HSAD 640Y University of St Francis Five Forces Analysis of Rush Copley Medical Center Aurora Paper Mini Project- Five Forces Analysis for Segmentation: Re

HSAD 640Y University of St Francis Five Forces Analysis of Rush Copley Medical Center Aurora Paper Mini Project- Five Forces Analysis for Segmentation:

Review the Five Forces Analysis (p. 75-76 in textbook).

1-Complete a Five Forces Analysis for the department that you work for (if you don’t work for one, find a healthcare organization and respond “Rush Copley Medical Center Aurora, https://www.rushcopley.com/”). I choose this Organization.

2-paying attention to how this might help you determine the market segmentation of the organization.

((APA format is required, Times New Roman, font 12 and double spaced))

Health Services Marketing

I have attached some materials.

The book:

Essentials of Health care marketing , FOURTH EDITION, Eric N. Berkowitz, PhD, MBA P. 75- 76
It is important to recognize that, in today’s market environment, the issue of lack of
control over growth rate of a service line must be considered. Since the BCG matrix
was first proposed, the rate of change in which products and services may proceed
through their life cycle has accelerated greatly. In health care, for example, a new
technology may displace an existing service line and its revenue stream in a short
period of time. Likewise, changes in reimbursement rules could also significantly
impact a business line such as the shift that is being observed in the health care system
to value-based care and population health management. In the 1970s and 1980s, half
of all Fortune 500 companies used the BCG approach in their planning process. A
recent analysis has found that this perspective still has greater relevance, but products
move through this matrix at a greater rate of speed from problem children, where they
may be introduced, to the cash cow position or the mature stage. Successful
companies need to explore new products, markets, and business models more
frequently to continuously renew their competitive advantage given the possibility of
new forms of innovation entering their market space.80
Five Forces Model
A second model that has seen significant attention as a useful framework within the
context of strategic planning is based on considering one’s situation relative to the
competitive environment and the intensity of that competition. Firms must assess not
only the existing competition but also potential competition. Porter has developed a
widely accepted conceptual model, often referred to as the **Five Forces Model of
Industry Structure, that considers factors affecting the competitive intensity within
an industry.81 As shown in FIGURE 2-9, (1) competitive intensity, one force, is
affected by four additional major forces: (2) the threat of new entrants, (3) bargaining
power of suppliers, (4) bargaining power of customers, and (5) the threat of substitute
products or services.
FIGURE 2-9 Forces Impacting Competitive Intensity
Data from Harvard Business Review. Forces Affecting Competitive Intensity from “How
Competitive Forces Shape Strategy” by M. E. Porter, March-April 1979.
Existing Competitors
In analyzing the competitive environment, it is important to first look at the existing
competitors. This analysis provides a perspective on the cost of competing and on the
bases around which the competition will occur. A major focus of the competitive
analysis is also to assess the degree to which competition is cost based.
Competition is intense among existing competitors when the product is relatively
standardized and the competitors are relatively numerous and similar in size. This
frequently describes the market for hospitals and medical groups in major
metropolitan areas. Competition can also be intense when the cost of switching
providers is relatively low. In health care, this is a major factor that managed care
companies face. For many employers, the cost of switching health plans is often not a
large obstacle. Competition also tends to be intense in industries characterized by
overcapacity and among firms still in the market because of a high fixed-asset
position. These latter two issues defined the competitive setting for inpatient hospital
care in the 1990s. In the health care industry, the intense rivalry spurred by managed
care caused many hospitals to try to differentiate themselves by investing in
expensive, high-technology services.82 This competitive environment has continued
into the 21st century, resulting in the large growth of high-tech companies, such as
Intuitive Surgical, the manufacturer of the da Vinci Surgical System, a robotic
surgical tool. One industry analyst observed that the continued growth of Intuitive
Surgical despite a significant downturn in hospital capital investment in the later part
of the decade was because hospitals “were making the decision to stay competitive
and drive patient market share.”83
New Entrants
Although it is essential to consider the existing competition when developing a
strategic plan, an organization must be keenly aware of new players entering the
marketplace. As the market changes, so, too, does the competition. For example,
many medical groups that once competed against other providers to provide care for
the employees of major companies within their communities are now finding those
companies providing care for their workers within their own company clinics. Cerner,
a company well known in health care for its software expertise, also designs, builds,
and manages medical clinics for other corporate clients besides the clinics it runs at its
own facilities. Walgreens runs 500 such clinics through its Take Care Health
division.84 These are both examples of a new entrant into the competitive landscape.
New competitors can come from several sources, such as a segment or market that is
underserved. Occasionally, competition comes from either competitors or customers.
The academic medical group that used to supply tertiary services to a community
hospital might integrate to a lower level of care and establish its own academic group
of family practitioners. Common now among academic medical centers is the
establishment of faculty practice plans as a vehicle to attract, process, and organize
patient revenue activities. This type of plan provides an incentive and focus to the
generation of clinical revenue that historically was less a major concern of the
historical academic mission of teaching and research. As a result, over the past 20
years, many academic medical centers have moved to establish primary care satellites
throughout their region or state and have focused on becoming a new entrant to the
competitive mindscape for many other providers.
** Five Forces Model of Industry Structure:
This model considers factors affecting the competitive intensity (rivalry) within an
industry (1) that is one force as affected by (2) threat of new entrants, (3)
bargaining power of suppliers, (4) bargaining power of customers, and (5) the
threat of substitute products or services.
Threat of
new entrants
• Telemedicine
• Retail clinics
Bargaining power
of customers
Buying coalitions
CalPERS
Bargaining power
of suppliers
• McKesson
• CVS Health
Intensity of
Competition
Threat of substitute
product/service
• Advanced practice
clinicians
• New technologies

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