Competition in Health Care

Competition in Health Care

Competition in the healthcare markets enable the consumers to gain from reduced costs, improved care, and increased innovation. The healthcare system in the United States has performed dismally in both quality and costs in the past years. While this might not be a strange occurrence in a state regulated sector, it cannot be tolerated in competitive and aggressive markets. In the U.S., healthcare is mostly private and liable to cut throat competition compared to any other place in the world.

The cost, accessibility, and convenience of the healthcare system in America have become matters of both policy and legislative concern. Considerable increments in the costs associated with health care services have occasioned substantial stress on the household, state, and federal budgets, in addition to the corporate health insurance schemes. The quality of healthcare differs significantly, even after taking into account the issues of costs and patient preferences. The forms of competition in the healthcare industry include competition among the health care service providers for the patients, competition between third parties for the insured customers, and competition between third parties themselves for contracts with healthcare service providers, and the reverse (Porter & Teisberg, 2006). In a productive competition, continued improvements in the procedures and methods reduce the costs. The quality of service consistently rises. Innovation gives rise to new and better ways of handling patients, and these spread widely and swiftly. The providers who are not competitive are forced to restructure or lose business. Competition makes prices to plummet and markets to expand. This is the normal path in a properly functioning industry.

The cost of healthcare in the United States has been high and on the upward trend. This is despite of the attempts to reduce them. These escalating costs cannot be related to any betterment in quality. The opposite is the case. Health care services are rationed or controlled. Many patients endure care that staggers behind the current standards and procedures, and unacceptable frequencies of avoidable medical errors abide. There have been broad and inscrutable disparities in the quality and costs among healthcare service providers across vast geographic regions. These differences have existed due to the slow spread of best practices. On average, it takes seventeen years for clinical trial results to be adopted as standard clinical practice. This has prompted some players in the sector to see innovation as a predicament rather that a motivator of success. Such scenarios are not healthy for a properly functioning market. This is especially so in health care where the quality of life is at stake.

Competition is viewed as the cause of the mess in the American Healthcare system (Barr, 2007). However, this is not to say that a state-controlled model is the most preferable. Competition can also be a solution, but the pedigree of competition in the context of health care must change. Competition should not produce losers and winners; it should instead make all the players better. Economic competition leads to the formulation and implementation of better ideas. Competition in the health care industry can drive the costs downwards while improving the quality of services provided. Innovation that is occasioned by competition in the healthcare industry drives down costs considerably. Low costs are derived when a patient gets healthy quickly. Innovation enables accurate diagnosis, averting any misdiagnosis that may lead to unnecessary treatments. When such mistakes can be avoided, costs plummet and quality rises. For instance, aesthetic surgery and laser eye surgery are all competitive markets in which the providers furnish the patients with the necessary information. This has led to improved quality and the downward adjustment of costs. Such competition also applies in acute care. It is becoming a fashionable trend for foreign hospitals to compete against those in advanced countries which are characterized by high costs and long waits. A case in point is the high number of patients who have been flying to India where they get proper medical care at a fraction of the price (Holtz, 2008). However, “free market” in the healthcare sector is just a concept, not a system. Theoretically, increased competition would drive down the cost of medical care by providing an affable environment to health insurers. The flipside of this argument is that there is no realistic example of any reduction in premiums.

Success in a business cannot be attained by disregarding competitors but by predicting competitive issues and formulating a proactive strategy in order to keep pace with competition. Competitive intelligence gathers information from a very wide and decisive view, enabling the prediction of future scenarios. This in turn enables an entity to remain competitive through the improvement of strategic decisions, leading to improved performance compared to the competitors. Competition enables wider access to health care services, improvements in the medical procedures, and reduced prices. For patients, competition also leads to a wide array of health care service providers from which they can choose from. This forces the providers to offer only the best possible services and at competitive prices.








Barr, D. A. (2011). Introduction to U.S. health policy: The organization, financing, and delivery    of health care in America. Baltimore, MD: Johns Hopkins University Press.

Holtz, C. (2008). Global health care: Issues and policies. Sudbury, MA: Jones and Bartlett           Publishers.

Porter, M. E., & Teisberg, E. O. (2006). Redefining health care: Creating value-based        competition on results. Boston, MA: Harvard Business School Press.










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