Competition in the Healthcare Industry Essay

This paper pertains to the marketing of Health Care Services and provides the steps and history of marketing in health care and the effects of marketing on the health care delivery system from 1950 to 1990. It introduces the health care consumers and their role in the marketing process as well as the factors that influence consumer behavior. These factors influence the success of marketing in health care. It also provides the requirements for successful marketing and current techniques and strategies used by health care organizations.

The healthcare system in America started as a predominantly volunteer system where patients were required to pay little to nothing for treatment. Since it began, the healthcare industry has seen tremendous changes that have transformed it into a business entity which has operations like financial management, strategic planning and functional specialties to keep the industry viable. The industry is one of the largest in the country employing 15 million people with a projected increase of jobs with 3 million jobs annually. As the healthcare industry continues growing, services and personnel are changing, and various dynamics are coming into play to accommodate changes (Smith, Saunders, Stuckhardt, & McGinnis, 2013).

“Within the health care industry, competition impacts several relational perspectives; with numerous studies reporting the impact of increased competition. For example, several studies have examined the relationships between competition and quality of health care (Zwanziger and Melnick, 1996; Enthoven, 1993; Kassirer, 1995; Chassin, 1997); between competition and health care system costs (Robinson and Luft, 1985; Robinson and Luft, 1987; Robinson and Luft, 1988; Zwanziger and Melnick, 1996; Zwanziger and Melnick, 1988; Robinson, 1991); and between competition and patient satisfaction (Miller, 1996; Brook and Kosecoff,

This force describes the intensity of competition between existing players (companies) in an industry. The results of high competitive pressure could impact prices, margins, and hence, on profitability for every company in the industry.

If the health care market place continues to consolidate, the defined line of managed health care continues to be blurred. As the health care market demands change, so does the managed health care plans. These ever changing plans are crucial for the survival of managed health care plans and companies (Kongstvedt, 2001).

price, quality, convenience, and superior products or services); however, competition can also be based on new technology and innovation. A key role of competition in health care is the potential to provide a mechanism for reducing health care costs. Competition generally eliminates inefficiencies that would otherwise yield high production costs, which are ultimately transferred to patients via high health service and delivery costs. With so much competition going on in the healthcare field and around the healthcare organization of my choosing, reducing cost for the patients will keep my organization in the competition for more patients to come

A competitive market is one that allows easy entry and exit: a market in which companies are generally free to enter or to leave at will. This does not describe the health care market in the US. There are certain assumptions that the competitive market model operates under some assumptions, first is the consumer/patient has full information about the nature of the services required, the anticipated results of their decision and the benefits obtain from the service. This is not true in health care often time the patient is operating at a distinct information disadvantage when they require health care services such as insurance. If a patient purchases health insurance often they don’t know enough information to ascertain if they have

There are many different forms of competition among health care organizations. Some of them are the prices of services, different co-pays someone will have to pay out of pocket, lower premiums, they have to be competitive in the quality of the service in which they perform daily. The health care competition is being advertised every day. The competitive nature of business cause them to reach out to the community. The health care industry has to fight for the approval of the community, the government, the insurance companies, the pharmaceutical companies and of course the stake holders as well as future investors.

In all industries, competition among businesses has long been encouraged as a mechanism to increase value for patients. In other words, competition ensures the provision of better products and services to satisfy the needs of customers (Glover & Rivers, 2009). In the health care industry, competition has an impact on many relational perspectives. There have been several studies examining the relationships between competition and quality of health care, competition and health care system costs, and competition and patient satisfaction. Some elements of competition in health care are price, quality, convenience, and superior products and

For several decades health care has been tied to the economy and with the current downturn we see continued efforts to control and reduce over-head costs. Health care organizations in their effort to become more efficient and address changes in the industry have altered their strategic business plans. Lee & Alexander (1999) researched organizational change in hospitals and their survival, in this paper I hope to discuss their findings and add other examples to validate their conclusions.

Analyze the current health care delivery structure in your state. Compare and contrast the major determinants of healthcare market power.

The concept of health services marketing is centered on “the analysis, planning, implementation, and control of carefully formulated programs designed to promote voluntary exchanges of values with target markets with the purpose of achieving organizational objectives (Longest et al. 2000, p 358). The marketing department of any health care organization requires knowledge of the current and future needs and desires of the target market, which will allow strategic planners to determine services and products that can be offered. An assessment of the target markets

Existing Competitors. Rivalry among competitors within an industry use price discounting, new products, marketing, and other techniques to be competitive. Profitability of an industry suffers from high rivalry. The intensity with which companies compete and the basis on which they compete determine to which degree rivalry brings down an industry’s profitability (Porter, 2008). Pure competition is considered by economists as a competition with a high

With each passing day the health care industry is experiencing an increase in participants due to its perfect competition nature. Due to this increase the industry participants, the industry has vicious competition which in effect leads to an increased in the cost of doing business. Smaller companies within the industry are hard hit by this competition due to their limited resources and therefore find it hard to remain relevant within the industry. Due to the looming threat of closure and liquidation, small companies must explore various strategies they may use to remain in operation. On the other hand large hospitals that are looking to eliminate competition and at the same time improve on their market share and in effect their revenues, merge with those that are struggling with low profitability. These mergers are beneficial to the smaller struggling companies since they provide increased savings on company overheads and availability of specialized machinery. Growth is also expected due to the increased market share as well as the good will already established by the large company. Contrary to popular opinion, mergers are not always between a large and a small company. In the healthcare industry two small companies may come together in order to pool their resources together and be in a position to compete against the large companies.

I am a registered nurse employed in a hospital in the healthcare industry. Porter’s five forces model begins with the first force being the intensity of rivalry among incumbent firms (Parnell, 2014). Competition in healthcare, particularly hospitals, is limited. Due to the accredidation process, government regulations such as a certificate of need (Certificate of need, n.d.) and licensing of facilities and providers, competition is limited. The Federal Trade Commission (FTC) is looking at ways to increase competition in healthcare such as opening up opportunities for nurse practitioners, increasing the availability of such technologies as telehealth and establish more competitive healthcare pricing. In cities, there is more of a concentration of competitors. The hospital that I work at is the largest between Memphis and Nashville and has the busiest ER in the state of Tennessee. Therefore, the concentration of competition is low for that particular hospital. There are high fixed costs with a hospital such as buildings, overhead, equipment, and salaried personnel. Yet, a hospital does not cut their prices to increase patient census. However, it could be questionable in a low census period as to whether there are additional tests run or hospital admissions that would ordinarily not happen if the census were higher. There is strong growth in the healthcare industry with the industry growing at twice the rate of the national economy (Health Care Industry, 2012).