Competition in Health Care
Health care is a vital service that touches the lives of many Americans on a daily basis. The United States health care industry is continually expanding and changing. As the health care industry grows, so too does the competition. The competition is among hospitals, health plans, physician groups, drug companies, physicians and hospitals, and hospitals and health plans.
The competitions among hospitals includes, but are not limited to, specific procedures, market share, quality of service, cost, location, and suppliers. The effectiveness of procedures such as operations, diagnosing, testing, and therapy, if necessary, comes down to the space available within an organization. The broader space an organization has the more effective the procedures will be simply because there will be more space available for beds and equipment. To be put quite simply, hospitals must become full service in order to obtain expensive medical technology and programs (Doremus, 1992). Being able to obtain expensive medical technology and programs will give hospitals an edge over the competition.
In order to successfully compete, each hospital must have market-share leverage. When there are hospitals within a 15 mile radius of one another they compete for market-share (Thomson, 1994). For example, if there are two hospitals within a 15 mile radius of one another then there is going to be competition; specifically between the emergency room departments. Market competition is distinctly associated with the ability to maintain emergency departments. The presence of competing emergency room departments within a 15 mile radius are both at risk of closing (Hsia, Kellermann, & Shen, 2011). Location plays a major role in market share; one hospital in a particular location may do better than a hospital 15 miles away. Customers will go to the nearest hospital, especially when they are in an emergency situation. The downside is that while one hospital may be closer...
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