Analysis on Industrial Structure of Hospitals that Have Over 500 Beds

Abstract

In order to assess the attractiveness of the hospital industry, the competitive environment of the industry was analyzed. With the employment of Michael Porter´s ´five forces model´, the deciding factor was examined and applied to evaluate the intensity of the competitiveness in the hospital industry, and then the structure and attractiveness in hospital industry was assessed. The subject of this study was hospitals that have over 500 beds. Main findings are as follows. 1. Out of 5 factors deciding competitiveness, the pressure from newly opened hospitals and the competition between existing hospitals, were both high in intensity ; this makes hospital industry less attractive. The pressure from the substitutes and the pressure from the negotiating power of consumers and suppliers were low ; this makes hospital industry more attractive. 2. Overall intensity of competitive pressure for existing hospital industry that have over 500 beds was rather low, consequently the attractiveness of the industry was evaluated quite high. These findings, however, were not solid enough to endorse the attractiveness of the industry. 3. It was understood that future industry would have bigger pressure/competition so that the attractiveness for the relevant hospital industry would be decreased. This study has its limitations. As the evaluation of competitive factor was not grounded on quantitative data, its objectivity could be questioned. Also, the overall result of each factors could be distorted as it was calculated with same weight against individual factor. This study has its significance in that the specific hospital group was viewed as one industry, and its attractiveness as a potentially profitable industry in which worth investing was estimated, with all factors considered. With this key result, hospitals industry could work out a plan to enhance the status of hospitals, allowing hospitals to get assistance in making strategic decisions such as mergers, cooperations, and new establishments.