When and how provider competition can improve health care delivery (2022)

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Health systems around the world face the same fundamental challenge: how to deliver broad access to health services while improving quality of care and controlling costs. Greater competition has often been proposed as a solution that elegantly addresses each element of that challenge.1

There is no consensus, however, as to how much competition is appropriate in health care. Too often, the debate is argued based on strongly held ideological presuppositions or vested interests rather than a dispassionate review of evidence, and thus a full consensus on competition in health care may never be reached. Furthermore, countries differ significantly in the values they hold most important and the goals they have for their health systems. Nevertheless, we believe that by examining the available evidence through the lens of economic theory, it is possible to develop a framework that health systems can employ to decide when and how competition can be used to promote access to high-quality, efficient care.

Our focus here is on competition among providers—most often for patients, but in some cases for payor contracts.2 We suggest that the level of provider competition that is appropriate will vary based on the nature of the clinical services delivered. For highly specialized services, competition should be limited or used only very judiciously to ensure quality and avoid overdelivery. In contrast, greater competition could be an effective mechanism for improving the quality and efficiency of less specialized services, particularly care delivered outside the hospital.

The arguments for and against provider competition

Compelling arguments can be made both for and against provider competition in health care. The strongest argument in favor of competition is that it can be designed and deployed to create potent incentives that encourage providers to innovate so that they can deliver higher quality at lower cost. Porter and Teisberg, for example, have noted that:

In a normal market, competition drives relentless improvements in quality and cost. Rapid innovation leads to rapid diffusion of new technologies and better ways of doing things. Excellent competitors prosper and grow, while weaker rivals are restructured or go out of business. Quality-adjusted prices fall, value improves, and the market expands to meet the needs of more consumers.3

It has also been long known that increased competition among corporations leads to higher productivity.4 Many people, including Porter and Teisberg, have therefore suggested that provider competition could play a similar role in health care, creating the same virtuous circle of innovation, improved quality, and efficiency.

Opponents of provider competition argue that it is inimical to the delivery of good health out-comes at a reasonable cost. Competition, they maintain, often encourages excess capacity and duplication of services, and thus it can lead to supplier-induced increases in demand. Opponents also argue that the markets for some health services are natural monopolies and that care quality will suffer if competition is introduced. Furthermore, they suggest, in at least some health systems, provider competition can promote profit making and market success over patient care; it can also penalize the least well-off patients, thereby exacerbating health inequalities.

At the root of the problem, opponents argue, is the fact that some of the fundamental mechanisms through which competition drives improvements in normal markets do not work in health care. For example, because of the information asymmetry between providers and patients, health care consumers lack an effective way to choose among providers based on care quality. In such a market, competition will not drive up quality. Even proponents of competition recognize that health care suffers from a high number of potential sources of market failure—not only information asymmetry, but also uncertainty, adverse selection, and moral hazard. The combination of these factors makes it difficult for a health care market to function efficiently and, consequently, to reap the full benefits of provider competition.

(Video) 6 Strategies: Competitiveness in Healthcare

For countries with public-sector health systems, provider competition raises another concern. Many people in those countries take pride in their public systems and fear that the introduction of provider competition leads inevitably to the introduction of private-sector provision and then to the privatization of health care delivery.

The evidence for and against provider competition

Academic evidence can be cited to support each side of the debate. For example, a recent report demonstrated that increased competition among English hospitals drove up the quality of their management practices, and that, in turn, improved their clinical, operational, and financial outcomes.5 A similar conclusion was reached in another recent paper about English hospitals, which noted that “hospital competition in markets with fixed prices can lead to improvements in clinical quality.”6 In a broad 2006 survey of studies about US hospitals, Martin Gaynor found that for Medicare patients (for whom pricing is fixed), most of the empirical evidence suggests that hospital quality is higher in more competitive markets.7 Daniel Kessler and Mark McClellan also showed that competition among US hospitals can improve care quality and control costs.8

Gaynor admitted, however, that the studies he surveyed did not demonstrate a clear link between competition and hospital quality for patients with private insurance. Because pricing for these patients is not fixed, hospitals can compete on price as well as on quality, and thus it becomes more difficult to detect the impact of competition on quality. Furthermore, a 2002 study found evidence that competition among English hospitals may have worsened the quality of care in the UK National Health Service (NHS) to a small degree.9 A subsequent paper by two of the same authors reported that hospital competition did shorten waiting times, but it also appeared to have reduced care quality (as measured by mortality from acute myocardial infarction).10

McKinsey’s experience working in more than 20 health systems around the world yields examples of situations in which provider competition has resulted in poor outcomes, duplicate costs, and inefficient allocation of resources. We have also encountered health systems that function efficiently without competition. However, we have been most struck by health systems in which provider competition, managed effectively, has improved outcomes and patient choice significantly, while at the same time reducing system costs. Many of these examples are described below. Thus, we began to wonder if the question is not whether provider competition is intrinsically good or bad, but rather whether it is possible to identify specific circumstances in which the judicious use of provider competition is likely to produce the desired results.

How much competition is feasible?

Five core questions need to be considered to establish how much provider competition is appropriate in a given clinical setting (Exhibit 1):

When and how provider competition can improve health care delivery (1)

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  1. What is the relevant market-segment size?

  2. What is the minimum economic scale?

  3. What is the minimum clinical scale?

  4. Are there significant barriers to market entry or exit?

  5. Are there significant barriers preventing patients from switching providers?

    (Video) Hospital Competition Can Impact Your Health

The answer to each question varies considerably depending on the clinical setting, even within a given care pathway.11 As a result, the level of competition that is healthy may also vary considerably in different clinical settings—largely (but not entirely) because of the minimum economic and clinical scales needed to ensure high-quality, efficient care delivery.

