Simone directly affect hospitals because the less

Simone Blackman
Strategic Thinking I
Assignment: Discussion 2. 1 Industry Analysis
June 3, 2018
The healthcare industry encompasses companies ranging from non-profit healthcare organizations to medical equipment manufacturers to pharmaceutical companies. Within the healthcare system, there is the hospital industry that is one of the most important. There is a great deal of competition inside the hospital industry that drives the prices down so that people can afford to pay for care. It promotes innovation which will improve healthcare in the country. The demand in hospital industry is controlled driven by people getting ill or injuries. On the other hand, advancement in medical care and equipment will increase profits for the individual hospitals because patients will prefer to go there for help. Therefore, this will have an impact on growing doctors’ wages because these hospitals would like to have the best medical staff to improve the efficiency of care, thereby optimizing in value. However, there are many macro-environmental factors such as political, economic, and technological. Then, there is the competitive landscape that affects profits and the affordability provided by hospitals.

The most significant factor is political that will affect the success of each hospital organization. The Affordable Care Act program was, implemented so that most Americans can get covered for health insurance but it has had a lot of negative outlook on the economic impact for the hospitals. Also different drug laws are passed, and the health insurance industry with its y unpredictability can affect the reimbursements. In 2013, The Affordable Care Act had mixed reviews, 48% of Americans approved the law, then the approval decreased to 37% and gradually increased up to 47% (Jones, 2015).
Hospitals are economic drivers within the community. Every year hospitals provide vital healthcare services to millions of people in their communities. The state of the economy will directly affect hospitals because the less disposable income household has, the less likely they will be to spend money, which will affect the profitability. Furthermore, with population growth many more people will need help and further utilization of the hospitals. Additionally, hospitals employ millions of people and as a result, create trillions of dollars for the economy.

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As technological innovation continues to grow, changing all industries as it evolves. In the hospital industry, technology plays a role in almost all of the processes, from patient registration, to data monitoring, to lab tests and self-care. For a hospital to be successful, they must be up-to-date or ahead of their competitor in technology. Some healthcare practitioners’ are working on robotic surgeries to improve patient outcomes increase the success rate and minimize infection. These technological advancements could help hospitals gain public approval.
There is a lot of competition within the hospital industry. Therefore there is a need for hospitals to be innovative with the level of care they provide to their patients, to have return customers. Many people have unplanned hospital visits, so the person needing the care can choose from as much as three or so hospitals near them. Therefore, the competition is high, and each of these hospitals wants to be the one that the people choose. Then hospitals have to reinvent patient experience because most people do not like hospital experience. Waiting in the waiting room or emergency department for several hours scares consumers away. A hospital can be successful by creating an exceptional patient experience by working to create a favorable environment for patients or customers. On the other hand, there is competition from the pharmaceutical industry. These companies will compete amongst themselves to sell their products to individual hospitals.
There are very low risks of new entrants into the hospital industry because of the amount of capital required to make substantial investments in capital equipment, or existing hospitals or firms may have strong customer loyalties that may be difficult for new entrants. Also, the threat of entrant is low because of government regulations. The government has to make sure that hospitals entering the industry have the right types of equipment and technology to run a health care system.

There is no threat of substitute in the hospital industry; maybe only many people may not like or trust going the hospital for care. Moreover, the bargaining power of suppliers is low in the hospital industry. There are many suppliers that hospitals have to choose from most pharmaceutical companies for them to exert control over the hospitals. The hospital prescriber can prescribe and also send their patient to purchase any medication of their liking within a particular parameter. Therefore, the pharmaceutical companies must create a relationship with hospitals and their doctors to influence them to prescribe their products to customers. Also, the pharmaceutical companies have a role in what classes or specific drugs are distributed.

The bargaining power of the buyers in the hospital industry is low to moderate. Due to the fact, that when someone needs healthcare, they are willing to pay any price for that care. Moreover, when customers like a particular product they will end up paying more for that product. The competition of price may not become extremely high for customers or consumers to afford.

In conclusion, hospitals have generated a lot of money to the economy. All of the individual hospitals play a role in driving the economic growth of America. Based on the Porter’s Five Forces model, healthcare administrator can gain insights on the competitiveness of the hospital industry. Also, there are a lot of macro environmental forces that affect the hospital industry significantly, along with a low bargaining power of the buyer. Moreover, Up to date and Innovative technology will help a hospital to gain more customers than its closest competitor; in turn lead to greater market shares.

Jones, M.J. (2015). Americans’ View of Health Care Law Improve. Available at (Accessed: 3rd, June 3, 2018


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