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The St. Sebastian is one of the main hospitals that is found in the Midwest City. The hospital makes money from providing health care services which include maternity programs, clinical examinations and treatments and physician consultation and also research programs in conjunction with pharmaceutical firms.
The geographic realm of competition for the hospital is the community in which it offers its services. This hospital has its focus set on a single strategy. It operates in singular geographical strategy since it only provides health care services and also system facilities..
The main buyers soliciting services from the St. Sebastian health care system comprises of patients from the community in which the hospital operates.
On the other hand, the buyer groups this health care system constitutes Medicare patients, commercial entities and Medicaid.
The suppliers forming part of the participants comprises of groups such as the Mercy, the entire pediatric health care providers, the university and also St. Sebastian. These give their services in return for profits. The university mainly provides the necessary research services. The pediatric health systems supply specialized pediatric services.
The groups forming part of the suppliers include emergency service groups, the radiology group, the specialized orthopedic health service provider group and also the gastroenterology departmental group.
St. Sebastian is experiencing substantial competition from the Mercy and the pediatric health care providers and also from the general university. The Mercy, for example, provides similar health care service programs and attracts patients from the same geographical scope as St. Sebastian.
St. Sebastian is facing the threat of new entrants who include twenty-three specialized nursing facilities and also three rehabilitation centers. These are the significant potential entrants into the market. The business environment is therefore set to be more competitive since these groups will be offering similar services as St. Sebastian at lower or more convenient prices.
The strongest force in the St. Sebastian competitive environment is the supplier bargaining potential. This is because the suppliers of the health care services are fewer than the buyers who comprise the community(Porter,1989). The supplier's experience and ever-increasing competition from one another and new entrants into the market. They, therefore, have resorted to imposing a relatively lower average charge per patient visit. This tactic has continued to increase competition among themselves. There are a few number of health system facilities found in this community, hence the reason why the supplier bargaining power forms the strongest force. The weak forces of competition in this business environment is the impending challenge posed by new entrants. This is considered a weak force in establishing respected health care systems requires huge capital.The services offered by these competing health care systems are similar, and due to competition, the averages charges for these healthcare service are also similar.This explains why patients can transfer from one health system to another without incurring any substantial extra costs.
The industry structure of, in this case that is the health system industry constitutes three competitors.These include the general pediatric facility, the Mercy health system and also the general university.The health industry structure to which St.ebastian is part of is small since it only comprises of the three major competitors. These competing faction, are more distributed over the entire community in which they offer their services in exchange for profits.
The regulations implemented by the state has majorly influenced the level of profitability for the health system in question.The government has for example implemented a strategy that delays the Certificate of Need program.As a result, some of the strategic programs that the St.Sebastian health system has been seeking to realize have been affected.This has resulted in a low-profit-margin being realized in the long term.In the year 2008, some of the main factors that affected the profitability of this health care system include the economic inflation and the subsequent high rate of unemployment(Porter,1979). These impacted on the St. Sebastian health system profits negatively
The most controlling forces determining profitability of the St. Sebastian business environment is stiff competition among the main health service providers and also the collective bargaining potential of the suppliers.The higher the competition the higher the quality of services provided and the lower the cost of providing the services.This translates into a relatively high profit for the firm.The bargaining power of the suppliers is one of the main factors influencing the amounts of profits realized since the suppliers can decide on the prices of their services.The suppliers may also choose to collectively produce low-quality products for the same costs to increase their profits(Porter,2008).
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 86(1), 25-40.
Porter, M. E., & Porter, M. E. (1979). How competitive forces shape strategy.
Porter, M. E. (1989). How competitive forces shape strategy. In Readings in strategic management (pp. 133-143). Palgrave, London.
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