Consider, for example, the difference between weight-loss services and bariatric surgery in the obesity care pathway. For providers of weight-loss services (Weight Watchers, Slim-Fast, local gyms, etc.), the minimum economic scale is low: setup and overhead costs are small. The minimum clinical scale is also relatively low: the level of training needed to provide nutritional consultations and programs of physical activity is not as substantial as the level required to perform surgery. Furthermore, no minimum throughput of patients/customers is necessary to ensure that the services provided are safe. As a result, weight-loss services can be delivered by a variety of competitors in most cities and towns.

In comparison, bariatric surgery requires a substantial amount of clinical expertise and specialized infrastructure, as well as a relatively high patient throughput, if high-quality care is to be delivered. A bariatric surgery provider requires a population base of about one million people to ensure that an adequate number of patients will request treatment.

In many cases, minimum clinical scale is the decisive factor for determining how much competition is appropriate. For example, a provider can deliver routine childhood immunization services safely to a relatively small population (perhaps 10,000 or 20,000 people). By contrast, a high-quality inpatient pediatric service that offers 24/7 access to specialist staff requires a much larger population (probably about 500,000 people) to ensure that the staff takes care of enough children to keep its skills sharp. Consequently, a small city could safely support multiple providers of childhood immunization services but only one hospital offering inpatient pediatric care.

We have come to believe that as health care markets become less specialized and less reliant on expensive infrastructure, they can support an increasing number of providers. Pragmatically, this means there should be less competition when care is delivered in highly specialized hospital settings and more competition when care is delivered outside the hospital (Exhibit 2).

When and how provider competition can improve health care delivery (2)

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Although this conclusion makes intuitive sense, it has not yet been proved within the health care arena, largely because most of the policy and academic focus in the past ten years has been on competition in the acute sector.12 If the conclusion is true, however, many of the potential gains from increased provider competition are likely to be in primary and community care. Coincidently, this is where most health systems are currently looking for innovation to provide the biggest gains in care quality and productivity.

What is our prescription?

We believe that health systems can use competition judiciously to drive up care quality and control costs by matching the level of competition to the nature of the clinical services delivered. To take advantage of this opportunity, however, most health systems will need to change. Some will first have to alter the structure of their health care markets to make appropriate levels of competition possible. Most systems will need to take steps to enable more effective—and more appropriate—competition, whether within existing or new market structures.

Altering the market structure

Although many health system executives accept the logic of differing levels of competition, some argue that, as a practical matter, changing the competitive structure of a health care market is extremely difficult. We agree. Nevertheless, it is possible, as a number of health systems have shown.

In 2002, for example, Denmark introduced competition by enabling patient choice and amending the health system’s payment structures. If the waiting time for a given treatment exceeded two months in the public-sector health system, patients were allowed to seek treatment free of charge at a private-sector hospital in Denmark or a hospital abroad. The introduction of competition, in effect, increased the system’s capacity; as a result, by 2007 the maximum waiting time in most parts of the public system had been reduced by one-third.13 The improvement in waiting times has enabled the government to tighten its requirements further: patients are now allowed to seek treatment elsewhere if waiting times exceed one month.

The transition to increased competition has not been easy for Denmark, however. To enable patient choice to work, the Danes initially paid private-sector providers a rate above that paid to public-sector hospitals. From an economic perspective, this is understandable—the private-sector providers needed to be compensated for the additional infrastructure required to support the treatments they could now offer patients and for the relative volatility of demand. However, the higher payments created political difficulties for the government. It eventually lowered the reimbursements it paid to private hospitals and created an independent broker, separate from the Ministry of Health, that sets prices for all hospitals.

(Video) Market competition on the health care delivery side

Queensland, Australia, recently adopted a similar approach to reduce waiting times: its government has contracted with private-sector providers as a way of putting pressure on its public-sector hospitals to improve their performance.14 First-year results suggest that emergency-department waiting times are beginning to shorten in Queensland; however, a decrease in elective-surgery waiting times has not yet been seen.

There are far fewer examples of health systems proactively changing the competitive dynamic in out-of-hospital care, because (as we noted earlier) the primary focus of most efforts has been on the acute sector. Examples do exist, though. In Derby, England, the commissioner brought in a private-sector provider to run a primary care practice.15 Not only did the new provider improve both access to care and the practice’s performance significantly, but it also may have created an important knock-on effect: the threat of private-sector competition appears to have galvanized performance in other nearby practices.

These examples illustrate how health systems have increased provider competition successfully, but it is worth pointing out that in some circumstances, reducing the level of competition may be the wiser course (when care quality suffers because of low patient volumes, for example). Our experience suggests that health systems have three options if they want to change the structure of a health care market: they can bring in new providers to increase competition, enforce consolidation (possibly through mergers or acquisitions) to decrease competition, or carve out specific services and then issue a tender, which can either increase or decrease competition. Which option is best depends on the circumstances a health system faces (Exhibit 3).

When and how provider competition can improve health care delivery (3)

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Enabling competition

Changing the competitive structure of a market is rarely sufficient on its own to generate the ideal level of provider competition. The system must also take steps to reduce the barriers to competition. Our analyses suggest that six steps can help almost any health system capture the opportunities that provider competition may offer.

Ensure information availability. Effective functioning of a health system requires accurate data on both the cost and quality of the services delivered. Without this kind of data, it is impossible to spot problems, shift system resources, or identify and disseminate best practices. In many health systems, however, this kind of data is still hard to obtain; it is frequently unavailable for care delivered outside the hospital and sometimes unavailable even for hospital care. Nevertheless, health systems often have more information available to them than they realize, and this information could be used far more effectively to drive performance. For example, the English and Welsh health care systems collect information about the cardiac and stroke services delivered to patients, which reveals stark differences in care quality (Exhibit 4); this information is readily available from credible sources and could be used more aggressively to drive improvements in quality.

