Rural Health Care, Essay Example

Introduction

In many areas of the rural United States, there are significant gaps in the availability of and access to healthcare services that are essential to meet the needs of local residents. Therefore, there is a high market demand for services in these areas and for the development of new clinics to accommodate this type of patient population. Modern healthcare systems must embrace rural communities because these individuals possess many unmet needs that must be addressed in a timely manner (Fortney, Burgess, Bosworth, Booth, & Kaboli, 2011).

Problem Statement

In rural areas, many residents are of retirement age or older, as younger populations are moving away from these areas and into urban communities, and furthermore, many of the workers in rural healthcare facilities are also older, including physicians (American Hospital Association, 2011). This reflects a lack of younger workers to fulfill the needs of existing hospitals and clinics, as well as new facilities, thereby increasing an already challenged rural environment (American Hospital Association, 2011). Many rural hospitals have less than 25 beds, but they are required to provide the desired levels of service that emphasize a variety of areas (American Hospital Association, 2011). Rural areas do not often provide optimal reimbursement levels for physicians; however, this is changing for the better due to the opportunity for physicians to practice in these Health Professional Shortage Areas (HPSA) over the next five years (American Hospital Association, 2011). In some areas, there is a single primary care practitioner for every, 3,500 residents, while some areas have one for every 2,500 residents; furthermore, only 10 percent of these physicians actually live in rural areas (American Hospital Association, 2011). Also, specialists are largely unavailable, with 54 specialists per every 100,000 residents, which is extremely low; therefore, it is important to aim to recruit physicians to these areas to practice medicine through a variety of initiatives to increase the number of physicians that are available to residents in these areas (American Hospital Association, 2011).

Market Analysis

Using the Five Forces model (Porter, 2008), the author would like to review how the Pocahontas Memorial Hospital can increase its competitive advantage, market its services to the right customers, and improve productivity.

Threat of new entrants. – LOW-MEDIUM

As it has been confirmed by the West Virginia State Health Plan (MacQuest Consulting, 1999), the state of West Virginia is mainly rural, and the road infrastructure is low, as of 1999. Family incomes are somewhat lower than the national average, which means that the health care market is not likely to appeal to new health care providers. However, the government initiatives to provide grants for Health & Human Services and Community Development projects in the area (Claude Worthington Benedum Foundation, 2011, p. 25) indicates that there is a threat of new entrants. In particular, the potential threat would be the development of home medical care services in order to reach out to patients who are unable to get to the hospital.

The government’s Critical Access Hospital program (2014) is designed to support rural hospitals in providing essential and emergency care for patients. Currently, there are seven designated hospitals with the facilities: Bath Community Hospital, Carilion Giles Memorial Hospital, Dickerson Community Hospital, Page Memorial Hospital, Shenandoah Memorial Hospital, and Carillion Stonewall Hospital. Any of the above health care centers could decide to start providing the same services as Pocahontas.

Bargaining power of buyers. – LOW

The West Virginia State Health Plan (MacQuest Consulting, 1999, p. 5) states that there is a general shortage of physicians in rural Western Virginia, just like in other rural areas of the United States. Physicians specializing on chronic and rehabilitative diseases’ treatment, in particular, are in shortage in the area. This means that the Pocahontas Memorial Hospital, offering physical therapy and respite care are in high demand, and the hospital is popular among older people with Medicaid or Medicare insurance.

Bargaining power of suppliers. – HIGH

It has already been noted that the availability of specialist physicians is low in rural areas, and this is true for the catchment area of Pocahontas Memorial, too. Suppliers, who would be able to provide specialist care for patients are in shortage. The hospital, however, seems to have found a solution by holding monthly specialist clinics (Pocahontas Memorial Hospital, n.d.). By reducing hours of operation, but still providing services in different fields, such as cardiology, nephrology, podiatry, and offering surgical consultation, Pocahontas is able to provide effective care and reduce operational expenses.

Threat of substitute products of services. – MEDIUM

While it is unlikely that investors would be attracted to set up new hospitals in rural Virginia, substitute products, such as mobile hospitals, consultation – mainly for private, housebound patients – can be easily established. The Virginia’s State Rural Health Plan (Virginia Department of Health, 2013, p. 19) includes the initiative of setting up “Telehealth” program for rural patients. As the document confirms, the plan is designed for “allowing the utilization of telecommunication

technologies to deliver health-related services” (The Virginia Rural Health Plan, 2013, p. 19). This service could be a substitute to workshops, specialist consultation, and health education services offered by Pocahontas Memorial Hospital.

Rivalry amongst existing competitors – LOW

As the availability of health care, specialist services in rural Virginia is low, the competition among hospitals is negotiable. Generally, the public is under-served in this area, and – as the West Virginia State Health Plan (MacQuest Consulting, 1999, p. 5) confirms “Half (31 of 62) of West Virginia’s acute care community hospitals are properly characterized as small rural hospitals They have fewer than 100 beds and offer a limited array of services”.

Recommendations Based on Porter’s Five Forces Theory

The main competitive advantages of Pocahontas Memorial Hospital, identified by the above analysis are: availability of specialist services, community engagement, and the fact that the hospital offers case management, physical therapy, and respite care. These services are extremely relevant to the older population of Western Virginia. It is, however, recommended that the hospital seeks collaboration with government agencies to take part in new initiatives, such as projects funded by the Health & Human Services and Community Development program. The hospital could increase its effectiveness and reputation through further enhancing community projects and making mobile clinics available, funded by government agencies.

Conclusion

The Five Forces analysis of Pocahontas Memorial Hospital’s market has revealed that there is a low-medium threat of new entrants, however, there is a risk of new substitute products’ introduction into rural health care, such as the “Telehealth” program. The bargaining power of suppliers has been found high, while patients are under-served, therefore, their bargaining power is low. Rivalry among competition is also low, due to the low availability of health care in the area.

References

American Hospital Association (2011) Rural health care. Retrieved from http://www.aha.org/advocacy-issues/rural/index.shtml

Claude Worthington Benedum Foundation (2011) Meeting the health care challenge in West Virginia. Retrieved from http://www.benedum.org/resources/2011AR.pdf

MacQuest Consulting (1999) West Virginia State health plan. Retrieved from http://www.hca.wv.gov/policyandplanning/Documents/Background%20Material/shpRurPiper.pdf

Pocahontas Memorial Hospital. (n.d.) Webiste. Retrieved from http://pmhwv.org/

Porter, M.E. (2008) The five competitive forces that shape strategy. Harvard business Review, January 2008

Virginia Department of Health (2013) Virginia’s State Rural Health Plan. Retrieved from http://www.vdh.virginia.gov/OMHHE/primarycare/ruralhealth/rural-health-plan.htm

Fortney, J., Burgess, J., Bosworth, H., Booth, B. & Kaboli, P. (2011)  Re-conceptualization of access for 21st century healthcare. Journal of General Internal Medicine. Nov 2011; 26(Suppl 2): 639–647.