Competitive Markets of Integrated Health Delivery Systems

Introduction 

Only in 2017, the United States expenditure on healthcare was about $3.5 trillion which is approximately 18 percent of the Gross Domestic Product ( Conrad, 2015) . In the most current observation, the healthcare expenses have outpaced the growth of the GDP for the previous half a century. For ardent entrepreneurs concerning the bearing and balance of healthcare services, it would give the impression of a prolific ground for doing business. Although the knowledge of the incentives as well as the healthcare industry structure can be off-putting as the subject regarding healthcare is a complex one. In this paper, we are going to discuss the Competitive Markets of Integrated Health Delivery Systems 

Describe the determinants of market power for IHDS and assess how IHDS can use the market power to demonstrate superior economic efficiency and effectiveness. Explain how market power can affect labor market outcomes for your organization 

Healthcare system refers to the type of fundings and healthcare provision available in a country as well as the healthcare market is the relationship and the point in which the supply and demand of interact in the healthcare system. When it comes to healthcare delivery system, there are some indicators. In today’s healthcare, the most predominant determinants that are viable are the accessibility of care, care quality, and economic value. Also, these determinants directly determine the healthcare consumer views on the system functionality views on healthcare as a right or a commodity. IHDS as profit-oriented healthcare system is viewed as a commodity, and in this case quality and economical cost become the salient indicators of the functionality of the system. It becomes more difficult to balance all the determinants which are the economic cost, accessibility, and value in the healthcare market. Possibly one or two of the indicators may be compromised.

The position in which IHDS stands, it is a distinguishable healthcare system by identity which gives it the market power to become price setter in equilibrium point in access of care, quality and economic value in healthcare services. By this, we can deduce that healthcare is not consistent with normal free flow market as a result of quasi-monopolistic competition as well as the principle-agent crises, on the part of medical consumers that bring about inadequate knowledge on healthcare consumption ( Conrad, 2015) . Thus when it comes in the free-market structure, it allows for IHDS to be price-setters, and find a way around the competitive nature of the market. When healthcare providers are price-setters, the price will be set high, which will lower access, create higher quality (due to competition for consumers), and be economically inefficient.

Nonetheless, the moment the government controls funding’s providers in the healthcare system are left with the only option of either adopting the government pricing or may risk not to be granted payment ( Neprash et al 2015) . Thus making the government work easier when it comes to price-setting. As the government regulates healthcare finances as well as the healthcare provider, the prices will be likely practically set closer to cost. Lower price margins will probably lower the can lower care quality and establish waitlists. Although the moment the government particularly controls healthcare funds and not the healthcare provision, the government will be inclined to place healthcare services pricing higher obligated by the healthcare providers negotiations ( Ginter, Duncan & Swayne, 2018) . The higher cost of healthcare services will raise the quality of care via competition, guarantee accessibility, with the exception that the system will be economically unproductive.

Evaluate the potential economic consequences of the applied community rating and experience rating on IHDS. 

The constant growing insurance rate has become a huge setback for various businesses no matter the size. As the healthcare system is reforming, IHDS may have to incur more expenses to cover employees as a consequence of the  Affordable Care Act . When the community rating is mandated to set premiums, they will be a wider expenditure for IHDS as it covers across the wider group ( Neprash et al 2015) . In a wider view, the experience rating is applied to medical claims of a group. In this rating, premiums vary from one group to another since various groups have a diverse risk. For instance, individuals working in various industries are open to the elements of different levels, and types of risks, individual in some jobs are more vulnerable to the specific type of illness or injuries, and the older population represents higher risks than younger groups. Groups of higher risk are likely to incur high medical utilization which may result from high chargers from the premium they are charged or which they prefer. The high-risk has issues which arise from high rating which makes these chargers higher and unaffordable for other groups seeking premium services ( Ginter, Duncan & Swayne, 2018) . The members of the larger population in the community experience risk in rating spread. For a person to obtain premiums, they need utilization experience among the population as they look at the entire population to provide the same type of health insurance coverage. The same insurance rate cover should apply to the entire community rating regardless of the occupation, health risk indicator, age, and gender. For example, people with the medical condition and those without medical conditions should be able to access premium services. This situation is seen when community rating is used in determining premium which covers good risks, poor risk insurance, and health insurance. Also, the high premium costs shift from people with poor health to people with good health and making these insurances affordable for everyone. 

Assess the economic assumptions of a competitive market model on IHDS and identify the evidence for and against the competitive model. 

