Perpetual Mercy Hospital’s Market Competition

Introduction

For the last few decades, the health care industry has undergone a dramatic transformation. Before the 1960s, hospitals were hugely considered as charitable organizations that engaged in non-profitable ventures. However, the introduction of federal legislation in the 1960s saw an increase in the number of hospitals and clinics. The Hill-Burton Act provided billions of dollars for hospital construction leading to the expansion of hospitals, medical schools, and improved health care system in the US.

Problems

Perpetual Mercy Hospital is a 600-bed, charitable general hospital located in the southern periphery of a major western city, with prolonged services of a Downtown Health Clinic (DHC) that is an ambulatory facility. In the United States, the hospital is one of the metropolitan hospitals and has the highest overall occupancy rates. Nonetheless, the hospital has been faced with administration and executive concerns, on its patient mix, caused by the unfavorable demographic shifts. On the contrary, the Downtown area has an influx of young families and has many office workers. In a recent interview, 400 people acknowledged that they would access a newly developed health care clinic in the same location as DHC, even with the presence of a regular physician in DHC clinics. A close analysis of workers working downtown revealed that their workforce comprises of clerical and managerial workers, who enjoy health insurance benefits. Current research indicates that many people are likely to utilize the service provided by the clinic is suited within the downtown premises area.

Analysis

In the year 2000, the Perpetual Mercy Hospital administrator was informed of a possible competitor. According to the records, the competitor had been conducting business surveys to ascertain the demand for opening a clinic just a few blocks from the DHC facility. Through his or her research, the competitor realized that patients in the neighborhood needed extended hours of operation. In addition, improved services such as gynecology were essential. Similarly, the new facility was to bring in the needed new health care services, among which were extended operation hours and a reduced fee. In addition, appointments were not going to be considered necessary in the new firm. Moreover, as compared to the DHC facility, the new facility allows customers ease while assessing their medical services in the clinic with the availability of ample parking lot, short waiting time, and business card transactions, unlike the DHC.

As compared to the existing hospitals, the facility vicissitudes will act as stimuli to the consumer as they will be lured by the changes and benefits of the venture. This implies that the consumers in the end will have to evaluate the two hospitals to realize their difference. Thereafter, it will be upon the consumers to taste the new facility’s services hence determining its acceptance.

Since its inception, DHC’s main goals have been to expand the hospital referral base, increase privately insured referred patients, and start an association with the business community. Similarly, the hospital aims at becoming an independent firm within its three years of operation. The specific services being offered by DHC include preventive health care, minor emergency care, referral for acute and chronic health care problems, specialized employment services, primary health care services, and basic X-ray and laboratory services.

Researches indicate that the hospital was progressively achieving its goals within their first year in course, before the inception of a new clinic in the downtown area. As illustrated by the article, DHC’s administrator Sherri Worth worries more about the competition being waged by the newly established hospitals downtown. Thus, within their first year in operation, the hospital has experience encountered numerous challenges and lessons. First, the presence of a new competitive clinic downtown has greatly reduced the number of DHC’s potential clients. Similarly, the new hospital has hampered the DHC’s program towards achieving its mandate service and objectives.

To meet their objectives, Perpetual Mercy Hospital must be aimed at provision of quality service and improve on their image quality. Similarly, the hospital must take a bold step and compete with the newly established clinic, five blocks away from its premises. Perpetual Mercy Hospital has to determine the best course of action to help the Downtown health clinic meets its objectives. As illustrated in the article, the hospital’s goals of becoming self-supportive in the next three years are threatened by the possibility of a competing clinic opening downtown. As a result, hospital executives should consider the viability of the downtown clinic. Among the options to be considered are selling the firm, adding gynecology services, developing employer services, and extending hours of operation.

Through the research conducted by the competing clinics’ owners, Perpetual Mercy’s clinic was found to be inefficient, thus the need to set up another clinic within their locality. To avoid adverse future losses, the hospital management should consider selling their clinic to another developer, who will in turn improve its services to meet the customer demand. Similarly, Perpetual Mercy’s clinic administrators should consider selling their health center much earlier before it becomes insolvent. Through this, the hospital’s administrators will save the charitable organization from future economic blunders.

As asserted by the competitor’s survey report, the Downtown health clinic has failed in its provision of some essential health care services needed by the patients. Among these health services are gynecological services, treatment of minor emergencies, and inefficient customer care services. As a result, the hospital management team should ensure that their services meet their customers’ requirements, and their mode of delivery is streamlined to improve its efficiency. Failure to do this, the Downtown Health Service’s clinic returns, and services will continue to dwindle.

Another strategic response that the hospital administration can do to evade future challenges is to confront the new environment created by its competitor. Through this, the hospital administration will be required to depart from their conventional methods of hospital management. Thus, they have to resort to other non-conventional methods such as competing aggressively for physicians, diversifying their acute inpatient care into a broader mix of medical services, and developing captive distribution systems aimed at controlling the patient flow. With active committed medical personnel, Perpetual Mercy Clinic in the downtown premises will improve on its provision of service.

Hospitals are considered newcomers in the advertising industry despite its beneficial effects. As an appropriate marketing tool, medical institutions should embrace advertising tools to foster their public confidence and awareness. Through this methodology, Perpetual Mercy Health service administrators’ should consider the adoption of promotional approaches aimed at introducing their new packaged services to the public. In doing so, the hospitals will not only revive their reputation but also increase their patient turnover.

Recommendation

Due to unseen competition, it is affirmed that the Downtown Health Clinic has realized huge losses. To restructure its organization, the hospital’s executives must come together with the hope of reviving the clinic through the implementation of appropriate strategies aimed at repositioning the Perpetual Mercy Hospital. To improve their performance, DHC has suggested a reduction in its patients’ waiting time. Thus, more needs to be done to minimize crowding realized during lunchtimes if they are to realize reduce waiting time. Similarly, more physicians need to be allocated during lunch hours as records indicate that 70% of the patient turnover occurs during this period.

Conclusion

In the 1960s, the government has poured millions of dollars into the health care sector causing a boom in independent hospitals and respectively a large boom in the insurance cover. With the government, reduced funding in the 1980s saw an increase in private health care organizations aimed at increasing the provision of health care in society. Similarly, after the government’s withdrawal, several ambulatory health care services emerged threatening the existence of major public hospitals such as perpetual mercy hospitals. Due to this, there was a shift in trends in the hospital industry from charitable institutions to commercial services such as health insurance, employment compensation, and fringe benefits. To survive in the market, Perpetual Mercy Hospital has to make necessary changes. With increased market competition, the institution has to assess its organization’s principles, strategies and within its environment and then come up with the appropriate strategies to be adopted. Likewise, Perpetual Mercy Hospital’s management staff must support the concept that the public’s position will ultimately affect the extent to which they participate in coping approaches seeking social support.