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Should Medical Services Compete in the Global Market?

When evaluating the success of nations, industries, and companies, one of the most important criteria to look at is their level of competitiveness. 

The term “competitiveness” was coined by the World Economic Forum (WEF) to refer to the collection of institutions, policies, and other factors that determine the level of productivity.

In addition, competitiveness can be defined as the acquisition of a greater market share, increased profitability, and long-term stability and growth of these indicators, which ultimately results in an improvement in people’s welfare and the standard of their living conditions.

To put things into perspective, in order for businesses and entire industries to thrive, they need to be highly competitive in both the domestic and the international markets. 

In light of the increasingly dynamic and competitive environment of recent times, in order for businesses to achieve success in the arena of competitive business, they need to have a competitive advantage, which means producing and maintaining superior performance.

The level of competition is determined not only by the actions of individual businesses but also by the external business environment in which those businesses operate, including the condition of the infrastructure, the nature of the legal framework, and the efficiency of the financial system. 

In developing countries, barriers to competition typically originate from inappropriate government policies as well as anti-competitive behavior on the part of firms. This phenomenon is quite common.

The various healthcare systems around the world are consistently being forced to accommodate the various requirements of patients. 

Therefore, the supporting role that the pharmaceutical industry plays in developing and delivering products of a high quality to the general public is essential to the success of the various healthcare initiatives that have been taken up by public and private organizations. 

Value-Adding Medical Competition 

Pharmaceutical products account for 15 percent of total global spending on health care; the cost of pharmaceuticals per capita ranges from $400 to $4 in countries with high incomes but is only $400 in countries with low incomes. 

Inefficiency in pharmaceutical production, procurement, storage, and distribution are the most significant factors contributing to underinvestment in health care. 

This is due to the fact that a significant portion of the costs associated with health care are accounted for by pharmaceutical expenditures. 

On the other hand, the social value contributed by the pharmaceutical industry is glaringly obvious and cannot be contested. 

Not only is it a source of treatments that are both effective and affordable, thereby increasing life expectancy and making people’s lives better, but it also makes a significant contribution to the growth and stability of the economy. 

In addition, the contribution of the pharmaceutical industries to Research and Development is indispensable to the development of modern medicine, which would be impossible without their involvement.

Over the course of the past decade, the global pharmaceutical industry has undergone a period of profound change.

In each of the three sub-industries that make up the global pharmaceutical industry, intensive concentration and consolidation processes have been going on for some time now.

In the meantime, the pharmaceutical industry is beginning to place an increased emphasis on its ability to compete globally. 

Increased levels of competition, as well as shifts in the organizational make-up of rival companies, have an effect on the strategic orientation of global pharmaceutical corporations. 

The pharmaceutical industry is still relatively fragmented, which contributes to the moderately intense level of competition that exists. 

There is not a single company that controls more than a 9 percent share of the market, despite the fact that the top 20 drug manufacturers control just under 60 percent of the market.

In order to strengthen their position in the market, rivals engage in price wars, fight it out in the advertising ring, acquire complementary businesses, and launch innovative products. This competition is particularly fierce in mature markets (for example, cardiovascular and central nervous systems, as well as pain relievers), whereas it is significantly less fierce in emerging markets (e.g., oncology or immune disorders).

While the level of competition has increased dramatically, there is an urgent need for the pharmaceutical companies to conduct themselves in an efficient manner.

Is Medical Service Competition Worth it

Since very early on, the discussion surrounding how healthcare should be structured has continued unabated. Competition in healthcare markets is one of the most contentious issues. 

Some say competition should not be allowed in services that protect the sick, while others say it “saves lives” and cuts waste, given the variety of models operating between countries and the regular changes that occur within countries where competitive forces are in favor and sometimes not, it is perhaps surprising that we do not appear to have sufficient evidence from comparison of different practices to settle this debate. 

