Competitive Advantage in Healthcare Research Paper

Pages: 10 (3293 words)  ·  Bibliography Sources: 7  ·  File: .docx  ·  Level: Master's  ·  Topic: Healthcare

Same is the case with the price of treatment that encourages paying visits to doctors. The clients feel power and control over their decisions when there is competitive pricing in the industry. The patients feel that they are benefitted by paying for the insurance or the medical services. The free market mechanism and consumer choices make the client capable to decide which organization to select for purchasing the good or service.

validating competitive advantages

Competitive advantage plays a vital role in determining the success of organizations. The sales person in a medical organization needs to communicate pricing as well as quality message in order to increase sales and thus revenues of organization. Like the movie Love and Other Drugs, it is the case in actual business life in healthcare industry that the companies face problems if they do not have a set competitive advantage. A company can lose its market if it does not rightly respond to the trends. For example, offering the right product and right price needs to be backed by a detailed homework. A company may not succeed if it operates without a competitive advantage. The price as competitive advantage is an effective policy. The competition in the industry demands that the prices should be responsive and the clients should be able to pay these prices.

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Research Paper on Competitive Advantage in Healthcare Through Assignment

A company can survive to be competitive if at first place it has a unique and distinct organizational feature and then it successfully maintains and upgrades it without letting it be copied. This can be done by first getting patents for the treatment methods and drugs that the company invented and then adding features to it with time. The patents to medicine and procedures are a classic example of developing competitive advantage. Yet it requires additional costs of research and development and acquiring patents. The research and development is often half the budget of pharmaceutical companies. They conduct research on a procedure and chemicals or years and may or may not get success after years. Thus, this huge cost ultimately translates into the price of product. Also a successfully developed product needs a patent so that the company gets rights to sell it. A company can thus be only effectively competitive on the basis of price if it can sell the goods at the price that can earn it enough revenues to maximize is profits without ignoring the rights of the clients. Thus, in order to be competitive, companies need to spend in a way that can be marketed tomorrow and maximize its wealth.

Future Trends

The increasing competition in the healthcare industry and new technologies, it is becoming more challenging for organizations to improve their competitive position. The pricing in medical care is more clients oriented rather than the profit oriented given number of organizations. The costs of healthcare products and services are increasing but the industry seeks to control them through innovation in procedures and technology. Now it is vital for healthcare professionals to foresee how they will need to use price and quality in their campaigns.

It is mentioned earlier that at present as well as in future, the cost of R&D and patents would be a challenge for healthcare organizations. These companies need to be more responsive towards both (a) the price consideration of clients and (b) the cost control needs of the company. Thus an organization cannot afford to lose a patent since it that was it will be sharing the formula and hence the market shares with other competitors in the industry.

As the costs of running drug production plants increase because of energy prices, and the additional costs of acquiring patents, the prices seem to increase continually. The costs also vary differently in different geographical regions. Because the cost of labor is set higher by law in North America, the Chinese and Korean companies are producing low price goods and thus profiting. It motivates many global companies to shift their production plants in cheaper countries and win the price was in the industry competition.

While price attracts the clients, it also speaks the value of the good or service. Thus, given the increasing awareness about pricing in the public, the professionals will be required to attach price to the quality of good and do not let the customer confuse low cost with inferior quality. The healthcare trend analysis also reveals that organizations require time for establishment and they settle down as established brands in decades while it can be good news for existing companies in the industry, it can be a threat for tomorrow as newly settled brands will offer great competition in time to come.

The uncertainty in every sector is evident but the medical industry should be extra careful about it. The uncertainty demands that the company should be careful about the future costs as well as future demand. The legalization of drugs, increasing or decreasing individual and group insurance and viral diseases should be studied so that the company can anticipate what future needs can be. Thus the organization should prepare and be ready as much as possible for the foreseeable and uncertain environment through a market analysis and research approach.

Future Competition

It might not be the right choice to enter attacking marketing campaigns regarding pricing. A company can associate its pricing with quality but it cannot afford to spend energies in price fights. Porter and Teisberg (2013) say that the increase in quality often decreases the cost through innovation. They say that since the consumer has less information in the healthcare industry, he can be manipulated and charged a higher price. The costs of goods often increase to support the superior quality of medical services but then it becomes zero-sum game for the organization since it cannot earn more because of improved features or quality. Porter agrees that the costs are moved from hands of the payer to the patient. Thus a physician has more control over it than the company. When a provider increases price, the client moves to a different provider and thus loss of one party becomes the gain of other.

The zero-sum game takes place when the bargaining power is worked upon rather than the struggle to offer better service. Porter and Teisberg (2013) thus emphasize that the future of healthcare cannot be made safe without developing a balance between price and better care. All the provider end factors that are plans, organizations, hospitals and physicians need to work on quality and justifying why pricing is justified. There is a limit to price cuts but not to enhancement in quality. Hence, the quality should be a concern in pricing rather focusing on the bargain power. Such a quality should be linked to the price. The marketers and professionals should encourage customer perception that organization offers best quality that is possible in the given range of price.

Contrasting views

There are two groups of people with respect to the pricing strategy. There is one group that feels that pricing strategy is effective as a competitive advantage while other feel that the pricing should not govern competitive strategy of a healthcare organization.

Pro: The advantages of pricing as competitive strategy are that it understands the psychology of the client that is attracted to the cost of a good. Every individual and every organization faces budget constraints at a lower or higher level. The price thus has a psychological effect on the clients (Stossel, Binkley, and McMenamin, 2007). Also in the competitive environment, price is one success determining factor for organizations.

Con: The price, if alone the component of competitive advantage, can cause a lower quality of good or service. The company needs to differentiate product not only on the basis of price. It should be one factor. If the price of the product or service is the only differentiation, it can easily be lost since any other organization can offer lower prices. While other unique attributes that cannot be copied easily, quality can serve as competitive strategy longer. On the other hand, price plus quality concern would be an even better choice.

Personal views

While I dream of a world where cost does not hinder the medical treatment of a person yet the world is limited by certain constraints and cost is one of them. Thus, I believe that the organization should be concerned about costs and can include it in its strategy as a part of competitive advantage. Not only Wal Mart can excel on the basis of pricing policy but healthcare companies can also attract clients telling them that the cost is affordable for them and offers best quality in the price range. The companies will face a tougher challenge in future and they should be prepared today for the challenges and competition of tomorrow.

Why Some would Disagree

There are people that a cost concern and pricing strategy cannot offer competitive advantage in the healthcare industry. The cost is bound to, in one way… [END OF PREVIEW] . . . READ MORE

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How to Cite "Competitive Advantage in Healthcare" Research Paper in a Bibliography:

APA Style

Competitive Advantage in Healthcare.  (2013, October 9).  Retrieved June 15, 2021, from

MLA Format

"Competitive Advantage in Healthcare."  9 October 2013.  Web.  15 June 2021. <>.

Chicago Style

"Competitive Advantage in Healthcare."  October 9, 2013.  Accessed June 15, 2021.