Competition is a common phenomenon in the business arena. It shapes the quality of goods in the market and determines the price of various commodities in the market so as to edge their rivalry firms out of business. Healthcare industry is not an exception when it comes to competition. A study carried out by American Medical Association (AMA) in 2007 asserts that competition among various health organizations is one of the driving forces towards the provision of quality healthcare in the United States. Therefore, this article aims to bring out the existence of competition within the U.S. healthcare industry, as well as its impacts.
Competition among Healthcare Plans
A study carried out by American Medical Association (AMA) in 2007 showed that the U.S. citizens are facing a limited choice of healthcare insurance. This is attributed to the monopoly of few established firms out of the numerous private health insurance providers in the healthcare industry. The survey found out that in at least 95 percent of the health insurance market, one insurance provider dominates more than 30 percent thus limiting the choices available for the U.S. citizens and employers. Nevertheless, the series of ongoing mergers between established and upcoming firms have helped reduce competition. For instance, United and WellPoint controls 36 percent of the national insurance market due to amalgamation with smaller firms.
Competition among various Parties in the Healthcare Industries
It is also notable that stiff competition between hospitals in terms of quality service provision is on the rise. Hospitals strive to beat each other in underbidding so as to secure managed care contracts (Greenwald, 2010). Interestingly enough, even hospitals offering the least profitable services often match their competitors in the provision of quality care. In the same magnitude, physicians also compete among themselves by opening up private firms where they tend to have more contact with their customers. According to Greenwald (2010), stiff competition has been observed between the medical practitioners in the University medical centers and community doctors. The latter hesitate to refer patients to the former for an inherent fear of losing clients.
More often than not, hospitals and private physicians tend to lock horns in the extent of their authority because the physicians offer services once restricted to hospitals such as emergency, surgery, and outpatient services (Greenwald, 2010). The direct competition from the private entities has led to decreased number of patients in hospitals. The pharmaceutical firms are neither staying behind in the jostling. 2010 Pharmaceutical Research and Manufacturers of America (PRMA) research survey exposed yet another fierce competition between drug manufacturers. Drug manufacturers compete in offering patented and cheaper medicines to limit blood pressure and reduce cholesterol levels in patients. As such, the duration in which new drugs get into the market get so reduced.
Finally, health insurance providers such as WellPoint which cover a wider market segment through mergers are in constant face-off with physicians (AMA 2007). The high cost giant healthcare providers have got no provision for price negotiations with the insurers, compelling the physicians to accept their costly policies. Consequently, physicians resist their exorbitant costs by offering services at lower prices, which are affordable to patients who in turn stop buying health insurance policies (AMA, 2007).
Benefits and pitfalls of Competition in Healthcare
Competition generally improves quality of health care services and service delivery. It is a common observation that hospitals which are in constant competition for clients discharge their service efficiently for outpatients and inpatients. The hospital environment is clean, and management strictly consists of qualified doctors and nurses. Furthermore, patients are bound to enjoy quality services offered in hospitals and physician’s private clinics at an affordable price by courtesy of competition. Contest between healthcare plans and physicians results into reduced cost of health insurance policies for patients- low-income workers being the highest beneficiaries. Finally, competition between the pharmaceutical companies leads to the manufacture of high quality drugs at lower costs.
However, competition in healthcare can also be detrimental to the U.S. health sector. For instance, competition between hospitals and physicians deprives the insured patients of unlimited access to the healthcare services because most physicians spend more time with private patients at their personal clinics. The whole matter divests the general insured public of their right to get healthcare services at any given time.
Conclusion and Recommendation
Competition is evident among the U.S. hospitals, physicians, healthcare plans, and pharmaceutical companies. This improves delivery of healthcare services as hospitals strive to attract larger population of clients by providing quality services at a subsidized price. The existing clients receive much more care and customized individual attention. Physicians not only compete among themselves for patients at their private clinics but they also compete with hospitals for patients by offering improved services. Drug companies do compete in manufacturing safest and demand driven drugs such as those for cancer, high blood pressure and asthma. Stiff market competition enforces healthcare insurance providers to merge with smaller firms to improve their network coverage and modes of service delivery.
Healthcare insurance providers that do not face stiff competition seem to offer very costly policies that low-income earners cannot afford. Competition is, therefore, healthy for the healthcare seekers and patients; therefore public insurance plan is needed to reduce the monopoly created by the private insurance plans. Although competition improves healthcare services, competition between physicians and hospitals should be reduced by rewarding them handsomely for the services they offer to the service of the hospital clients.