Comprehensive Industry Analysis of Private Hospitals in Australia

This report provides a comprehensive industry analysis of private hospitals in Australia. It begins with an executive summary highlighting the operational activities and growth of the private hospital sector over the last decade. The report delves into competitive analysis, examining rivalry between private hospitals, competition from both public and non-profit private hospitals, and the impact of market forces. It further explores the opportunities and challenges faced by private hospitals, recent industrial trends, and factors influencing their operating activities through SWOT and PESTEL analyses. Ethical challenges within the healthcare sector, including conflicts of interest, managing geriatric and paediatric patients, and balancing profit with patient care, are also discussed, along with methods to avoid ethical issues. The report concludes by summarizing the key findings and emphasizing the significant role of private hospitals in the Australian healthcare landscape.

Running Head: INDUSTRY ANALYSIS OF PRIVATE HOSPITALS
INDUSTRY ANALYSIS OF PRIVATE HOSPITALS
Name of the Student:
Name of the University:
Authors Note:

1INDUSTRY ANALYSIS OF PRIVATE HOSPITALS
EXECUTIVE SUMMARY:
In the recent times, Australia private health industry delivers cost efficient, high quality and
appropriate services, which is highly responsive to the needs of its customers. The report aims to
highlights the operational activities of the private hospitals and its growth over the last decade.
The market analysis of the hospitals will focus on the challenges and opportunities faced by the
healthcare private industry. Moreover, the report will also highlight the ethical issues faced
within the private sector health care segment.

2INDUSTRY ANALYSIS OF PRIVATE HOSPITALS
Table of Contents
Introduction:....................................................................................................................................3
Competitive Analysis:.....................................................................................................................4
Competition Rivalry between Private Hospitals:........................................................................4
Competition Due to Public Sector Hospitals...............................................................................5
Competition due to Non Profit Private Hospitals:.......................................................................6
Opportunities and Challenges Faced by the Private Hospitals:.......................................................6
Recent Industrial Trends:.................................................................................................................7
Factors influencing Operating activities of Private Hospitals:........................................................8
Ethical challenges in Healthcare:...................................................................................................10
Conflicts of Interest:..................................................................................................................10
Managing geriatric and paediatric patients:...............................................................................10
Balancing profit with charity care and serving patients:...........................................................10
Methods to avoid ethical Issues:....................................................................................................11
Conclusion:....................................................................................................................................11
Reference List:...............................................................................................................................12

3INDUSTRY ANALYSIS OF PRIVATE HOSPITALS
Introduction:
The privately operated and owned hospitals charge patient fees for services and
accommodation like- day care, psychiatric and acute care, In Australia, there are around 573
private hospitals equate to 41% of the total hospital care system provided in Australia
(Abs.gov.au., 2017). Although private and public hospitals are offering the identical core
products but the way the products and services are delivered is very different. According to
Australian Bureau of Statistics (2013), the private health care sector allows the generation of 140
billion dollars each year in the Australian economy, as well as, supports 3, 03,000 employees
working for the hospitals. The main purpose of this report is to evaluate the marketing strategies
used by the hospital in the last few years through SWOT analysis and Competitive Analysis of
the industry environment. In addition to it, the recent trend followed by the industry and ethical
issues faced within the industry is also discussed.
Private sector hospitals are recently undergoing significant structural changes (Barr,
2014). As per Australian Private Hospitals Association, (2016), private healthcare sectors are
now performing complex techniques, relevance for day surgery is increasing, hospital’s
relationship with different types of health funds are significantly changing. Co-located private
and public sector hospitals are recently becoming more popular (Brown & Barnett, 2014).

4INDUSTRY ANALYSIS OF PRIVATE HOSPITALS
PRIVATE HOSPITALS, Australia—Selected years
2005-62010-11 2011-122012-13 2013-142014-15 2015-16
Hospitals (no.) 547 593 592 601 612 624 630
Beds/chairs (no.) (a) 26,227 28,351 29,004 29,827 30,920 31,774 33,074
Separations ('000) 2,925 3,707 3,899 4,178 4,344 4,565 4,706
Patient days ('000) 7,473 8,851 8,999 9,385 9,957 10,423 10,694
Full-time equivalent staff (b) 50,001 58,448 57,495 60,387 62,413 64,429 66,800
Income ('000) (c) 7,001,11
3
10,649,6
50
11,227,9
08
11,802,6
49
12,731,1
30
13,894,7
32
14,745,8
62
Expenditure ('000) (d) 6,497,93
0
9,609,99
2
10,043,2
18
10,629,6
66
11,350,9
61
12,358,8
83
13,138,7
10
Gross capital expenditure
('000) (e)
387,366 721,529 492,198
712,879
765,336 908,066 1,185,79
9
Table I: Growth over the last 10 years in Private Sector Hospitals
Source: (Abs.gov.au., 2017)
Competitive Analysis:
Competition Rivalry between Private Hospitals:
The private hospitals make business by efficient delivery of services to its patients.
Nowadays, doctors generate more demand in the interest of the patients and major part of the
treatment bill is paid from the health funds on behalf of the contributors. In Australia, private
hospitals are competing with the public sector hospitals by providing free treatment to the public
patients. In the recent times, key changes in the healthcare industry structure has mainly
occurred for the profit-sectors, like the Ramsay acquisition for its benchmark group of private
hospitals, as per Australian Private Hospitals Association, (2016). The number of private beds
has been increased that has strengthened Ramsay’s market coverage and by further making ten
hospitals in South and Victoria.

