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A Conceptual Review of Four Traditional Healthcare Models
By Dr. David E. Marcinko; MBA, CMP™
By Hope Rachel Hetico; RN, MHA, CMP™
In any discussion of theoretical competitive medical practice models – as a surrogate for more pragmatic real world competition – assumptions are made that include normal demand quantities, many fully informed patients, and the fact that physicians cannot directly influence demand for care (debatable).
These assumptions, although fluid, also negate that patient buyers are large enough have any influence over price.
Competitive Structures
A result of the above assumptions, four structures or models of competition emerge.
- In a “pure monopoly”, there is only one provider with a unique service. The doctor is a “price maker” and charges whatever he wishes.
- In an “oligopoly”, there are a few physicians who provide similar services. For example, when it becomes clear to local competitors – Dr. Smith and Dr. Jones – that neither can win a price war, oligopolists return prices to prior, but still inflated levels.
- In “monopolistic competition“, there are many providers with differentiated services. For example, should Dr. Jones decide to have evening hours, she may charge a premium for her fees if Dr. Jones doe not follow suit.
- Finally – when “pure competition” occurs – there are many physicians, providing similar and substitutable services. Marketing and advertising does not affect fees, and prices are determined by supply and demand. The doctors become “price takers” by accepting fees arrived at by practicing competitively.
Conclusion
And so, what kind of competitive medical provider or physician executive are you; and is you competitive model based on locale, supply-demand, provider specialty or some other factors? Or, do these philosophical economic models offer any real world applications, at all?
Speaker: If you need a moderator or a speaker for an upcoming event, Dr. David Edward Marcinko; MBA – Editor and Publisher-in-Chief – is available for speaking engagements. Contact him at: MarcinkoAdvisors@msn.com
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Filed under: Health Economics | Tagged: Health Economics |
In-Situ Medical Practices
A growing trend toward so called “in-situ practitioners” where specialists include internists in the practice or a primary care practice adds a specialist to address the needs of a large number of patients with a specific need.
This clearly indicates that physicians are more business savvy, are becoming more sophisticated in driving the growth of the practice, and better understand the structure and needs of the local health care market.
Source: Carolyn Merriman
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