Cleveland Clinic Industry Analysis

Conduct a Porter’s Five Forces Analysis on the health care delivery industry and pull out strategic implications for each of the five forces.

New Entrants: Low pressure. It is very hard to formulate the plan for a hospital and very costly. A lot of funding is necessary to start and continue the running of a hospital. Staff have to be educated by going to medical school or receive appropriate healthcare certifications, which takes time. Threat is low due to funding of facility and equipment. Also, obtaining educated and prepared staff takes a longer period of time.

Rivalry among competing sellers: Moderate Pressure. Nationwide rankings and reputations causes a health care industry rivalry as to which institution is best. U.S. News and World report determine annual rankings and accreditations. These reports rank hospitals based on procedures, care and specialties provided. Institutions are also evaluated based on their physician and staff education.

Firms in other industries offering substitute products: Low Pressure. Other firms that provide substitute health care are holistic practices or wellness centers that wean patient care away from medicine and science. Online health websites, like WebMD, are also health care substitutes. They provide health care information that will lead many to self-diagnose and self-medicate by purchasing materials and remedies over the counter at pharmacies.

Suppliers: High pressure. Suppliers of medical supplies and equipment have a strong bargaining power because they have the authority to control cost. Due to minimal suppliers of specialized products, like MRI machines (GE and Phillips), they have a stronger bargaining power because there isn’t much competition of a high quality products that meet the standards and passes regulations. Hospitals look to them for a high quality product and are less likely to seek other companies without an honorable reputation.

Buyers: Moderate pressure. Depending on how dense the area is...