Kelsey Shane Valencia

BOM31

Enabling Assessment 3 - Porter's Five Forces Analysis

Competitive Rivalry (High)

• As of October 2017, the country has 476 government hospitals and 960 private
hospitals, according to the most recent Department of Health statistics.
• Most hospitals offer the same healthcare services, only a number of distinguished
hospitals offer more specialized services.
• Since differentiation is low and fixed costs are high, there is constant pressure in
price competition to match technological advancements.
 • Customer loyalty is prevalent in hospitals which allows for competitions depending
on the hospitals’ given services.
• There are many public clinics and hospitals that provide free or affordable services
to people which makes it more in demand.

Threat of Entrant (Low)

• The Department of Health is in charge of organizing and implementing the

mandatory accreditation of health care facilities, as well as developing and
approving state quality standards and clinical protocols therefore being heavily
government regulated.
• There is a high capital expenditure for building the infrastructure, healthcare
facilities, and hospital equipment.
• Requirements for putting up a hospital are difficult to acquire because of the need
of sufficient finances and requisite licenses to run the hospital.
• High technology is vital in the healthcare industry to aid in its quality improvement
and research.
• Recognizable talents are needed in this field with employees providing patient care
and services to its customers, a specified knowledge is required.

Threat of Substitutes (Low)

• Most medical services are difficult to substitute when advanced medical care is
needed.
• Home care on occasions is substituted with hospital care when hospitals are
packed with patients.
• Lower-priced medicines are available in various stores which customers can
decide from.
• Natural remedies may be used by people to get relief from symptoms aside from
prescribed medicines according to Medline Plus.
• Nonmedical therapist or healer may be resorted by people mostly from provinces
when a nearby hospital is not available.
Power of Buyer (Low)

• Customers are unable to negotiate prices as they have little bargaining power due
to the number of consumers in the industry.
• A number of hospitals can only fully cater from middle level to high level income
consumers because of the costs of healthcare services.
• Patients have limited bargaining power since their options depend on the advice
of doctors and other healthcare professionals.
• The government or a large entity of organization are the ones that buy a bulk of
purchases of products, therefore the prices being dictated by them.
• Most prices of medical goods and services are fixed as it is nonadjustable since it
is approved by the government hence the buyer paying in accordance with the
price.

Power of Supplier (High)

• With the healthcare industry’s heavy reliance on its supplier’s products and
services, they have a high bargaining power.
• Since the number of people getting sick continues to grow, the demand for these
services is rising.
• Healthcare professionals are significant in the industry because of their importance
in relation to the number of patients each day.
• Given the medical equipment and supplies are a necessity to hospitals, the
industry cannot operate without the suppliers’ goods.
• The uniqueness of the product or service provided by the supplier such as
specified medicines and specialized services gives the suppliers a bargaining
leverage to its buyers.
References

• DID YOU KNOW: PH has 476 public, 960 private hospitals as of October 2017.
(2017, November 20). Inquirer.net. https://newsinfo.inquirer.net/946244/did-you-
know-ph-has-476-public-960-private-hospitals-as-of-october-2017
• DOH Hospitals. (2023). Department of Health. https://doh.gov.ph/doh-hospitals-
directory
• A guide to herbal remedies. (n.d.). Medline Plus.
https://medlineplus.gov/ency/patientinstructions/000868.htm#:~:text=People%20
use%20herbal%20remedies%20to,regulated%20or%20tested%20like%20medici
nes.