The model of the Five Competitive Forces, developed by Michael E. Porter, is based on corporate strategy, industry structure and the way they change. Porter has identified five competitive forces that shape every industry and every market and they determine the intensity of competition and hence the profitability and attractiveness of an industry. We further look into how the strategy and industry structure is placed in the field of healthcare and hospitals and analyze the attractiveness of the overall industry. 2.2 Rivalry among competitors Industry Rivalry is one of the 5 forces used to determine the intensity of competition in the industry. Competition in health care is the potential to provide with a mechanism to reduce cost and hence accessible …show more content…
The healthcare sector is expected to continue with its accelerated growth momentum and by 2020 it is expected to reach $ 280 billion [5]. As per 2015 data, no. of beds to population ratio is just 0.09% and no. of physicians to population ratio is 0.07%. Comparatively bed to population ratio is 0.38% and no. of physician to population is 0.19%. The numbers are similar for US and UK [9]. India has multiple players in the healthcare segment but there is a huge gap in the demand and number players in the market. Also, considering the growth potential projected in the next few years, it is a highly attractive industry for the existing players. Considering government hospitals as incumbents: This does not impact the industry attractiveness for private players by much because of following reasons in urban areas. Accessibility in terms of commuting and waiting time is much more in govt. hospitals than the private clinics Even though the cost of physician in govt hospitals are almost nil, the opportunity cost could …show more content…
This can be further substantiated by the fact that the operating margins of Apollo, Wockhardt and Fortis being consistently above 1520% year on year. 2.2 (f) Rivalry among incumbents will increase if high class Govt hospitals like AIIMS, MAMC etc are accessible in the vicinity. This rivalry will increase to the extent that it will bring down the cost per patient in private hospitals and attractiveness of the industry will be reduced but it is less likely to happen in the near to medium future pan urban India. The important differentiation is most of the famous govt. hospitals also have medical colleges associated with it and it is a great source of research experience. Many private hospitals counters this by poaching the experienced physicians with high remuneration. The Private players also looking to various methods to reduce cost including economies of scale and scope so that more people can be treated with better facilities. 2.2 (g) Bed occupancy rate remains high for the last 5 years despite increase in number of beds. Also the growth of inpatient volumes in line with addition of beds are also increasing. Hence the excess capacity is in general small and Industry attractiveness is high
[Cost] Cost could potentially be the biggest factor of the iron triangle and perhaps the side of the model that leaves administrators most puzzled. With new technology being released quarterly, drug prices soaring, a new aging population that can't be supported by the current workforce, Medicare cutting reimbursement payments and leaning towards insolvency, and the price per service continues to rise it seems as if cutting costs down may seem impossible. Not only have hospitals and clinics began looking for more cost-efficient ways to provide care or, unfortunately which programs to cut, the political arena has been evaluating this as well. Since Obamacare has not lived up to its true potential and glory an alternative method must be identified before the nation's model of healthcare implodes from high costs.
Legal RRMC’s external stakeholders consist of the community, patients, MedKey System members, CMS, HMOs and any other private insurances” (Richards & Slovensky, 2004). “One of the major constant struggles RRMC’s hospital administrators were facing was the low Medicare reimbursement rates and trying to operate the facility on such low reimbursements for their services which definitely became a significant external threat to the organization”(Richards & Slovensky, 2004). Eighty percent of patients at RRMC were Medicare or Blue Cross and the administration experienced much difficulty when it came to negotiating prices with Blue Cross due to monopoly”(Richards & Slovensky, 2004). In this market, buyers have high bargaining power because reimbursements
Although the US is technologically advanced and has some of the highest caliber medical professionals in the world, compared to many other industrialized countries, it has one of the lowest outcomes in regards to quality of care. Moreover, it has some of the highest overall medical costs (Panning, 2014). In the US, low quality care and high costs have resulted in fragmentation of the healthcare delivery system. Fragmentation of services often results in patient experiences that are poor, with less than desired
There are some people that say since the physician to patient ratio is so skewed towards patients, this makes it more difficult for patients to get timely and cost effective healthcare. Despite
The medical field is an area that never seems to falter. With increasing technology to increasing charges, it is ever growing and ever changing. Luckily, this means that there will always be a high
This is very helpful to those who cannot pay but also helpful to the hospitals because they can get more government grants and funding for better technology. Here locally in Oregon those hospitals would be; Adventist Medical Center, Providence Willamette Falls Medical Center, Portland VA Hospital, Providence Hospitals, Shriners Hospitals for Children, and Doernbecher Foundation. These hospitals help so many people that need help especially those children whom need specialized care. Most veterans go to the Providence Hospital, or Portland VA hospital.
