Question

Explain, using the terminology and theories on how Michael Porter's strategies that can be employed to improve the U.S. health care system. Be sure to use words and concepts like free rider, scarcity, coarse, and demand.

Answer 1

Porter’s vision has six components:

1. Organize into integrated practice units, moving from specialty and service-organized care to one structured in the home, clinics, outpatient centers and hospitals around the requirements of patients.
2. Measure each patient's results and expenses.
3. Moving to bundled payments, covering the medical condition care cycle, starting before hospitalization, and then covering the care required.
4. Consolidate services provided in one place to patients with a diagnosis, so that patients with a disease such as diabetes or pulmonary disease can easily get the care they need.
5. By extending to satellite places, share the riches of information and skills.
6. Build an IT scheme that enables hospitals to harvest information, measure outcomes, publish their results and share critical information with patients

Overall cost leadership needs companies to create strategies that aim to become and remain the industry's lowest-cost producer and/or distributor. Company approaches to control costs include building efficient equipment, tight cost and overhead control, avoiding marginal client accounts, minimizing operating expenses, reducing input costs, tight labor cost control, and reduced distribution costs.

The second generic approach, which differentiates the product or service, needs a company to produce something perceived as distinctive throughout the sector about its product or service. Whether the characteristics are genuine or in the clients mind, customers must see the product as having desirable characteristics that are not frequently found in competing products. It must also be comparatively price-insensitive for clients. Adding product features means that a differentiated product's production or distribution costs may be somewhat higher than a generic, non-differentiated product's price.