When and how provider competition can improve health care delivery (4)

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Many health systems are beginning to make publicly available the data they do have about health care costs and quality. Because of the data’s complexity, we believe that, in the near term at least, its primary users will be clinicians and payors, not patients (as informed consumers). However, there is clear evidence that even the simple act of measuring data on health outcomes and organizational performance and then making the results publicly available improves the results achieved.16 Improved results can be further guaranteed if data availability is combined with a systematic approach to performance improvement.

Reform reimbursement mechanisms. Reimbursement mechanisms should be designed to ensure that all providers are encouraged to behave in ways that promote the interests of the overall system (for example, they should not be rewarded for offering unnecessary procedures and thereby driving up demand for care). It is also important that funding is linked to and follows each patient; otherwise, providers have little reason to compete with each other for patients. In addition, the reimbursement mechanisms should reward excellence. In an ideal world, providers would receive a quality-adjusted fee based on how their performance influences the outcomes achieved throughout the whole cycle of care, from diagnosis (or even prevention) through to recovery and monitoring. Realistically, this is difficult to do in most health systems today. Nonetheless, health systems have a number of options for ensuring high-quality, cost-effective care throughout a cycle of care. For example, they could use disease-management programs to integrate care for specific conditions,17 institute tariff-based systems that reward quality for bundles of care, and permit payors and providers to share in the value of any productivity gains achieved.

Build primary care capacity and capability. As health systems increasingly attempt to shift the balance of care from hospital to nonhospital settings, much of the competition individual hospitals will face will come not from other hospitals but from non-acute providers. To spark competition both within primary care and between primary care and acute care providers, most health systems will need to increase their primary care capacity to handle higher volumes and to improve the capabilities of their primary care clinicians and managers.

(Video) Examining Proposals for Provider Health Care Competition

Align incentives for payors. If competitive pressure is to exert the maximum influence on quality and productivity, the purchasers of health services (payors) must have the freedom to buy selectively and be given incentives to seek value for money.

Reduce barriers to patients switching among providers. The ability of patients to change providers can be an important driver of improved quality. In many health systems, patients are discouraged from switching by legal or bureaucratic obstacles, such as geographic restrictions and complex re-registration requirements. Health systems should ensure that patients can change health care providers as easily as they can switch mobile-phone networks.

Reduce barriers to entry and exit. Finally, it is important that health systems reduce unnecessary barriers to market entry and exit. Allowing poor-performing providers to exit the market and high-performing providers to enter it is critical for encouraging innovation and providing incentives for high performance. In some cases, however, market exit may not require a facility’s closure; a change in management may be sufficient to achieve the desired outcome.

What does this mean for care delivery?

As we have shown, the level of provider competition that is healthy varies depending on the clinical setting. Thus, health systems should use different strategies for different types of care.

Highly specialized care

For health services that require a relatively high level of specialization, competition could inadvertently encourage excess capacity and duplication of infrastructure. In developed countries, overcapacity in the acute sector is often more common than undercapacity; introducing new providers would therefore be a mistake.

Health systems should instead seek, whenever possible, to sharpen the competitive dynamic among existing acute care providers. Because many highly specialized services are natural monopolies, multiple acute care providers should not compete to offer those services within a limited geographic area. In some cases, however, the providers could be allowed to compete to become the sole deliverer of a specific service for a fixed period. The winning provider of each service would be issued a license to deliver care for a specified time (perhaps ten years), along with clear outcome-based performance metrics. The remaining providers could focus on other types of acute care, reconfigure themselves to offer lower-acuity services, or simply exit that market. This approach introduces competitive forces into monopolistic markets without risking unnecessary duplication of costs.

Admittedly, for some very specialized services (complex pediatric surgery, for example), even this limited approach to competition may not be feasible. When this is the case, health systems should fall back on regulation and performance management to ensure high-quality care delivery.

Less specialized hospital care

For less specialized acute services, more classic models of competition are usually suitable. Most markets, for example, can sustain a number of efficient and safe providers of elective surgery. Thus, encouraging sharper competition among existing providers or even, in some cases, introducing new providers could yield improved efficiency and better health outcomes.

Before new providers are added, however, it is important that the health system carefully analyze whether the associated increase in system costs will be offset sufficiently by improved productivity and quality. Furthermore, competition for less specialized acute services will not achieve its desired ends unless mechanisms are in place to allow some providers to reconfigure the services they offer or, if necessary, exit the market entirely.

Primary and community care

We believe that the case for encouraging the intensity of competition and the emergence of new providers is clear-cut for care delivered, now or in the future, outside the hospital. This is the area in which competition can be introduced most easily and is likely to have the biggest impact—an important consideration given that, as mentioned earlier, it is the area in which health systems are seeking the greatest improvements in quality and productivity.

Increased data availability could help introduce competition by enabling patients (and, in some cases, referring doctors) to compare the quality of services being offered. Initially, the data could focus on metrics that can be easily gathered and readily understood, such as waiting times and satisfaction scores. Over time, outcome metrics could be added as health systems’ data-collection ability and patients’ level of knowledge rose. In some countries, legislative or regulatory action may be required to make it easier for patients to switch providers, for funding to follow the patients, and for funding to reward excellence. However, a virtuous circle could be established in which competition among providers increases the quality and efficiency of care delivered.

New providers of community-based services can be added in a variety of ways. For example, health systems can increase the number of family doctors they train and/or allow ancillary health providers (nurse practitioners, for example) to offer primary care services. In addition, they can introduce or encourage the expansion of new delivery formats, such as polyclinics, ambulatory surgery centers, retail health clinics, and telephone- or Internet-based care provision. Public-sector health systems can reshape their ownership rules to allow private-sector providers to enter the market.