Two reasons: First, “competition in healthcare” is a broad term that does not adequately capture the many variations and meanings of the term; second, even when defined carefully, evaluating the impact of competition is difficult.

From a simple economics perspective, a competitive market is one in which buyers and sellers exchange, and if it were a “perfect” market with certain characteristics, theory would predict the best possible outcomes for both buyers and sellers. 

In reality, even the staunchest proponents of competition are unlikely to argue that the restrictive conditions under which such outcomes are achieved will exist in healthcare markets with serious imperfections or “failures” (such as buyers’ inability to determine quality), and thus it has long been held that healthcare is almost always provided in regulated markets, sometimes called “quasi-markets.” Thus, the debate is about the best mix of competition and government regulation (central, federal, regional, or local) to achieve the best results.

  • Finance 

Too often, people confuse competition with the private sector or privatization, and not having competition with the public sector. 

Things become even more complicated when healthcare financing and delivery are not considered separately. There are many ways to look at the role of competition, but let’s start with financing. 

While many healthcare systems have insurance coverage provided by a national, local, or common insurer (called a “single-payer system”), some healthcare systems have more than one insurer that competes with each other, even when insurance is required. 

In some cases, such as the Netherlands and Switzerland, government regulation dampens the degree of actual competition; in others, despite the presence of multiple insurers, affiliation to one of these is determined by factors other than individual choice, such as professional status. 

The United States is notable for operating a competitive insurance market (outside of Medicare and Medicaid), but there are a small number of other countries that allow insurers to compete for citizens’ business, with some countries offering more than five options.

Some countries, such as Ireland, may be shifting to multiple payer systems.  In low- and middle-income countries (LMIC), the debate on financing is more focused on financial protection, and in the quest for universal coverage, there are many possible configurations that involve some level of competition. 

  • Quality of Service 

This brings up another critical aspect in the debate, which is how competition can help healthcare in the first place.

A lot of attention has been paid to how important it is for patients to be able to choose where they get care.

The argument is that even when patients don’t pay a direct price, they still respond to signals about quasi attributes of the services on offer, so their actions can drive up the overall quality.   

This can only happen when patients have a direct choice of provider and there is competition in the market, like when the NHS offers elective care.

Even though some have said that improving the quality of one part of a provider’s care may also enhance the efficiency of the provider as a whole, others have looked into how competitive pressures can lead to improvements in “management quality,” which could have an effect on all hospital activities.  

Otherwise, the mechanism works through the agents of patients (commissioners, insurers) making decisions on their behalf and giving business (in the market or for the market) only to those who offer a service that is reasonably priced in terms of price (when prices are not fixed) and/or quality.

  • Nuances 

Understanding the complexities of the reality of most healthcare systems, which typically do not fall into either of these two extreme categories, is complicated by the oversimplification of the debate over whether or not markets should be competitive or non-competitive. 

It is possible that the complexity and diversity of competitive markets is one of the reasons why evidence on their impact, despite being plentiful, is frequently contradictory and cannot be generalized beyond the specific context in which the evaluation has taken place. 

This may help explain why there are such a variety of perspectives on the function of competition. 

In addition, the absence of robust evaluation frameworks during the process of policy implementation makes it more difficult to collect trustworthy evidence regarding the effects of competition.

Wrapping Up

The way people feel about whether or not competition should be allowed in healthcare is additionally a matter of politics and culture. 

This is because different countries’ healthcare systems are based on different values. In some situations, any volume of competition could be viewed as “too much” and as a sign of “privatization” and the breakup of public systems that people love. 

In other places, the beginning of competition is seen as a way to improve efficiency, productivity, and the health of the population. Competition can be seen as both the “problem” and the “solution.” This shows how important context is for understanding how market forces might be able to enhance the health care system.

Since this change has a direct effect on the track record of businesses in this area, precision is of the extreme significance for the medical translation company. When medical products are sold directly to end users around the world, they may have to meet more legal requirements.