Hospitals cannot afford to lose money for treating Medicare and Medicaid patients with the hospitals already taking a loss for treating non-insured patients. The impact that hospitals have on the community, state and Gross Domestic Product is enormous. The amount of goods and services purchased from other businesses and the number of hospital jobs supporting community families has a ripple effect when a hospital has to close its doors. In the future, hospitals will have to be more cost effective in treating patients that are either underinsured or non-insured so that it does not affect their advancements and efforts towards new technology. One thing is for certain and that is hospitals play a huge role in the care of all patients and hospitals
n her Nytimes Op-ed article “we need more nurses” Writer Alexandra Robbins reveals that while nurses plays a very important role in improving the health care system of the country, most hospitals and medical establishments are understaffed with nurses. nurses are often one the least recognized group of people who are long due overstretched with the service they provide. Inadequate staffing has become one of the major problems across the country, with the exception of state of California, no other state has set up a standard minimum nurse to patient ratio.many studies has shown that when more patients are assigned to a nurse, the higher for the risk of death, infection,complication, falls and longer hospital stay. the author quoted
INTRODUCTION In the United states(U.S) hospital care is the largest component of the health services which accounts for about 31% of all money spent on health care in 2005 (Catlin et al. 2005; AHA 2006).Contemporarily, enormous use of limited facilities by patients is the supplementary issue of the diverse mixture of hospitals, patients, market settings and financial resources have compromised the health care providers to strike a balance between efficiency and quality.(Woolhandler, and Himmelstein,2004; Coulter et al. 2000). A mix of public and private organization’s hospitals in the US in which Not-For-Profit (NFP) and For-Profit (FP) institutions are found. Healthcare organizations can begin either like FP or NFP.
The increase in both the aging population and the necessary medical care will have significant ramifications on a healthcare system that is already distressed. This will definitely affect resource availability
Each of the forces is determined how competitive in that industry as well as the structure of the industry. Porter’s five forces factors are consists of competitive rivalry, the threat of new entrants, the threat of substitutes, bargaining power from
This theory is based on the concept that there are five forces that determine the competitive intensity and attractiveness of a market. Porter 's five forces help to identify where power lies in a business situation. This is useful both in understanding the strength of an organization 's current competitive position, and the strength of a position that an organization may look to move into. Strategic analysts often use Porter’s five forces to understand whether new products or services are potentially profitable. By understanding where power lies, the theory can also be used to identify areas of strength, to improve weaknesses and to avoid mistakes.
This model is considered as the most potent and useful tool and is widely used by organisations. This model deals with external factors that influence the nature of completion and internal factors how firms compete effectively to be more profitable. Porter’s 5 forces is used. Industry Rivalry : Porter (1980) reiterated that intensity of rivalry is dependent on number and size of direct competitors as numerous and/or equally balanced competitors may lead to intense competition. The rivalry for market share becomes intense when product differentiation and switching costs are
Threat of Substitutes 4. Bargaining Power of Buyers 5. Power vested by Suppliers 1. Competitive Rivalry: According to Porter the competitiveness in any sector is significantly increased by the number of players operating in the field and their major competencies.
The increasing level of competition decrease the profitability. Moreover, this tool provides a foundation to formulate strategy and recognize the competitive landscape in the same industry of the company ("Industry Analysis | Porter’s Five Forces | Competition,"