5INDUSTRY ANALYSIS OF PRIVATE HOSPITALS
As per profit, the largest market share is owned by Affinity, which has 5360 beds (42%)
followed by Ramsay Healthcare with 3680 beds (29%). The fortune of private hospital depends
mostly on the capability to engage the reputed professionals or doctors, thereby securing its
contracts in the funds available for health. Moreover, around 30% of the patients already decide
the hospitals in which they are going to be treated according to Australian Institute of Health and
Welfare, (2013). Thus, private sector hospitals can compete through marketing their facilities,
range of procedures and services, location that is accessible for the patients and visitors,
reputation or prestige and contracts with health funds. The competition between the private
hospitals for its patients is quiet dissimilar then the way the hospitals are competing for doctors.
The private healthcares often require informing the potential patients about the services and
facilities provided by them (Brown & Barnett, 2014). In few cases, this involves advertising it in
the media.
Competition Due to Public Sector Hospitals:
During 2012-2014, in Australia around 15 % of the insured patients were received their
medical treatment or facilities in public sector hospitals as per Australian Private Hospitals
Association, (2016). Both the public and private healthcare industries operate its functions in
market conditions, which are unalike. The public healthcare industry focus is on treating the
seriously and acutely ill patients with severe chronic conditions or ailments. Many public
healthcare organizations are now providing treatments, facilities and services, which were earlier
only available at great private hospitals (Wiederhold, 2013). Therefore, the insured patients with
any kind of aliments and the representative doctors will always have alternative to choose the
best private sector hospitals.

6INDUSTRY ANALYSIS OF PRIVATE HOSPITALS
Competition due to Non Profit Private Hospitals:
The private sector hospitals that are controlled by the charitable and religious institutions
provide an alternative solution to the Australian patients by giving them private hospitals
services (Canta & Leroux, 2016). During 2008-09, the religious or charitable institutes providing
hospitals services accounted for total 37% of the beds available in psychiatric and acute private
hospitals as per Australian Institute of Health and Welfare, (2013). In the non-profit sector, Sister
of Charity holds maximum market share, which is 30%, with 2586 beds.
Opportunities and Challenges Faced by the Private Hospitals:
An organization must consider its strengths, weaknesses, opportunities and threats for re-
evaluation of procedures or planning any vital campaigns (Moschis & Bellenger, 2013). In order
to understand the factors the recent opportunities and challenges facing the private healthcare
segment SWOT analysis is done. The SWOT analysis discussed in Table II is the most efficient
way for visualizing the factors influencing the internal and external environments of the private
hospitals
Strengths Weaknesses
 Affiliated with nationally recognised
brand.
 Comfortable and well-managed facility.
 5-star servicing
 Reputation within the communities
 Limited patient capacity
 Potentially outdated facilities
 Lack of exposure
 Minimum funds provided by the
Government.
Opportunities Threats

7INDUSTRY ANALYSIS OF PRIVATE HOSPITALS
 Increased privacy and comfort for
patients
 Funding and support from a affluent
and reputable organisation
 Local public hospitals are expanding
due to the increased funding that is
presented in the Federal Budget of
2016-2017.
Table II: SWOT Analysis of Private Hospitals
Recent Industrial Trends:
By growing consolidation as well as rationalisation, the healthcare profit segment
industry works in oligopoly market condition. The major organisation owning 92% of the profit
shares in private hospital sectors (Abs.gov.au., 2017). In the private healthcare segment, each
hospital or organisation has its unique and identical positioning in the key markets as well as
classified and referring network of doctors. This further put a limitation to the competition
rivalry going on between the organizations in the industry as per Australian Private Hospitals
Association, (2016). Moreover, increase in the number of senior citizen in Australia, the
awareness for the want of qualitative health care and need for the health related services will
grow rapidly in the near future.

