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Hospital Competition and Strategic Planning Essay


One of the core facilitators in the successful operation of any health care organization is coming up with the most appropriate strategic mapping techniques. The duty of a strategist is to perceive the competition within the field and be able to handle it (Porter, 2008). Competitive analysis of the service area is necessary to provide a better understanding of the company’s environment (Ginter, Duncan, & Swayne, 2013). Such analysis allows discerning particular issues concerning competitors and service areas.

The Importance of Hospital Competition and Strategic Planning

Strategic planning is a vital element in any health care organization’s activity. Its core function is to determine the competitors and their strong and weak points. Obtaining such data allows us to predict the strategic actions of the rivals and thus helps to overcome them. Apart from accumulating data on the competitors, strategic management presupposes finding out information about the service area (Ginter et al., 2013). Concentration on service area makes it possible to prevent unexpected situations, decrease the time necessary to answer the rivals’ actions, establish vacant positions in the market, and learn through correlating one’s strategies with the competitors’ (Ginter et al., 2013).

Porter (2008) identifies five forces defining strategy: the threat of entry, power of buyers, power of suppliers, the threat of substitutes, and competition among existing organizations. New entrants put the existing competitors under threat as they can change the present capabilities. The impact of buyers lies in their possibility to demand better quality and lower costs. Suppliers have the power to modify the industry’s profitability. Substitutes are dangerous as they may replace the original product or service. Finally, competition among existing organizations restricts production’s profitability (Porter, 2008). However, a recent study by Cooper, Gibbons, Jones, and McGuire (2011) shows that such competition is extremely beneficial for the patients.

The Most Appropriate Characteristics of Mapping Strategic Groups in Service Area

In the modern health care environment, strategic groups can be mapped according to patient-centered care and the cost of services. Patient-centered care has become an important issue for people when choosing a health care facility (Bertakis & Azari, 2011). By finding out the competitors’ approaches, one can design a plan for his/her organization’s patient-centered care methods which would help to win the service area’s trust. Patient-centered care has grown popularity among customers as it suggests a better attitude and a higher quality of service (Bertakis & Azari, 2011). Such an approach enables customers to take part in the decision-making process, gives them the power to choose services and specialists, and provides the best approaches to treatment. By mapping strategic groups in service areas against the patient-centered care characteristics, the strategist will increase his/her organization’s prospects for encouraging more customers to use their services.

Another critical component of mapping the strategic groups is presented by service prices. The current situation in the health care industry requires people to spend a lot of money on medical services (Baicker & Goldman, 2011). While it is getting more and more difficult to compensate for a hospital stay, customers tend to choose the facilities whose prices are lower. It is necessary to set the fees acceptable for clients and manage the facility’s budget to maintain a balance suitable for both sides and allow to win the service area competition.


Strategic planning is a crucial element of any health care facility’s success. By comparing one’s strategies to the competitors’ ones, it is possible to create a plan for improvement and development. Strategic mapping is an essential feature of management as it provides an opportunity to evaluate the customers’ needs and propose them the most suitable options.


Baicker, K., & Goldman, D. (2011). Patient cost-sharing and healthcare spending growth. Journal of Economic Perspectives, 25(2), 47-68.

Bertakis, K. D., & Azari, R. (2011). Patient-centered care is associated with decreased health care utilization. The Journal of the American Board of Family Medicine, 24(3), 229-239.

Cooper, Z., Gibbons, S., Jones, S., & McGuire, A. (2011). Does hospital competition save lives? Evidence From the English NHS patient choice reforms. The Economic Journal, 121(554), F228-F260.

Ginter, P. M., Duncan, W. J., & Swayne, L. E. (2013). Strategic management of health care organizations (7th ed.). San Francisco, CA: Jossey-Bass.

Porter, M. E. (2008). The five competitive forces that shape strategy. Special Issue on HBS Centennial. Harvard Business Review, 86(1), 78-93.

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