(Video) Stephen Dunn: How competition can help improve patient care

Finally, some health systems may want to consider stimulating competition for control of certain providers, if they do not already permit such competition. Offering incentives for high-performing providers to take over and turn around low-performing providers can drive up quality and productivity as long as the impact on the overall level of competition in the market is appropriately regulated.

In the past ten years, the focus—among academics and policy makers—has been on introducing competition to the acute sector. However, the potential for competition to drive real improvements in out-of-hospital care has been neglected. We believe that it is time for health systems to shift their focus toward unleashing competition in primary care; that is where competition is likely to make the greatest difference.


How can health care delivery be improved? ›

7 steps to improved healthcare delivery systems
  1. Center the "whole person" in the system design.
  2. Develop systems for care management and coordination.
  3. Incorporate behavioral health and social health determinants into the equation.
  4. Work toward collaborative leadership.
  5. Align care delivery and the community.

Are comparison and competition good for the healthcare industry? ›

Provider competition can contribute to stronger performance, but it will not address all performance problems and may have adverse effects. Neither economic theory nor empirical evidence support the conclusion that competition should be promoted for all health services.

What is competitive advantage in health care? ›

Differentiation – The best way to create a competitive advantage is to differentiate yourself from the competition. This means offering services, care, environment, and/or experiences that your patients can not get at a neighboring facility.

Can competition improve the quality? ›

The studies find no evidence that competition is associated with quality or improvement in quality over time. The current study extends the previous work by using fixed-effects models to adjust for any time-invariant traits that may mask a relationship between competition and quality.

What are some examples of quality improvement in healthcare? ›

What are Examples of Quality Improvement Initiatives in Healthcare?
  • Reduction in medication-related adverse events.
  • Optimization of sepsis care.
  • Decreased number of urinary catheter infections.
  • Reduced hospital readmissions.
  • Decreased medication administration errors.
  • Improved electronic medical record documentation.
Jan 28, 2022

What are the main objectives of a health care delivery system? ›

The primary objectives of any health delivery system are to enable all citizens to receive health care services whenever needed, and to deliver health services that are cost-effective and meet pre-established standards of quality.

How is competition affecting the delivery of some forms of health care? ›

A key role of competition in health care is the potential to provide a mechanism for reducing health care costs. Competition generally eliminates inefficiencies that would otherwise yield high production costs, which are ultimately transferred to patients via high health service and delivery costs.

What are examples of competing needs in healthcare? ›

Almost a quarter of a century ago, authors recognized that competing demands, including acute care, patient requests, chronic illnesses, psychosocial problems, screening, counseling for behavioural change, and administration and management of patient care, presented a substantial barrier to the provision of specific ...

What type of competition is the healthcare industry? ›

This is considered a non-price competition which is for the improvement of quality. Here, physicians dominate the distribution of hospital resources and treatment-related things along with the choice of hospital.

What are examples of competitive advantages? ›

Examples of Competitive Advantage
  • Access to natural resources that are restricted from competitors.
  • Highly skilled labor.
  • A unique geographic location.
  • Access to new or proprietary technology.
  • Ability to manufacture products at the lowest cost.
  • Brand image recognition.
Jun 23, 2022

How do you stay competitive in healthcare? ›

Six ways to survive – and even grow –in a competitive world
  1. Size counts.
  2. It pays to be where the patients are.
  3. Leave the customer satisfied.
  4. Smart personnel management is a smart move.
  5. Cultivate referrals.
  6. Invest in success.
  7. References.
Oct 26, 2016

What is a healthy view of competition? ›

As a loose definition, healthy competition is the interaction between individuals that promotes and fosters striving for higher achievements yet creates an environment where everyone in the group hopes that everyone will do well, rather than wish that others fail.

How does competition influence quality management in healthcare services? ›

We find that higher competition results in higher management quality, measured using a new survey tool, and improved hospital performance. Adding a rival hospital increases management quality by 0.4 standard deviations and increases survival rates from emergency heart attacks by 9.7%.

Why is competition an important factor? ›

Competition makes the market more efficient, and will translate into competitive prices for goods and services. Competition spurs businesses to be more productive, innovative and responsive in order to compete for consumers.

Why is competition a good thing? ›

Basic economic theory demonstrates that when firms have to compete for customers, it leads to lower prices, higher quality goods and services, greater variety, and more innovation. [1] Competition is critical not only in product markets, but also in labor markets.

Why is quality improvement important in healthcare? ›

Quality improvement seeks to standardize processes and structure to reduce variation, achieve predictable results, and improve outcomes for patients, healthcare systems, and organizations.

What is process improvement in healthcare? ›

Process improvement in healthcare is a long-term journey to better patient care and operational efficiency. By homing in on the priorities and working to improve the entire patient journey through a data-driven approach, healthcare organizations can reach their targets and ensure better patient outcomes.

What is performance improvement in healthcare? ›

Performance Improvement: The continuous study and adaptation of the functions and processes of a healthcare organization to increase the probability of achieving desired outcomes and to better meet the needs of patients.

What is a healthcare delivery system give examples? ›

delivery system. A facility or organization that provides health care services. Hospitals, long-term care facilities, medical offices, and laboratories are all examples of delivery systems.

What is the meaning of health care delivery? ›

health-care delivery n.

the services provided by nurses and others in the health service. A Dictionary of Nursing.

What are 3 different types of healthcare delivery systems? ›

Healthcare delivery systems
  • Exclusive Provider Organization (EPO) EPO's have a network of providers who have agreed to provide care for the members at a discounted rate. ...
  • Health Maintenance Organization (HMO) ...
  • Integrated delivery system (IDS) ...
  • Preferred Provider Organization (PPO) ...
  • Point-of-Service (POS) Plan.

