Patients queue for drugs at a hospital: Stand-alone medical enterprises
are threatened as market leaders open clinics across the country.
Photo/FILE
By Edward Omete
The local private medical health sector is
largely controlled by four or five top players. The rest of the private
medical providers, though more in numbers, are fragmented and operating
on the fringes.
By virtue of their visibility, the current market
leaders have an easier avenue to both the supply markets and acquisition
of corporate clients, the most desired target clientele.
However, the threat of market dominance disruption
sometimes lies in a player slightly outside the scope of current
operations, in our case medical device suppliers and pharmaceutical
distributors can upstage this dominance.
As far as numbers and geographical spread go, no
one quite matches the individual private practitioners. They have a
nationwide presence and collectively would easily have the largest chain
of medical care units. The big question then is whether operating them
as a single business entity is feasible.
While the economies of scale would easily play the
way of such an outfit, operating such a huge number of facilities also
comes with its inherent weaknesses.
A system functioning independently is only as
strong as the number of links it has. Hence the more the number of
members the more difficult it is to run the operations.
The transition from being “owner” to “shareholder”
is also not palatable to many doctors. Usually such operators prefer
the freedom and independence of running such an enterprise alone.
Standalone enterprises are, however, on their last
decade of operation. Mobility of patients arising from workplace
relocation and commutes means multiplicity of possible point of care
clinics is preferred by many patients and employers, especially for
corporate deals.
The logistics and financial muscle needed to
compete with the larger well-oiled competitors will at some point
dictate mergers and acquisitions for general practitioners.
Businesswise it makes sense having such
independent units amalgamate. For the average medical clinic’s
operations, diagnostic equipment and pharmaceuticals accounts for up to
30 per cent of the budget.
Adoption of evidence-based medicine and the fear
of litigation means thorough clinical investigations are made for most
visits to the doctor
.
.
Top players
Because the superiority in sophistication of diagnostic services is one of the major differences between the big chains and the individual enterprises, these suppliers pose a threat to market dominance of the top players. Availing the equipment to doctors evens the score for the small fish to play in the major league.
Because the superiority in sophistication of diagnostic services is one of the major differences between the big chains and the individual enterprises, these suppliers pose a threat to market dominance of the top players. Availing the equipment to doctors evens the score for the small fish to play in the major league.
Such a move potentially guarantees a larger
distribution channel. The ever rising insurance premiums may also
potentially benefit. A market served by many has competitive pricing.
info@healthinfo.co.ke
Twitter: @edwardomete
Twitter: @edwardomete
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