The modern healthcare industry is dynamic with new policies and technological developments responsible for monumental changes in the competitive landscape. In the US, the quest for universal healthcare, through Medicare and Medicaid, and innovations in medical procedures present both challenges and opportunities for existing players. Sustainable competitive edge in the industry requires strategic planning based on an understanding of the current and future market scenarios. Therefore, the five forces that shape organizational strategy are critical in the planning process.
As a public health institution, the organization must place itself strategically by implementing policies that act as barriers to new entrants. According to Lethbridge (2011), government and public policy make it difficult to understand the public healthcare sector, thus serve as barriers to potential multinational entrants. Nevertheless, private health organizations are likely to develop a knowledge based on how to operate in complex public healthcare systems posing a threat in the process. The organization needs to adopt continuous learning by investing in new ideas and knowledge about the public healthcare sector. The process must include strategies that progressively influence policy in favor of the public sector to act as a deterrent to new entrants. The organization is likely to face increased pressure to adopt emerging technologies that improve service delivery, efficiency, and patient outcomes. Public institutions face problems of funding which incapacitates acquisition of relevant technologies. Therefore, it is imperative to adopt strategies that avail the necessary technologies to give the organizations an edge over competitors.
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Rivalry among existing competitors includes strategies to do with pricing, new products and services, advertising campaigns, and service improvements (Porter, 2008). Public institutions experience challenges trying to create transparency in their pricing. Adoption and implementation of relevant systems of pricing are poorly executed. Strategies are needed to facilitate the synchronization of systematic processes to ensure transparency (Lethbridge, 2011). Financially able organizations are consolidating through mergers and acquisitions to expand their market share and control. The institution lacks resources to undertake a similar process and lacks the impetus to enter into the privatization business. Therefore, maintaining profitability calls for strategies that allow partnerships and collaborations to rival competitors growing in size and stature.
As outlined by Lethbridge (2011), substitute products create uncertainty about the future of the industry and the possibility of different ways of delivering care. Different drugs have different treatment outcomes that drive patients’ preferences. However, the cost of switching to the new drugs is the main limitation. The hospital can devise strategies that make it more service oriented rather than just product oriented to counter the threat of substitutes. Substantial product differentiations call changes to meet customer preferences. The institution risks losing the trust of clients because of the delayed efforts to introduce substitute superior products. Therefore, strategies to make customers understand that their individual needs are important rather than the product they are buying are needed.
The complex environment in which health institutions operate call for the establishment of efficient supply chains with multiple suppliers (Gaynor, Moreno-Serra & Propper, 2013). However, existing policies limit the organization to doing business with specific contracted suppliers. A review of the institution's logistics systems is mandatory give it an upper hand by choosing and possibly controlling the price. Volume is a critical factor for most suppliers. The size of the hospital does not allow for the realization of such an advantage to influence prices. Therefore, approaches are needed to create dedicated suppliers whose businesses depend on the organization to survive.
Bargaining in the health sector is limited because most buyers own individual home health. However, most seekers of healthcare service require specialized customization and failure to provide them with such services increases their bargaining power. The organization faces a challenge in building a large customer base due to existing competition. Therefore, strategies to streamline services are needed to counter the threat of buyers having too much power. Customers are also known to seek discounts for services requested. The implication of the organization is the difficulty in price differentiation (Kirkwood, 2016). Strategies for rapidly innovating new products and services that fit different price brackets must be explored.
References
Gaynor, M., Moreno-Serra, R., & Propper, C. (2013). Death by market power: reform, competition, and patient outcomes in the National Health Service. American Economic Journal: Economic Policy , 5 (4), 134-66.
Kirkwood, J. B. (2016). Buyer power and healthcare prices. Wash. L. Rev. , 91 , 253.
Lethbridge, J. (2011). Understanding multinational companies in public health systems, using a competitive advantage framework. Globalization and health , 7 (1), 19.
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review , 86 (1), 78-93.
