Competition in the Healthcare Industry

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Competition in the Health Care Industry
Kelly Montagano
Health Care Planning and Evaluation
Instructor Sowle
November 25, 2011

The driving force for any kind of business or organization is competition. Without competition there would never be a need to grow or to better the services or products being offered. In the healthcare industry competition takes many different forms and happens within many different types of healthcare organizations. Competition can take place among hospitals, health plans, physician groups, drug companies, between hospitals and physicians, between hospitals and health plans, and many more. Competition drives companies to work at their full potential as well as constantly evaluate their business strategy. It also can force health care organizations to compete for business by lowering costs of services provided. The cost, quality, and accessibility of American health care have become major legislative and policy issues. Significant increases in the cost of health care have placed considerable stress on federal, state, and household budgets, as well as the employment-based health insurance system. Health care quality varies widely, even after controlling for cost, source of payment, and patient preferences. According to a report conducted by the Federal Trade Commission and the Department of Justice in 2004, health care spending was broken down as follows: 31% hospital care, 21% physician and clinical services, 11% on prescription drugs, 36% on other spending. The customer’s purchase the firm’s products and services and generate flow of revenues and profits that it depends upon for its existence. In contrast, the firm’s competition stand in opposition to its strategic aspirations; they wish to capture the firm’s customers and the revenues and profits along with them (Moseley, pg. 76). The movement toward “consumer-driven health care” is growing out of the continuing increase in national health care costs, the desire of consumers...
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