Focusing on market competition, when the market structure allows easy entrance and exit where the generally the business can freely enter and leave the market at will. The healthcare market in the United States is not in conformity with this structure for they are some assumption that a competitive market model which will impact IHDS operations ( Neprash et al 2015) . These assumptions are that first of all, the patients/consumers have the complete knowledge of the nature of services required, the projected outcome of their decision and the rewards from the services. The statement may not be true in every healthcare setting as most of the time the consumer operates under distinct information which is an inconvenience when it comes to the time of provision of healthcare services. For instance on insurance when a patient at first purchases the health cover regularly they may not have full information to ascertain if they possess particular health cover. 

The assumption of the homogeneity of the product in the competitive market model does not apply in the case of the healthcare system as the product/services offered in are differentiated and suite each client as per their need. In the case of IHDS, the firm has strived to differentiate its healthcare services from its competitors who have given the competitive business edge to survive in contemporary healthcare. Also in the competitive market model, one group is often affected by this model are complementary or alternative healthcare providers. The precincts under which they operate plus the reluctance of the insurance industry to pay for their services gives them more or less monopolistic power over the healthcare industry. In this kind of scenario, IHDS is required to have the capacity to enter the market for competition to be viable and there ought to be other many providers competing for customers ( Ginter, Duncan & Swayne, 2018) . Also, for IHDS to benefit from the health cover plans consolidation as well as multispecialty practices it must increase the group negotiation leverage but in some areas in the United States a single sizeable healthcare system which has become the only provider of key health services in so doing contains some restriction. Alongside allowing the healthcare facilities as well as group practices leverage during negotiations of prices of supplies/services the consolidation is likely to increase the healthcare cost to the consumes since they are no longer any competition. In these grounds competition in the majority of the healthcare market will continue to be lesser effective as a result of the precondition for totally competitive markets are partially met. A perfectly competitive market established healthcare system would stipulate an improved of independence of regulations, accountability, public engagement as well as assessment at all levels to safeguard the public benefit and to sustain the demand and the supply of health care commodity. 

Compare and contrast alternative delivery arrangements for IHDS regarding their microeconomic efficiency 

When it comes to the Accountable care organization the activities around Affordable Care Act endorse and mirror both the private and public sector ( Trish & Herring, 2015) . The law provides a voluntary program inside the Medicare program whereby IHDS can integrate and contribute to the savings they are can generate by plummeting the treatment cost of the Medicare patients at the same time keeping up and bettering quality of care ( Neprash et al 2015) . The IHDS allow prospective accountable care organizations to select one of two payment mode, centered on their ability and readiness to assume financial risks. In the first track , Individuals will be entitled to savings share generated from treatment of the Medicare consumers below projected spending levels at the same time advocating or the quality of care improvement , but these people are needed to change over to the second track once a certain timeframe has passed. In the second mode , Accountable care organizations will be entitled to bigger financial benefits compared to individuals in the first mode although they would also be needed to settle up IHDS the fraction of any expenditure higher than the estimated outlay targets. Apart from this initiative, IHDS has strategize d to examine the alternative accountable care organization compensation methods , for instance, partial capitation design of payment that would offer accountable care organizations with an open payment system to verify their original shift along with investments for the future in quality enhancement out of the Center for Medicare and Medicaid Innovation. This program will update and affect future modification to IHDS’s Accountable care organization program ( Ginter, Duncan & Swayne, 2018) . IHDS targets to take into account an additional model examined in the future for decision - making purposes. 

Identify several alternative measures of IHDS market competitiveness and economic evaluation 

One decisive factor that can be used to evaluate the competitiveness of IHDS on the market is its turnover about other businesses that are established the identical industry ( Ginter, Duncan & Swayne, 2018) . This relationship makes it visible the share in which the market the business owns, in this scenario the IHDS is a market pacesetter as well as giant healthcare operator, and it will have a larger number of clients that are affiliated to the business. 

References 

Conrad, D. A. (2015). The Theory of Value ‐ Based Payment Incentives and Their Application to Health Care.  Health services research ,  50 , 2057-2089. 

Ginter, P. M., Duncan, W. J., & Swayne, L. E. (2018). The strategic management of health care organizations . John Wiley & Sons. 

Neprash, H. T., Chernew, M. E., Hicks, A. L., Gibson, T., & McWilliams, J. M. (2015). Association of financial integration between physicians and hospitals with commercial health care prices. JAMA internal medicine , 175 (12), 1932-1939. 

Trish, E. E., & Herring, B. J. (2015). How do health insurer market concentration and bargaining power with hospitals affect health insurance premiums?. Journal of health economics , 42 , 104-114. 

Eggert, A., Ulaga, W., Frow, P., & Payne, A. (2018). Conceptualizing and communicating value in business markets: From value in exchange to value in use. Industrial Marketing Management , 69 , 80-90. 

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