Porter's 5 Forces In Health Care
According to Michael Porter (2008), the key reason for the existence of intense competition and rivalry in the health care industry works as a mechanism to increase value for patients. Competition or opposition has ensured provision of better products and services to satisfy the needs of customers. It is capable of increasing value for customers over time. Quality and process improvements, as a result of competition or opposition leads to decreased cost and increased customer satisfaction (Porter, M. 2008). Michael Porter’s “Five Forces” helps to gain a better understanding of the competitive nature that exists in the external environment.
Threats of New Entrants: With the current situation of President Trump’s aim to replace or repeal the ACA, there is a high probability of it being replaced or certain aspects of it being repealed. With some stakeholders citing rising healthcare costs and less value obtained from it, universal healthcare system or single payer system could …show more content…
replace the ACA.
Intensity of Rivalry among Existing Organizations: With ACA being the only governing act in the United States, there is no existing rivalry.
Threat of Substitute Products or Services: The ACA in itself, does not provide any products or services and therefore, there is no threat of substitute products or services in the external environment.
Bargaining Power of Buyers: Consumers, employers and insurers are the major stakeholders that can make a significant impact on the ACA’s goal of providing healthcare insurance for all. Consumers, especially the non-elderly individuals and employers can decide if they want to buy insurance or not. They can also weigh in the options and benefits, to see which one best suits their needs and only then make a decision. Similarly, for-profit insurance companies (UnitedHealthcare Group, Aetna, Humana, Blue Cross Blue Shield) can opt out of Obamacare health-insurance exchanges in various states, if they feel that they are not benefiting or profiting enough from the exchange.
Bargaining Power of Suppliers: The ACA being a governing act and not an organization, would not have any suppliers.
Key external stakeholders
Since the inception of the Patient Protection and Affordable Care Act (ACA) on March 23, 2010, healthcare regulation and delivery has undergone significant changes. Any changes to the ACA has a direct impact on it external stakeholders. The three major stakeholders in the ACA are: (1) consumers; (2) employers; and (3) healthcare providers.
Consumers: Consumers form the most important stakeholder in the ACA with any significant changes directly affecting them.
The majority of American healthcare consumers, approximately 49% who receive health insurance through an employer and 32% through a government program, may not notice as many changes of rising premium costs or benefits in health insurance coverage. However, any changes in the ACA has a significant impact on the demographic environment. The Congressional Budget Office (CBO) estimates that changes to provisions of the ACA especially for insurance purchased in the nongroup market and to the Medicaid program would drive up the number of uninsured people to 21 million in 2020 and then to 24 million in 2026, weakening the ACA’s vision (Congressional Budget Office, 2017). This act has greatly impacted individuals with pre-existing conditions, children under 26 years and the uninsured poor income individuals to receive health insurance, increasing their accessibility to
healthcare.
Employers: With the employer mandate and enticing health reform law’s tax credit, employers provide coverage subsidies to its employees as a benefit. This benefit reduces the financial burden on employees and keeps them insured. It also helps the ACA in achieving its objective of reducing the number of uninsured individuals in the country.
Providers: Providers consist of physicians, insurers and healthcare service organizations. With the implementation of the ACA, many changes have driven providers to integrate with one another, in an effort to provide higher quality and lower cost healthcare. To encourage efficient and quality patient care, insurers incentivized providers and designed innovative programs like bundle payments program. Additionally, in an effort to increase access to primary care and preventive health services, physicians providing primary care services were guaranteed reimbursement rates of no less than 100% of Medicare payment rates in 2013 and 2014 for Medicaid services rendered. These changes have encouraged preventative care and curtailed a minor medical condition from aggravating and incurring additional costs.
Threats of New Entrants: With the current situation of President Trump’s aim to replace or repeal the ACA, there is a high probability of it being replaced or certain aspects of it being repealed. With some stakeholders citing rising healthcare costs and less value obtained from it, universal healthcare system or single payer system could …show more content…
replace the ACA.
Intensity of Rivalry among Existing Organizations: With ACA being the only governing act in the United States, there is no existing rivalry.
Threat of Substitute Products or Services: The ACA in itself, does not provide any products or services and therefore, there is no threat of substitute products or services in the external environment.
Bargaining Power of Buyers: Consumers, employers and insurers are the major stakeholders that can make a significant impact on the ACA’s goal of providing healthcare insurance for all. Consumers, especially the non-elderly individuals and employers can decide if they want to buy insurance or not. They can also weigh in the options and benefits, to see which one best suits their needs and only then make a decision. Similarly, for-profit insurance companies (UnitedHealthcare Group, Aetna, Humana, Blue Cross Blue Shield) can opt out of Obamacare health-insurance exchanges in various states, if they feel that they are not benefiting or profiting enough from the exchange.
Bargaining Power of Suppliers: The ACA being a governing act and not an organization, would not have any suppliers.
Key external stakeholders
Since the inception of the Patient Protection and Affordable Care Act (ACA) on March 23, 2010, healthcare regulation and delivery has undergone significant changes. Any changes to the ACA has a direct impact on it external stakeholders. The three major stakeholders in the ACA are: (1) consumers; (2) employers; and (3) healthcare providers.
Consumers: Consumers form the most important stakeholder in the ACA with any significant changes directly affecting them.
The majority of American healthcare consumers, approximately 49% who receive health insurance through an employer and 32% through a government program, may not notice as many changes of rising premium costs or benefits in health insurance coverage. However, any changes in the ACA has a significant impact on the demographic environment. The Congressional Budget Office (CBO) estimates that changes to provisions of the ACA especially for insurance purchased in the nongroup market and to the Medicaid program would drive up the number of uninsured people to 21 million in 2020 and then to 24 million in 2026, weakening the ACA’s vision (Congressional Budget Office, 2017). This act has greatly impacted individuals with pre-existing conditions, children under 26 years and the uninsured poor income individuals to receive health insurance, increasing their accessibility to
healthcare.
Employers: With the employer mandate and enticing health reform law’s tax credit, employers provide coverage subsidies to its employees as a benefit. This benefit reduces the financial burden on employees and keeps them insured. It also helps the ACA in achieving its objective of reducing the number of uninsured individuals in the country.
Providers: Providers consist of physicians, insurers and healthcare service organizations. With the implementation of the ACA, many changes have driven providers to integrate with one another, in an effort to provide higher quality and lower cost healthcare. To encourage efficient and quality patient care, insurers incentivized providers and designed innovative programs like bundle payments program. Additionally, in an effort to increase access to primary care and preventive health services, physicians providing primary care services were guaranteed reimbursement rates of no less than 100% of Medicare payment rates in 2013 and 2014 for Medicaid services rendered. These changes have encouraged preventative care and curtailed a minor medical condition from aggravating and incurring additional costs.