Health care is a vital service that touches the lives of many Americans on a daily basis. The United States health care industry is continually expanding and changing. As the health care industry grows, so too does the competition. The competition is among hospitals, health plans, physician groups, drug companies, physicians and hospitals, and hospitals and health plans. The competitions among hospitals includes, but are not limited to, specific procedures, market share, quality of service, cost, location, and suppliers.
The effectiveness of procedures such as operations, diagnosing, testing, and therapy, if necessary, comes down to the space available within an organization. The broader space an organization has the more effective the procedures will be simply because there will be more space available for beds and equipment. To be put quite simply, hospitals must become full service in order to obtain expensive medical technology and programs (Doremus, 1992). Being able to obtain expensive medical technology and programs will give hospitals an edge over the competition.
In order to successfully compete, each hospital must have market-share leverage. When there are hospitals within a 15 mile radius of one another they compete for market-share (Thomson, 1994). For example, if there are two hospitals within a 15 mile radius of one another then there is going to be competition; specifically between the emergency room departments. Market competition is distinctly associated with the ability to maintain emergency departments.
The presence of competing emergency room departments within a 15 mile radius are both at risk of closing (Hsia, Kellermann, & Shen, 2011). Location plays a major role in market share; one hospital in a particular location may do better than a hospital 15 miles away. Customers will go to the nearest hospital, especially when they are in an emergency situation. The downside is that while one hospital may be closer the quality of care delivered may not be the greatest.
As the health care industry grows there is more demand for physicians, resulting in physicians competing against one another. More and more physicians are performing procedures in their office, as well as specialized clinics. For example, tubal ligation can be performed as an out-patient procedure under local or general anesthesia in a physician’s office. Customers benefit because there is no lengthy hospital stay, on the other hand if a customer needs a major surgery or procedure then he/she may not necessarily get to see their primary physician.
Another positive side to competition among physicians is that the quality and type of care customers receive is continually changing and improving for the good. Without drug companies the health care industry would have a difficult time improving, as well as function. The social value of the pharmaceutical industry is apparent and profound. Not only is it the source of cost-effective treatments that continue to increase life expectancy and bring better lives, it is also a significant contributor to the strength of the United States economy (Glover, 2002, para.1).
Great research is put into the development of pharmaceuticals; each company wants to sell the top of the line products. The downside to competition among pharmaceutical companies is that each company is so wrapped up in the competition that they often lose focus on what is important, producing and delivering top of the line pharmaceuticals. A lot of times pharmaceutical companies develop substitute pharmaceuticals, which is fine but they will not be the best solution all the time.
Careful planning must be exercised when the research and producing of pharmaceuticals are implemented. Competition among hospitals and physicians are long standing. Customers are typically loyal to their physicians, generally because they place their lives and well-being into the capable hands of their physicians and they trust what their physicians tell them. If, and when, a physician ever decides to resign from an organization then their loyal customers will follow wherever he/she may decide to go, in turn causing an organization to lose profits.
Another scenario is an organization may have a highly skilled physician that is an important asset to the organization; the organization is not going to want its top physician going elsewhere. The hospital would compete with the other hospital to ensure its top physician stayed on board. References Doremus, H. (1992). Managing competition in the health care industry. Retrieved March 1, 2013, from http://search. proquest. com/docview/226910539? accountid=32521 Glover, G. J. , (2002, March). Competition in the Pharmaceutical Marketplace. Retrieved March 3, 2013, from http://www. ftc. gov/opp/intellect.