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 services. One type of competition that takes place in health care amongst the various types of health care organizations is the business’s existing competitors. The existing competitors are the ones that the business has been dealing with for many years. There are also potential competitors, which are companies that are currently operating in another industry or market, but show interest in entering the business’s industry or market.
Some examples are; firms operating in other geographic regions seeking to expand their markets, firms offering similar and related, but not directly competing, products that wish to expand their product lines, customer firms that decide to integrate backward in the industrial value chain, suppliers attracted by margins may choose to integrate forward in the chain, a small, strategically weak firm becomes a serious threat of entry when it is acquired by a company that can reduce or eliminate the weaknesses, firms that feel threatened by a move into their markets might retaliate by moving in the opposite direction, and firms that have a possible fit or synergy with the critical success factors in the industry (Moseley, 2009). Attention must also be paid to indirect competition, those entities offering products or services that may serve as substitutes to the business’s products or services in the eyes of its customers (Moseley, 2009).
Hospitals also compete for physicians by offering more highly trained supportive staff and/or better equipment. Hospitals are more likely to compete for patients by providing more services, better amenities, or discounted prices. There is a strong competition for cutting edge technology and medical talent locally and globally. Hospitals also have to compete for inclusion in insurer’s provider networks. Insurance plans compete for cost to payers, quality of provider networks, credentialing screening, and quality assessment procedures. Competition drives innovation and ultimately leads to the delivery of better healthcare. Competition has played a vital role in shaping the delivery of healthcare in the United States.
Competition results in lower prices and broader access to health care and health insurance. Competition among and between hospitals and physicians intensified with the development of managed care organizations. In addition to putting pressure on costs, managed care plans have pressured providers to use shorter hospital stays and to offer alternative outpatient treatments (Botti, 2007). This led to lower costs and an increase in choice without sacrificing quality. Lower costs and improved efficiency has made health insurance more affordable and available. Another benefit of competition in health care is the innovation in healthcare technology (i. e. endoscopic surgery, anesthetic agents available in ambulatory surgery centers).
There are many competitive success stories in healthcare in the area of pharmaceuticals, urgent care centers, and elective surgeries. Some pitfalls of competition in healthcare are the time and costs that it takes for healthcare organizations to compete against others. Some other common pitfalls are unexpected difficulties when expanding into new geographies, over-optimistic projections in patient numbers, revenues, and profitability, misjudging local income levels and ability to pay, and underestimating local competition. Another pitfall may be over investing in equipment. Competition has severely restricted collaboration among service providers.
An alternative to competition would be collaboration between providers or fixed prices. Success is not achieved by ignoring your competition but rather by anticipating competitive issues and influences so you can always have a proactive plan and strategy for staying ahead of your competition. Competitive intelligence is a process of giving you insights into what might happen in the near future. Competitive intelligence pulls together data and information from a very large and strategic view, allowing you to predict or forecast what is going to happen. This in turn allows you to effectively strategize in relation to your competitive environment.
Therefore, competitive intelligence allows you to remain competitive by improving your strategic decisions and this leads to better performance against your competitors (Evans, n. d. ). The services provided by health care organizations and the choices patients have, have increased in value for patients due to the competition between organizations. The competitiveness ensures better products and services to satisfy the needs of customers. In conclusion, there are many forms of competition that have an influence on services offered by health care organizations. The competition comes from not only other practices, but can include anyone or anything that may influence a prospective patient to not become a patient of an organization.