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Competitor Analysis in Health Care
An earlier lesson in this course introduced the idea of SWOT analysis as a key tool for strategic planning in medicine. You will recall that this refers to the strengths, weaknesses, opportunities, and threats for our own healthcare organizations. SWOT applies very well to health care, whether you are managing a hospital, clinic, long-term care facility, or home health agency. In all medical settings, SWOT is useful for our planning.
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Write My Essay For MeIn Unit III, we take a closer look at the opportunities and threats in our healthcare environment, focusing not on ourselves but outside our walls where other healthcare facilities are competing with us for patients and revenue. Have no doubt about it, health care is a very competitive industry. Recent changes in medical reimbursements have made our world even more competitive. Smaller operating margins mean that more patients are needed to float the boat. Great healthcare leaders know their competitors very well and can even anticipate what moves those competitors may make over the months and years ahead. Staying “one step ahead of the competition” is real in medicine, and that expression sums it up pretty well. Let’s take a close look at “competitor analysis” in health care and provide an understanding of the key forces that impact competition in our own markets and service areas. There are really five key considerations here.
Competitive Intensity
The competitive intensity of our service area is a key consideration. For most healthcare markets, this intensity has escalated over recent years. Some of the key factors which drive intensity of competition include:
HCA 4320, Development and Strategic Planning in Health Care 1
| Large numbers of competitors in the service area | High fixed costs of operation High stakes, meaning much to be gained from winning and much to be lost from losing | |||
| High “exit barriers” making it difficult for organizations to leave the market quickly for other opportunities | High competitor diversity in services | |||
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As you go over that list, you will see that just about every factor applies to medical services and thereby contributes to an increasingly competitive environment. A typical U.S. urban market will have somewhere between five and 20 major healthcare players, offering many of the same services but also working hard to “stand out” as different from the rest. Also, it is very expensive to get into this market and very difficult to get out as well because there is so much to be gained! With hospital revenues in the hundreds of millions of dollars and CEO salaries in the $200,000 to $1,000,000 range, there is a lot at stake with every strategic move in our business.
Entry by Outside Competitors
Now let us look closer at entry by outside competitors, which is not as easy in health care as it might be in some industries. The capital investment for a new healthcare facility will, of course, vary by size and scope of services. Consider a recently built community hospital for a small city in Kansas that had total capital investment—bricks and mortar plus equipment—of just under $50 million. The decision to place a new hospital in a market area must be made very carefully. Contrast this with other industries, such as retail or food service. Literally you might see a “Dollar General Coming Soon” sign in April, lots of rapid activity, and the store grand opening in May. How about a Subway franchise? Consider one who takes an interest in investing in that business. He or she may research it in November, sign papers in early December, and the new Subway can open for New Year’s Eve. That sort of rapid market entry does not happen in health care. As an example, construction time for the hospital can take over a year, and probably another six months will pass before all departments were fully operational. Health care is slow coming in and slow going out.
Substitute Products and Services
This aspect is really interesting and dynamic for health care today. We are seeing more and more entry into CAM (complementary and alternative medicine services) that may compete with traditional hospital and clinic services. Patients who are frustrated with the western medical environment definitely have options these days. Naturopathic physicians and other holistic health practitioners offer natural approaches to a diversity of medical problems. While the effectiveness of such therapies varies and does remain controversial, many Americans are now utilizing these forms of treatment. A smart hospital administrator will not allow that natural health market to escape but will instead put the hospital and its clinics into the CAM business! “If we can’t beat them, join them” is the expression that comes to mind. A great strategy is to have a physician on staff with special interest in holistic health and to let that physician oversee the use of CAM in the hospital’s programs. From experience of those already in the field, some DO (doctor of osteopathy) physicians have special training and interest in this area. They can be an asset to the organization in its use of CAM. Patients want it, and if we are smart, we will provide it because somebody else will.
Power of Consumers
Adding to the competitive nature of medicine today is the reality that consumers have much more power in medicine than ever before. The days of “doctor’s orders” and simple obedience to them are gone forever. This
HCA 4320, Development and Strategic Planning in Health Care 2 probably relates mostly to the Internet and television commercials/programs that have produced a much better informed healthcare consumer. Consider patients in the clinic waiting room. Today, many of them have Internet printouts in hand containing information on their medical issue or concern. Physicians may report that some patients have already diagnosed themselves online (correctly or not) and make clinic appointments simply to get the tests and treatments that they have already decided are necessary. Some patients even come with a list of diagnostics and medications, hand it to the doctor, and say, “Just order this stuff, and we can save some time today.” The better informed consumer is more demanding and more likely to switch providers quickly if not satisfied.
Power of Employees
The medical service market is not the only market that requires us to analyze our competitors. We must also consider the labor market for medical professionals. Nowhere is this more evident than in nursing. Hospitals are competing fiercely for nurses today with salaries through the roof, sign-on bonuses, relocation expenses, and daycare for those with children. We will do whatever it takes to get a good nurse to our hospital and not somebody else’s hospital. And medical professionals are simply treated better in healthcare facilities today because of the high demand. Other professions, such as respiratory therapy, pharmacy, and family practice medicine are in similar power position. There is just not enough of them to meet the need today.
Conclusion
As you enter your career in healthcare leadership, come in with open eyes, and realize that this a very competitive world. In order to succeed as a medical leader, you need to identify your competitors, anticipate their moves, and find a way to stand out as unique among them. Your textbook does a great job of covering this topic. Hopefully, this lesson has helped you to understand why it is so important to be good at competitor analysis today.
Project Step 2: Clarify your measurable goal
In the second step of the MAP, the desired outcome from MAP implementation should be clearly defined.
What are you trying to accomplish? How will successful MAP implementation be measured and evaluated? What realistic constraints do you have as you begin creation of the MAP? Limits on time, money, and other resources specific to the MAP must be considered. Continuing the example of chart documentation, in this step, the criteria for high quality documentation must be clearly stated. These are elements that must be seen consistently included on charts in order to be successful as an organization. This could be done as a retrospective review checklist that will be used in chart audits as we identify specific problems and shortcomings, and we work to improve them. Your measureable goal might be that 95% of audited charts will meet retrospective review criteria.
