Article-at-a-Glance Background To manage patients on a risk-bearing basis and achieve demonstrable quality and efficiency of care, a delivery system must exercise consistent and systematic managerial decision making. The organization must have a well-conceived approach to managing knowledge and a corporate ability to acquire information and apply it in ways that enable the organization to deliver better care. Knowledge management can be divided into three components: evidence acquisition, information transformation, and knowledge application. Evidence acquisition Basic information is assembled about the status of the organization and its operating units, the organization's relative position in the environment around it, and the changes in these over time. Delivery systems can accomplish this through the scientific literature, a data repository, or technology transfer. The scientific literature is quite definitive where it has information available, but there are limited topics for which this information is available. A data repository, the collection of transactional information from clinical and business systems, allows a flexible questioning of what has happened, so that processes can be improved. Technology transfer–know-how transferred from one physician, caregiver, hospital, clinic, or system to another–can be achieved with comparative data or field experiences. Integrated delivery systems can transfer technology across different operating units. Information transformation Information learned can be applied by process improvement, education, and health services research to previously existing templates or hypotheses about the organization and its environment. Process improvement connotes a process by which people engage in analysis to understand how the organization operates and how to change to achieve its business goals. In education, a formal structure around the knowledge gained is created and used to advance future learning about the organization. Health services research represents the attempt to use information to develop operating procedures and rules by examining testable hypotheses about care delivery. Knowledge application The knowledge an organization has gained can become a systemic and reliable part of managerial and clinical practice. The organization derives economic value from information and knowledge–by clinical engineering, the mechanism by which clinical processes are defined in order to accurately describe and optimize the practices of clinicians; decision support, the process by which information and evidence is presented to a physician or other caregiver at the point of care so that decisions can be made more quickly and accurately; and by member empowerment, the process by which patients and their family members themselves are educated, provided tools for self-care, and enabled to be more effective consumers. Conclusion By using knowledge management to inform and guide the process of managerial decision making in practical and applied ways, the organization will not only become more intelligent and more effective in the marketplace, but it will be able to build on its apparatus to maintain a learning environment and therefore its market advantage well into the future.