Does competition work in healthcare? ›

There are some positive findings, with competition being associated with improved clinical outcomes in a number of studies. However the evidence is not unequivocal, with some studies suggesting either no influence or a negative impact of competition on clinical outcomes.

How can competition among insurance firms impact health care costs for consumers? ›

There is a direct effect: lower competition may raise premiums and also lead to higher rates as hospitals capture a portion of the increased premium revenues. There are also offsetting indirect effects.

What is managed competition in healthcare? ›

Abstract: Managed competition in health care is an idea that has evolved over two decades of research and refinement. It is defined as a purchasing strategy to obtain maximum value for consumers and employers, using rules for competition derived from microeconomic principles.

How do you manage competing needs? ›

Time Management 101: How to Handle Competing Priorities
  1. Communicate. Discuss details and deadlines with managers to come up with a workable situation that satisfies everyone. ...
  2. Create a timeline. Having a timeline and regularly informing each manager of your progress reduces scheduling conflicts. ...
  3. Get help. ...
  4. More resources.
Jun 23, 2017

How do you manage competing needs in a company? ›

The allocation of resources is the key part of managing competing needs. The company satisfies those needs with priority on the hierarchy by allocating available resources in the most effective way. Management starts by allocating unlimited resources wherever they are needed and then allocates reusable resources.

What policies would you propose to make healthcare delivery more price competitive? ›

Proposals for increasing competition among hospitals
  • Encourage new competitive entrants. ...
  • Liberalize regulations that artificially increase hospitals' market power. ...
  • Transparency into hospital prices and anticompetitive contracts. ...
  • Facilitate medical tourism and telemedicine.

What is the relevance of encouraging diversity and competition in improving the health system? ›

Espousing diversity in healthcare can lead to cultural competency, the ability of healthcare providers to offer services that meet the unique social, cultural, and linguistic needs of their patients. In short, the better a patient is represented and understood, the better they can be treated.

What is hospital competition? ›

The traditional view of hospital competition has posited that hospitals compete primarily along 'quality' dimensions, in the form of fancy equipment to attract admitting physicians and pleasant surroundings to entice patients. Price competition among hospitals is thought to be non-existent.

What are the four benefits of competitive advantage? ›

In most industries there are only four competitive advantages that meet the four definitional criteria, and they are innovation, culture, customer affinity and predictive analytics.

What are the 5 factors of competitive advantage? ›

The production factors that can be a source of competitive advantage are:
  • Economies of scale: Scale of business stands for the size. ...
  • Locational advantages: ...
  • Raw-materials: ...
  • The strength of maintenance: ...
  • Inventory norms:

What are 3 competitive advantage strategies? ›

According to Porter's Generic Strategies model, there are three basic strategic options available to organizations for gaining competitive advantage. These are: Cost Leadership, Differentiation and Focus.

What is a way for hospitals to remain competitive in today's market? ›

Increased savings on necessary purchased services (“economies of scale”). Decreased competition (“if you can't beat them, join them” strategy). Increased ability to make capital investments. Open sharing of cost savings initiatives. Open sharing of expertise and technology that improves care.

How do you increase market share in healthcare? ›

Four Keys to Increase Healthcare Market Share
  1. Key 1. Alignment. ...
  2. Key 2. Vehicles. ...
  3. Key 3: Five Tools. In order to make improvements, the COE needs a baseline to help the leadership team identify improvement opportunities and then prioritize which areas to focus on first. ...
  4. Key 4: Education. ...
  5. Additional Reading. ...
  6. PowerPoint Slides.
Mar 10, 2020

How do you create a friendly competition in the workplace? ›

Creating Healthy Competition at Work
  1. Make it Fun. Work is naturally competitive: Everyone wants to do well in his or her job, be recognized and get promoted. ...
  2. Monitor the Effects. ...
  3. Compete in Teams. ...
  4. Encourage Competing with Yourself. ...
  5. Stay Focused on the End Goal. ...
  6. Provide a Reasonable Reward.
Feb 7, 2017

How can we prevent unhealthy competition? ›

How to avoid being overly competitive at work
  1. Analyze what causes your competitiveness. ...
  2. Build your confidence. ...
  3. Focus on self-improvement. ...
  4. Foster better relationships with your coworkers. ...
  5. Collaborate purposefully. ...
  6. Compete with yourself.
Sep 29, 2021

Does competition lower healthcare prices? ›

The results of the study showed that actual hospital prices were lower in more competitive markets.

What are some reasons that health care markets may not be perfectly competitive? ›

7 The structure of markets in health care is not competitive. There are barriers to entry and exit. Some barriers come from professional licensing, long and expensive training and expensive investment requirements (e.g. hospitals are expensive to build).

Is healthcare a competitive market? ›

The healthcare market has constrained competition, providing a platform for mediocre quality of care and unsustainable, rising healthcare costs. These constraints are multifaceted and co-dependent: Patent monopolies: Drug and device patents legitimately provide monopolies for novel treatment options.

How having strong competitors can benefit a company? ›

Greater competitiveness creates more productivity and better quality of products and services. Companies can satisfy consumer preferences and, consequently, attain a better position in the market. The market grows steadily, and consumers benefit from lower prices and a more comprehensive range of goods and services.

How can competition improve your life? ›

It's a way to challenge yourself and others while pushing those around you. It allows you to tap into your potential and succeed. When we compete in this positive way, we aren't rooting for others to fail or become obsessed with winning at all costs.

How do consumers benefit from competition? ›

Competition in America is about price, selection, and service. it benefits consumers by keeping prices low and the quality and choice of goods and services high. Competition makes our economy work. By enforcing antitrust laws, the Federal trade Commission helps to ensure that our markets are open and free.

