Competition is one of the determining factors in the allocation of resources within the health industry. In the medical services market, it can be defined as a process of interaction between patients, medical institutions, and insurance companies aimed at achieving everyone’s target needs. An example of implementing the strategic analysis in the real world scenario is a new for-profit 50-bed acute care hospital. St. Anthony Medical Center is slated to open in the next eight months, offering a full complement of services. Thus, there is a need to conduct a strategic analysis that allows managers to evaluate the healthcare institution’s activities. As a result of the research, the company receives the required information to develop a long-term competitive strategy. An adequately prepared strategic analysis of an enterprise allows it to make informed management decisions and reduces the risks affecting its position in the industry.
Understanding the Environment
The growth of global competition leads to the need for reengineering business processes to ensure a medical organization’s efficiency. The point of strategic planning is that it combines the main objectives. The analysis can develop policies and related actions based on anticipating changes in the environment, being useful for allocating medical organizations’ resources in a particular and relevant way. In situations where the organization’s capacity does not match the challenge of capturing new opportunities and does not provide risk aversion, healthcare leaders should concentrate personnel’s focus on new plans (Ginter et al., 2018). Therefore, such approaches can be successfully implemented through strategic planning.
Since medical services are considered as any other product that can be bought or sold according to the market’s classical laws, the US healthcare system is an example of a typical business model. The medical sector is represented by developed private medical institutions and commercial medical insurance systems. Due to the intense competition, conditions are created to improve quality, adopt innovations and technologies, and reject economically ineffective planning strategies (Westra et al., 2017). These circumstances define the positive aspects of the healthcare market model. A medical institution’s competitiveness can be assessed according to several areas such as external competition, staffing, stakeholders and organizational capacity.
The most significant impact on the competitive advantages of medical institutions arises from uncontrollable factors. For example, this might be the outstripping growth in the average cost of medicine compared to this growth in other spheres of the economy (Westra et al., 2017). Such conditions also include the monopoly of clinics and pharmaceutical transnationals and the medical education system. Currently, effective management is achievable only if adapted to constant external environment changes (Westra et al., 2017). It is impossible to stop the growth in the costs of medical care. Still, it is reasonable to find other reserves for the rational use of resources, new forms of organizational structures, and adequate marketing.
Increase the employee’s responsibility for the quality of the work performed in the treatment and diagnostic process framework. The medical services provided principally depend on improving the personnel training and retraining system (Westra et al., 2017). For competitive advantage, strategic planning should consider the work environment, which is created to stimulate each employee’s desire to master the knowledge of technological advances and raise their professional level (Ginter et al., 2018). Moreover, the introduction of new medical equipment requires a different approach to medical workers’ training, including universal practice in modern practice standards.
Stakeholders and Organizational Capacity
In the healthcare system, the acquisition of assistance, payment, and service provision are separated processes. As a result, the emergence of a multi-level stakeholder system increased organizational capacity standards (Westra et al., 2017). Corporate payers are represented by insurance companies and health maintenance organizations, creating funds and finance the provided medical assistance (Westra et al., 2017). Since stakeholders’ interests may not coincide, employers are interested in paying the minimum insurance payments. Patients need to receive quality care; medical institutions are engaged in making a profit and providing the maximum number of services that are not always required (Westra et al., 2017). Insurance companies tend to spend fewer amounts on patients’ treatment.
Thus, competition in the health industry constitutes the environment of relationships among production and consumption processes of medical services. It is performed within the framework of a specific civilized form of concurrence between medical workers to manage the patients’ target needs and their highest satisfaction level (Westra et al., 2017). The concept of competition indicates understanding a particular process and the function of relationships between subjects. It might lead to a significantly positive result that characterizes medical care quality for a good set of specifications established and accepted parameters.
Strategic planning management should become the basis for adopting a medical organization’s leadership in the new conditions. It is necessary to include a comprehensive analysis of competition conditions to prevent a conflict of interest in the participants’ medical services market. It should consist of external conditions, such as state policy in health care, scientific development advances, and internal ones, for example, determining the price and quality of services and particular organizational issues (Ginter et al., 2018). For healthcare organizations’ strategic frameworks, it can be useful to determine strengths, weaknesses, opportunities, and threats regarding the external and internal environment. The favorable position is ensured by the availability of modern medical equipment, qualified medical personnel, raised salaries, and affordable prices combined with high-quality therapeutic services (Ginter et al., 2018). Weaknesses are determined as high costs of acquiring modernized medical equipment and a limited range of medical services compared to larger medical institutions.
Internal factors include opportunities and threats; the continued stable growth of the healthcare market, including in the context of economic crises, is beneficial for the hospital’s financial state in the long term. The upward trend of high demand for quality paid medical services will remain (Ginter et al., 2018). The key threat is the annual growth in the number of for-profit acute care hospitals. Consequently, the healthcare system’s competition is increased, and there are specific barriers to entering the medical market and rising costs for consumers.
Porter’s Five Forces of Competitive Position Analysis
Profound threat analysis requires the appliance of Porter’s five forces model. Concerning threats of new entrants, the medical services market should be classified as an imperfectly competitive market. A small number of sellers dominate, while high barriers limit new businesses’ entrance into the industry. The hospital needs to have an appropriate material and resource base and go through all the administrative approval stages (Ginter et al., 2018). Otherwise, it cannot count on high profits and dominant market positions.
The threat of substitute services is high due to numerous market actors. These are multiple healthcare organizations; competition within healthcare provides the importance of patients’ rights as consumers, including choosing a clinic and a physician (Ginter et al., 2018). Considering the bargaining power of customers, the clinic is motivated to compete for clients and strives for profitability by lowering costs and increasing public health services’ utility. Several factors affect the competitive environment, for example, the patient’s right to freely choose a doctor and ensure free access for patients to medical institutions and medical practices (Ginter et al., 2018). A healthcare facility depends on several provider groups, which is crucial when suppliers offer specialized products. For example, pharmaceutical companies that produce brand-name drugs have a more substantial influence on healthcare organizations and customers than pharmaceutical companies that manufacture generic or older medicines (Westra et al., 2017). Consequently, St. Anthony Medical Center should focus on providing a high-quality drug supply.
As long as the healthcare system is a market, it is crucial to promote marketing campaigns to increase popularity among citizens. Patients tend to choose to access the Internet via mobile devices (Ginter et al., 2018). Based on this, the hospital can develop a complete marketing strategy via creating mobile applications. Due to the abundance of offers and advertising, patients began to value the quality of medical services and their comfort (Ginter et al., 2018). The private and public strategy should focus on increasing healthcare provision quality to the consumer (Ginter et al., 2018). In this case, value is understood as the standard to which the patients’ needs and interests are met.
Internal and external environment analysis is needed to determine a medical organization’s behavior strategy and implement this strategy in life. It is essential to properly study the organization’s environment for the most effective management decisions necessary for successful performance. Thus, a medical company’s appropriate option to achieve effective long-term functioning and successful development is to pay increased attention to the strategic framework. This implies a comprehensive analysis, which can be produced using the above methods, giving a relatively objective picture of its competitive position. Taking into account this condition, the hospital guarantees the effectiveness of strategic and operational management decisions.
Ginter, P. M., Dnucan, W. J., & Swayne, L. E. (2018). The Strategic Management of Health Care Organizations (8th ed.). John Wiley & Sons.
Westra, D., Angeli, F., Carree, M., & Ruwaard, D. (2017). Understanding competition between healthcare providers: Introducing an intermediary inter-organizational perspective. Health Policy, 121(2), 149-157. Web.