Competitive Forces in the Health Care Industry of USA

This article discusses the five competitive forces in the health care industry of USA and their impact. It also identifies strategic groups, driving factors, and key success factors.

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Table of Contents
1.1. Identify and describe in your industry’s context the five competitive forces of
competition. Explain how they impact on the industry..............................................................3
1.1.1 Rivalry among the Competitors.....................................................................................3
1.1.2 The Bargaining power of Buyers..................................................................................3
1.1.3 The Bargaining power of Suppliers...............................................................................3
1.1.4 Substitute of Existing Products.....................................................................................4
1.1.5 Threat towards the entry of new Entrant.......................................................................4
1.2. Identify strategic groups in your industry’s context...........................................................4
1.3. Explain the driving factors present in your industry...........................................................5
1.4. Identify the key factors of success in your industry............................................................5
Reference List............................................................................................................................7

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1.1. Identify and describe in your industry’s context the five competitive forces of
competition. Explain how they impact on the industry.
1.1.1 Rivalry among the Competitors
Intense rivalry is an essential and commonplace factor in the health care industry of
USA. The presence of adequate number of medical centres is the chief reason behind this. As
per the reports published in 2016 regarding capitalisation of the business market, it was
revealed that the medical centres were the leading in terms of business volume and sales
proportion contrasted to the other proponents of the industry and in fact over the entire
business prospect of industrial domain of USA. The factors like switching cost also helps the
industry to gain prominence over other exponents in the business domain (Kitapci, Akdogan
& Dortyol, 2014). An individual who signs up in favour of the health care industry are
generally not able to find sustainable replacement in other industries.
1.1.2 The Bargaining power of Buyers
The bargaining powers of the customers in this industry is weak. Health care services
available in the medical centres comes against a price. The customers are mainly enticed to
acquiring a medical insurance and get the treatment done as they are often not able to bear the
price of treatment in case of critical treatments.
1.1.3 The Bargaining power of Suppliers
In the sector of the medical centres, the suppliers generally hold a place of high
bargaining power in USA. This is because this sector is totally dependent on the provision of
services. Again, Raghupathi and Raghupathi (2014), states that in USA, the number of
service users largely outnumbers the suppliers. In most of the cases, it have been observed
that the Americas have availed for a critical health care service more than once in their life
time. This implies that more than 89% of the population of USA, would become a customer

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of the industry once at least in their life time. Health care cost have increased considerably
over the last decade, However, Elenko, Underwood and Zohar (2015), states that despite the
increase in the cost of the services, the demand remains constant since the population and
government of the country as well, is most concerned about the health of the general public.
1.1.4 Substitute of Existing Products
The customers generally prefers cheap prescribed medicines. They like to explore for
places where there is availability of cheaper medicines. Bigger supplier stores like Wal-Mart,
or some smaller wholesale medicine suppliers provide cheaper drugs. Customers are
nowadays acquainted with health apps by virtue of which they are well medical drugs that
they could general require and keep the essential medicines stocked up for future use.
1.1.5 Threat towards the entry of new Entrant
Since there are very few organisations who have a market monopoly in the medical
centre industry, there is always a high scope for market entry in this sector. However,
Hiremath, Yang and Mankodiya (2014), discusses that one potential threat is that one small
organisations that exhibits great business prospect and steady growth would be brought down
and intimidated by the major market players. Again, Elenko, Underwood and Zohar (2015),
refers that down 5 to 8 years, the situation is expected to remain the same owing to the highly
expensive cost of switching and that of insure premiums.
1.2. Identify strategic groups in your industry’s context.

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The strategies and the operations of the strategic groups in this sector are primarily
aimed at maintaining the standard as well as availability of health care services in the
industry. The main strategic components include:
i) Information, Education as well as Communication (IEC) is the first group
that incorporates the activities like preparing campaigns as well as translation
as also dissemination of data regarding hygienic as well as proper life style.
ii) The other groups are PHC that is involved with development of rural health
iii) The last important group is the MCH or Maternal and Child Care
(Royermaddoxherronadvisors.com, 2018).
1.3. Explain the driving factors present in your industry.
The first factor is Cost. Under the Affordable Care Act, 40 billion people with low income ad
are not insured would now be able to get access to health care. The second factor is an ageing
population. Because of this, there would be 79 baby boomers emerging in the industry as
customers. The third factor is changing relationships. Because of the increase in awareness
over critical health factors, the customers of this industry are now more concerned and
believe in taking proper medical aid beforehand, in order to avoid critical disease in the
future. The net factor is Medical store clinics. There are clinics available in most of the
clinical stores because of which the customers avail the services in the medical centres more
frequently.
1.4. Identify the key factors of success in your industry.

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The critical success factors in this industry are as follows:
Organisational Success 1. Excellence of Governance
2. High level of competence of the
Leadership teams
3. Strong integration of the medical
centres with the physicians
Leadership Success 1. Competent
2. Committed
3. Passion for development and
attainment of industrial monopoly
(Healthcaresource.com, 2015)
Strategic Success 1. Collaboration vs. Continuing
Competition
2. Alignment of incentives
3. Accountability

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Reference List
Elenko, E., Underwood, L., & Zohar, D. (2015). Defining digital medicine. Nature
biotechnology, 33(5), 456.
Healthcaresource.com, (2015). 6 Factors Shaping the Future of Healthcare. Retrieved on 12th
November 2018. Retrieved from http://education.healthcaresource.com/6-factors-the-
future-of-healthcare/
Hiremath, S., Yang, G., & Mankodiya, K. (2014, November). Wearable Internet of Things:
Concept, architectural components and promises for person-centered healthcare. In
Wireless Mobile Communication and Healthcare (Mobihealth), 2014 EAI 4th
International Conference on (pp. 304-307). IEEE.
Kitapci, O., Akdogan, C., & Dortyol, I. T. (2014). The impact of service quality dimensions
on patient satisfaction, repurchase intentions and word-of-mouth communication in
the public healthcare industry. Procedia-Social and Behavioral Sciences, 148, 161-
169.
Raghupathi, W., & Raghupathi, V. (2014). Big data analytics in healthcare: promise and
potential. Health information science and systems, 2(1), 3.
Royermaddoxherronadvisors.com, (2018). Royer. Maddox. Herron. [Online]. Retrieved on
12th November 2018. Retrieved from
http://www.royermaddoxherronadvisors.com/Blog/2015/June/Three-By-Three-The-
Three-Critical-Success-Factor.aspx