Does competition improve performance? ›

Competition can increase motivation, improve productivity and performance, and provide accountability and validation.

Does competition work in healthcare? ›

There are some positive findings, with competition being associated with improved clinical outcomes in a number of studies. However the evidence is not unequivocal, with some studies suggesting either no influence or a negative impact of competition on clinical outcomes.

How does competition influence quality management in healthcare services? ›

We find that higher competition results in higher management quality, measured using a new survey tool, and improved hospital performance. Adding a rival hospital increases management quality by 0.4 standard deviations and increases survival rates from emergency heart attacks by 9.7%.

Is the healthcare industry a competitive market? ›

The healthcare industry is highly competitive, so taking the time to understand your aspirational, direct, and secondary competitors and make informed decisions based on your findings are crucial for success.

What are some reasons that health care markets may not be perfectly competitive? ›

7 The structure of markets in health care is not competitive. There are barriers to entry and exit. Some barriers come from professional licensing, long and expensive training and expensive investment requirements (e.g. hospitals are expensive to build).

if you have any of the main symptoms, even if they’re mild, stay at home and self-isolate straight away and get a PCR test (a test that is sent to a lab), to check if you have COVID-19 as soon as possible if you have any of the main symptoms you should stay at home to self-isolate and not have visitors until you get your test result – at this stage (until the test result is known), people you have been in contact with do not need to self-isolate, but they should follow advice on how to avoid catching and spreading COVID-19 if you do not have symptoms, but test positive on a home LFD test, you should report your result and self-isolate – you do not need to take a follow-up PCR test if you test positive for COVID-19, and are asked by NHS Test and Trace, you must share information promptly and accurately about members of your household you should also share information about other recent contacts through NHS Test and Trace to help us alert other people who may need to be advised to get tested and/or to self-isolate if you have had close contact with someone who has COVID-19, you should follow any advice you are given on getting tested and you must self-isolate if NHS Test and Trace advises you to do so if you are arriving from travel abroad it is important to follow the rules on testing and check whether you need to follow additional rules on quarantine and testing. If you are notified by NHS Test and Trace of a positive PCR test result or notified by NHS Test and Trace to self-isolate after reporting a positive LFD result, you must self-isolate and will be given guidance on when your self-isolation period can end.. If you develop symptoms, you may wish to alert the people with whom you have had close contact over the last 2 days.. If you get a positive PCR test result or report a positive LFD test result, NHS Test and Trace will contact you and ask you to share information about any close contacts you had just before or after you developed symptoms or, if you did not have symptoms, just before or after the date of your test.. call you from 0300 013 5000 – local contact tracers will contact you from a local council number but if you’re unsure if this is genuine, contact your local council for advice send you text messages from ‘NHStracing’ ask you to sign into either NHS Test and Trace or NHS Test and Trace contact tracing ask for your full name to confirm your identity, and postcode to offer support if you are required to self-isolate ask about the COVID-19 symptoms you have been experiencing ask you to provide the name, telephone number and/or email address of anyone you have had close contact with in the 2 days prior to your symptoms starting ask if anyone you have been in contact with is under 18 or lives outside of England. You should stay at home until you receive your test result and follow the guidance for people with COVID-19 symptoms .. If you’re exempt from self-isolation, you are not required to inform your employer that you have been contacted by NHS Test and Trace and notified that you are a contact of a positive case, but you may choose to do so.. If you are identified as someone who has had close recent contact with – or live in the same household as – a person who has tested positive for COVID-19 and you are not exempt from self-isolation as a contact, we will notify you that you must self-isolate in line with medical advice and the law.

Research to date shows that hospital mergers increase the average price of hospital services by 6%−18%.. This Drill Down describes the wave of hospital consolidation since 2010, identifies observed effects of hospital consolidation on utilization and prices of healthcare services, and discusses NCCI’s research in progress on the impact of hospital consolidation in workers compensation insurance.. In other cases, hospitals are sold between hospital systems, or similar hospitals may join in a merger of equals.. The acquisition of physician practices by a hospital or hospital system is a common example of vertical consolidation in healthcare.. To understand how the healthcare marketplace is being transformed by consolidation, we separate hospital merger and acquisition activity into three types: 1) acquisition of other hospitals, 2) acquisition of provider practices, and 3) other forms of vertical integration (e.g., acquisition of ambulatory surgical centers or skilled nursing facilities).. 12 Mergers have also been found to reduce hospital costs per risk-adjusted discharge , but not to reduce the price of hospital care to insurers.. To evaluate the competitive impact of a proposed hospital merger, antitrust authorities begin by identifying the relevant regional market for hospital services.. This is largely because rural HRRs’ referral hospitals serve many small hospitals over an extensive geographic region, whereas urban HRRs’ referral hospitals are supported by fewer (and larger) hospitals in smaller geographic regions.. Research such as Cooper et al., shows that hospital concentration increases the cost of care for Medicare fee-for-service (FFS), but in contrast to commercial insurance, this occurs by increasing the quantity of care rather than the price of care.. What is the impact of concentration in regional markets for hospital services on prices paid in workers compensation for hospital-based medical care after controlling for patient severity and hospital characteristics such as ownership, size, medical school affiliation, and wage variance?

