Influence on Competitive Markets, Price, Quality, and Monopoly in Healthcare

Introduction

Competitive markets comprise several producers that compete with each other to produce goods and services that the consumers need and want. This concept also applies to the price and quality of a good or service. This means that a single producer cannot decide the price and the quality of good air services. A monopoly is a market formation that is characterized by a single seller who does not face any competition. In a monopoly, the seller has the advantage of setting the price for the goods and services.

 In the healthcare environment, it is assumed that competition among companies helps to increase value for patients. That means when there is competition the patients get better products and services to satisfy their needs. The costs of a product or a service to determine customer satisfaction is another assumption. Research shows that competition has the ability to increase value for customers. In healthcare, the role of competition is to implement strategies that reduce healthcare costs (Rivers & Glovers 2008). Competition eradicates incompetence that might bring high production costs which are conveyed to the patients through high product and service costs. Quality and costs have a long term impact on the loyalty of the patients. Innovation helps to improve quality and reduce costs and without incentives to sustain it, the short-term cost savings are overburdened. The failure to develop innovation leads to low-quality services.

The price of a service can be high because of the high demand. High prices are also caused by the limited supply of a good or service. Price and utilization factors are influenced by the choices made by the consumer (Babalola 2017). For example, a consumer in healthcare will not be influenced so much on the price but will also want quality services. 

Other consumers will want the best quality at a lower cost. But in most cases, a consumer has to sacrifice one for another because it is rare to find all.

Monopolistic competition does not work for the healthcare system. This is because, in healthcare, competitors inefficiently invest to enlarge capacity that increases the fixed costs (Andreas 2018). The competitors then have to raise their prices to be able to pay for their extra investments in fixed costs. There are also extra fixed costs for differentiating a product where companies evade direct competition by selling the idea that their products differ from their competitors.

Conclusion

Competition in the healthcare system helps to improve the services and products of consumers. This ensures that the services and products satisfy the customer. Price and quality are of the essence to a consumer and the healthcare system and are influenced by the choices they make. Monopolistic competition in healthcare has a lot of inefficiencies in the healthcare system making it hard for it to thrive.

References