a more cost-effective way to purchase standard silicone product. They wanted to unbundle the services from the price of the product. To meet their needs, a new Web-enabled business model was created that not only significantly reduced overhead and price by creating business rules that customers could live by, it leveraged technology as the basis for a fully automated e-commerce platform. A successful example of organizational transformation, online sales between the XIAMETER brand and Dow Corning brand rose from essentially nothing to over 30%. This story uncovers leading management practices and core competencies that can be applied to health care.

For example, defining the path to success is critical to reinvention. According to Sg2, a hospital would need to reduce its direct costs by nearly 14% to sustain current contribution operating margins if all payers reimbursed at Medicare rates. This can signify the need for an innovative approach to dramatically cut costs and improve clinical performance to meet market dynamics.

Another approach to creating an innovative culture is to leverage technology as a distribution channel and delivery solution for new value propositions. According to Sg2's 10-year Impact of Change® disease-based forecast, over the next decade, there will be an aggressive surge in e-visits, or online care delivery. Technology, convenience and the desire to improve patient satisfaction will begin to displace in-person office visits with virtual interactions, including email, videoconference and online chat.

As with Dow Corning, market dynamics sometimes force organizations to change their business model in order to remain relevant and to support changing customer needs. For example, many health systems are exploring the idea of becoming an accountable care organization (ACO), or a legal entity of hospitals with physicians sharing responsibility for quality and cost across the care continuum. In any care delivery model, System of CARE (Clinical Alignment and Resource Effectiveness) integration is a key solution for providers as an innovative platform for future progress.

"Delivering higher quality, more consistent care at a lower cost is a goal that resonates around the globe. And with the passage of health reform, the urgency for breakthrough innovation is at its highest," says Michael Sachs, Sg2 chairman and CEO. "The stage is set for leading organizations to implement innovative practices -- and where applicable -- create new partnerships to ultimately help reshape the industry."

About Sg2
Sg2 is a health care information company that provides expert-led, future-focused systems for growth and clinical performance. Our advanced analytics, business intelligence, education and publications deliver measurable value across the full continuum of health care services. Sg2 works with more than 1,000 hospitals and health care organizations in the US and around the globe. For more information, please visit

The XIAMETER® brand of Dow Corning Corporation offers market-driven prices for standard silicone products. Introduced in 2002, the business offers more than 2,100 products including silicone fluids, sealants, silanes, emulsions and rubber. The XIAMETER brand is a no-frills model offering cost-effective products through streamlined services and a Web-enabled order platform. Learn more at

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