8INDUSTRY ANALYSIS OF PRIVATE HOSPITALS
2011-12 2012-13 2013-14 2014-15 2015-16
0
5
10
15
20
25
Acute and Psychiatric hospitals
Day hospital facilities
Figure 1.1: Private hospitals, Net Operating Margin 2011-2-12 to 2015-2016
Source: Australian Bureau of Statistics, (2013)
Factors influencing Operating activities of Private Hospitals:
Through PESTEL analysis, the external environmental factors that influence the
operating conditions of the private sector hospitals in Australia can be determined.
FACTORS OBSERVATIONS
Political  Australian political parties made an agreement to eradicate private
sector health insurance rebate facilities from all such policies that
covers only treatment for public hospital.

9INDUSTRY ANALYSIS OF PRIVATE HOSPITALS
 The private health fund premiums have been increased to 6.4% and
overall profit has increased to 8.9% as per Australian Federal
Government, (2016).
Economic  Australian federal budget will provide $36.3million to the Medicare
Benefit Schedule in the next four years according to Australian
Bureau of Statistics, (2013).
 Policy measures are taken to encourage the high income earners for
opting private sector health care facilities that are non congested as
compared to public sectors (Canta & Leroux, 2016).
Social  The cost of repairing and renewing aging population in Australia is
increasing by 20% per year in orthopaedic or hip replacement
surgery as per Australian Institute of Health and Welfare, (2013).
 Increased government funding as well as facilities promoting health
care have provided opportunities to generate profit for large private
hospital chains.
Technological  With the advancement of modern technology which aim to bring
together different platforms with innovative clinical changes.
Environmental  New waste disposal laws have been brought into effect for the
disposal of hazardous and clinical wastes (Barr, 2014).
 Using energy efficient methods and backup generators during
emergency.
Legal  With new competitive regulations, price fixing has been restricted
in private hospitals.

10INDUSTRY ANALYSIS OF PRIVATE HOSPITALS
 Healthy and safety regulations are to be abided by all private sector
hospitals.
Ethical challenges in Healthcare:
In the healthcare sector providing the patient with good care and avoiding any harm to
the patient mentally and physically are the major cornerstones of ethical practices (McGorry,
Bates & Birchwood, 2013). The ethical issues that are faced by the industries are as follows:
Conflicts of Interest:
The hospitals must have certain ethical guidelines to avoid any conflicts of Interest by
governing the behaviours of their professionals (Canta & Leroux, 2016). The hospital
management team also scrutinizes whether their board of directors and trustees should be
allowed or not to maintain the financial ties with the health system or institution by selling its
own goods and services.
Managing geriatric and paediatric patients:
These are the patient having less decision-making capacity about their medical condition.
The responsibility for making the decision and choosing the best treatment option falls on their
legally authorised representatives (Wiederhold, 2013). The rational decision for the patient’s best
interest or known preferences is to be made by them.
Balancing profit with charity care and serving patients:
It is vital for a healthcare organization to support efficient care of the patients by
providing ethically sound policy, fair and clear processes (Ducket & Willcox, 2015).

11INDUSTRY ANALYSIS OF PRIVATE HOSPITALS
Furthermore, ongoing ethics education should be provided at all levels for patient care. Proper
access to clinical ethics consultation services should be there so that the patient can consult with
the clinicians on critical cases.
Methods to avoid ethical Issues:
Ethics consultants or committee members need to be well aware of the hospital’s policies
as well as have additional ethical trainings. They should be available to assist the patients,
families and the employees (Hartung et al., 2015). They should resolve any perceived conflict if
arises between the parties. The clinicians can tackle most of the problems by blending support
mechanism and formal ethical policy (Knani, 2014). The hospitals should avoid any kinds of
conflicts by properly governing the behaviour of the professionals and employees within the
organisation.
Conclusion:
Thus, it can be concluded that the healthcare Industry of Australia is a booming Industry.
Over the past few decades, the healthcare industries, which focus is to help others has gradually
become entrenched as the country’s biggest employer. The healthcare facilities in Australia are
largely provided by the government or private operated hospitals and private medical
practitioners. The cost of the medical services are generally paid by the government agencies or
private insurance, and the balance amount is payable by the patient itself. Medicare is the
universal health care approach followed in Australia. This primary health system subsidises most
of the medical costs for all permanent residents or citizens of Australia. The private hospitals
involvement in the healthcare sector is provided in variety of forms that even includes the