States have many strategies available for controlling health spending, including promoting competition, reducing prices, and decreasing the use of low-value care. Goal: To examine the strategies available to states to control spending across all payers and how state health policy commissions can support implementation of those strategies.. Key Findings: States may pursue a variety of strategies to control spending growth, ranging from promoting competition, reducing prices through regulation, and designing incentives to reduce the utilization of low-value care to more holistic policies such as imposing spending targets and promoting payment reform.. Though different states will likely choose different approaches, health policy commissions can support a wide variety of strategies by supporting initiatives of existing state agencies or by directly implementing new policies themselves.. Health policy commissions also can play an important part in helping states achieve their health spending goals.. For example, when Beth Israel Deaconess Medical Center and Lahey Health decided to merge in Massachusetts, the state’s Health Policy Commission had concerns about potential price increases and access to high-quality care for underserved populations.. The Hospital Payment Program to test population-based payments for Maryland hospitals The Care Redesign Program that allows hospitals to make incentive payments to nonhospital health care providers if it has attained savings under its fixed global budget The Maryland Primary Care Program that is structured to incentivize primary care providers to offer advanced services and care management to their patients.. Commission Support of Price Reduction Policy Addressing high prices is a narrower charge than addressing overall health care spending because prices reflect a single transaction that policymakers could directly regulate.. States can pursue many different strategies, ranging from efforts to promote competition, reduce prices, or decrease utilization of low-value care to broader strategies that address overall spending.. States must reflect on their respective priorities, decide on the basic approach they want to take to address health care spending, and then design the commission that works best to support those approaches.. Massachusetts Health Policy Commission, Massachusetts Health Policy Commission Review of the Proposed Merger of Lahey Health System; CareGroup and its Component Parts, Beth Israel Deaconess Medical Center, New England Baptist Hospital, and Mount Auburn Hospital; Seacoast Regional Health Systems; and Each of their Corporate Subsidies into Beth Israel Lahey Health; AND the Acquisition of the Beth Israel Deaconess Care Organization by Beth Israel Lahey Health; AND the Contracting Affiliation Between Beth Israel Lahey Health and Mount Auburn Cambridge Independent Practice Association (MHPC, Sept. 27, 2018).. Bob Kocher and Donald M. Berwick, “ While Considering Medicare for All: Policies for Making Health Care in the United States Better ,” Health Affairs Blog , June 6, 2019; and Jonathan Skinner, Elliott S. Fisher, and James Weinstein, “ The 125 Percent Solution: Fixing Variations in Health Care Prices ,” Health Affairs Blog, Aug. 26, 2014.. 1997): 93–102; and Carmel Shachar, “ The Preemption Clause That Swallowed Health Care: How ERISA Litigation Threatens State Health Policy Efforts ,” Health Affairs Blog, Oct. 15, 2020.

The use of telemedicine during the COVID-19 crisis points to the increasing role technology will play in health care not only in treatments but in how those treatments are delivered, according to health care professionals with Bon Secours and Prisma Health .. But he sees telehealth as just one part of how health care providers are using technology to both improve the quality of care and expand access to that care.. Shot of a young doctor using a smartphone in her consulting room Using technology to coordinate in-home care is precisely what Prisma Health’s Home Recovery Care program is all about.. The program connects in-home care teams with acute care specialists to provide a level of care that would have previously required a hospital stay, according to Angela Orsky, vice president of value-based care and clinical integration with Prisma Health.. Through tools like a “virtual stethoscope” and other medical devices, the home health team sends real-time data to the physician overseeing the patient’s recovery.. Aside from increasing the efficiency of a scarce resource — highly trained medical specialists — the virtual ICU program expands the high level of care to more patients.. Technology is not just transforming health care from the side of providers but is increasingly providing more options for patients.. The problem, as founder and CEO Eugene Luskin describes it, is that due to the extreme level of regulation in the health care industry, there is an “insane level of fragmentation” in how medical records are generated, especially if a patient changes providers.. “Virtual care is here to stay, especially as people become more familiar with the technology.” Amelia Gainey, director of digital health services for Prisma Health. By focusing on the patient and providing them with a secure “personal electronic briefcase,” SYNC.MD’s mobile app gives patients a much greater level of control over their health records and who has access to them, Luskin says.. Telehealth/telemedicine — This is the use of technology to virtually connect patients with health care providers, typically using the audio and video connections of a smartphone, tablet or computer.

To answer, we must break down the problem, looking at the different types of innovation and the forces that affect them, for good or ill. (See the sidebar “Six Forces That Can Drive Innovation—Or Kill It.”) This method of analysis, while applied here mainly to health care in the U.S., also offers a framework for understanding the health care problems of other developed economies—and for helping managers understand innovation challenges in any industry.. Innovations in the delivery of health care can result in more-convenient, more-effective, and less-expensive treatments for today’s time-stressed and increasingly empowered health care consumers.. Innovative business models, particularly those that integrate health care activities, can increase efficiency, improve care, and save consumers time.. Innovation in health care presents two kinds of financial challenges: funding the innovation’s development and figuring out who will pay how much for the product or service it yields.. Government regulation of health care can sometimes aid innovation (“orphan drug” laws provide incentives to companies that develop treatments for rare diseases) and sometimes hinder it (recent legislation in the United States placed a moratorium on the opening of new specialty hospitals that focus on certain surgical procedures).. The empowered and engaged consumers of health care—the passive “patient” increasingly seems an anachronistic term—are a force to be reckoned with in all three types of health care innovation.. Opponents of consumer-focused innovation may try to influence public policy, often by playing on the general bias against for-profit ventures in health care or by arguing that a new type of service, such as a facility specializing in one disease, will cherry-pick the most profitable customers and leave the rest to nonprofit hospitals.. It also can be difficult for innovators to get funding for consumer-focused ventures because few traditional health care investors have significant expertise in products and services marketed to and purchased by the consumer.. Health Stop was a venture capital–financed chain of conveniently located, no-appointment-needed health care centers in the eastern and midwestern U.S. for patients who were seeking fast medical treatment and did not require hospitalization.. The framework described in this article—the three types of health care innovation and the six forces that affect them—offers a useful way to examine the barriers to innovation in health care systems outside the United States, too.. Three kinds of innovation can make health care better and cheaper: One changes the ways consumers buy and use health care, another taps into technology, and the third generates new business models.. More often than not, organizations can overcome the barriers by managing the six forces that have an impact on health care innovation: players, the friends and foes who can bolster or destroy; funding, the revenue-generation and capital-acquisition processes, which differ from those in other industries; policy, the regulations that pervade the industry; technology, the foundation for innovations that can make health care delivery more efficient and convenient; customers, the empowered and engaged consumers of health care; and accountability, the demand from consumers, payers, and regulators that innovations be safe, effective, and cost-effective.

Edward L. Baker, Jr, MD, MPH Daniel A. Pollock, MD. Randolph L. Gordon, MD, MPH Daniel M. Sosin, MD, MPH. Ann S. Long National Center for Injury. Guadalupe Olivas, PhD Prevention and Control. Paul V. Stange, MPH. Public Health Practice Program Office Scott D. Deitchman, MD, MPH. In recognition of the potential role of managed care in. prevention, in January 1995, CDC formed a Managed Care Working. Group to. develop recommendations for CDC for fostering the incorporation of. prevention practices into managed care.. In January 1995, CDC formed an agency-wide Managed Care. Working Group. to guide its efforts to foster partnerships between public health. agencies. at the national, state, and local levels and the rapidly growing. managed. care industry to promote prevention and improve the public's. health.. This report presents a) a brief summary of the systems for. financing. and delivery of health care in the United States, b) a review of. the. relationship between managed care and prevention, c) examples of. the. incorporation of prevention practices into managed care, and d) a. list of. the recommendations developed by the Managed Care Working Group for. CDC's. role in fostering the incorporation of prevention into managed. care.. Second, HMOs historically have included prevention, and they. maintain. and continue to develop systems to measure performance and improve. quality. of services, including preventive services.. Many HMOs provide or are developing. systems. that promote and deliver preventive services rather than relying on. individual providers, and the HMOs can be held accountable for the. delivery. of these services.. Health-care purchasers, particularly large employers, have. collaborated with HMOs to develop external systems to measure. the. quality of both preventive and treatment services in managed. care and. to hold HMOs accountable for their delivery.. Public and private purchasers of health care, particularly. large. employers, HCFA, and state Medicaid agencies, have direct. interest in. promoting quality in managed care and could be natural. partners with. public health agencies in improving health outcomes.. Work with MCOs, purchasers, and state and local health. departments in. key areas of prevention effectiveness, including. Medicaid and Managed Care. implement Medicaid managed care arrangements that specify. cost-effective. preventive services for Medicaid populations and hold all managed. care. plans accountable for the delivery of these services.. In summary, the continuing evolution of the health-care system. in the. United States provides new opportunities for partnerships among. MCOs,. purchasers of health care, and public health agencies to foster. prevention. in the private health-care system.

They often allocate their costs to procedures, departments, and services based not on the actual resources used to deliver care but on how much they are reimbursed.. Better measurement of outcomes will, by itself, lead to significant improvements in the value of health care delivered, as providers’ incentives shift away from performing highly reimbursed services and toward improving the health status of patients.. We increase the value of health care delivered to patients by improving outcomes at similar costs or by reducing the total costs involved in patients’ care while maintaining the quality of outcomes.. Accurate cost measurement in health care is challenging, first because of the complexity of health care delivery itself.. Existing costing systems, which measure the costs of individual departments, services, or support activities, often encourage the shifting of costs from one type of service or provider to another, or to the payor or consumer.. We also estimate how much time each provider or other resource spends with a patient at each step in the process.. When a process requires multiple resources, we estimate the time required by each one.. In this case, we make an adjustment: The costing system should use the time required to perform 6,000 tests as the capacity of the resource.. In the final step, the project team estimates the total cost of treating a patient by simply multiplying the capacity cost rates (including associated support costs) for each resource used in each patient process by the amounts of time the patient spent with the resource (step 4).. Our new approach actively engages physicians, clinical teams, administrative staff, and finance professionals in creating the process maps and estimating the resource costs involved in treating patients over their care cycle.

Successful supply chains are becoming a key differentiator and vital part of the care delivery process in ways we have never seen before in health care.. Identifying opportunities to partner with retail organizations to fill this gap can help simplify organizational services, increase access and provide better patient care at a lower cost.. Trustee Discussion Topics: Does our organization have a progressive supply chain strategy that includes risk mitigation, reliable suppliers, alignment with care delivery changes and a technology plan that is utilizing rapid advancements consistent with other fields?. Have we considered how to use the competition and new models to exit financially draining services, expand the market and leverage resources outside of ZIP codes we operate in?. It’s not surprising that patients expect the same high level of efficiency and transparency from their health care providers.. We will continue to see the emergence of virtual care solutions across the care continuum from telehealth visits to virtual hospital care and home-based care.. It will be important for organizations to align their virtual strategy with the changing needs of their markets, growth strategy and evolving payment models.. Expect to see large organizations making big investments to better leverage and monetize the use of data to improve productivity, enhance patient care and drive additional funding for key programs.. They will increasingly look to partner with provider and payer organizations to manage costs and the health of their teams.


1. Health Care - Redefining Health Care: creating value based competition on results
(Massachusetts School of Law at Andover)
2. Health Care Benefits: Rethinking of delivery, competition, unbundling, and rebundling | LIVE STREAM
(American Enterprise Institute)
3. Chairman Ryan: Choice and Competition Will Increase Quality, Decrease Costs in Health Care
(House Budget Committee GOP)
4. Reducing the Cost of Health Care with Scott W. Atlas | Perspectives on Policy
5. COVID-19 Pandemic: NIIT launches hackathon competition to improve healthcare delivery (23-3-21)
6. J-PAL Health Care Delivery Innovation Competition Webinar 2018

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