Threats from existing substitutes (i.e.This leads to lots of new entrants for the IPU market. Hospital departments can rework their admission and care processes to provide a broader, end-to-end care. Threats from new entrants: private practices can simply recruit doctors with complementary specializations and become IPUs.To qualify the analysis, I graded the desirability of establishing new IPUs below:
Here’s what Porter’s five forces framework says about the attractiveness and viability of the new healthcare provider model entering and thriving in the market. In practical terms, Porter proposes an extended health care practice model called Integrated Practice Unit ( IPU), which hosts multiple specialists, medical and administrative staff specializing in one condition (such as aphasia, cardiomyopathy, obesity, etc) who can deliver an end-to-end care and a definitive cure for their patients. Specifically, Porter says - in line with current trends in medical reimbursements - that we need to embrace the pay-for-value model and to fully manage the delivery of health care that produces healthy individuals, and not just dispenses medical procedure to sick people. His solution, to use a play on words, attacks the disease of the system by addressing the disease of the patients.
The problem with healthcare, says Porter, is a systemic one, and the majority of current approaches are patches that medicate the symptoms and do not actually cure the disease. This analysis looks at the intensity of the competition (and implicitly at the potential for profit) as determined by five major factors in that market‘s ecosystem: threats from new entrants in that market, threats from existing substitute alternatives for that business, the bargaining power of the firm’s suppliers and buyers and the intensity of rivalry in that space. The “Porter’s Five,” as it is affectionately called, is an analysis tool that firms use to assess the attractiveness and competitiveness of conducting business in a certain market. And since the audience consisted mostly of MBA alumni from Booth, Harvard, Kellogg and Wharton (plus various health, insurance, and finance industry representatives), I will do “the MBA thing”, and analyze his proposal through his own “Porter’s Five Forces” framework.
Michael Porter (of Harvard Business School fame) gave a talk recently in Chicago in which he presented his solution for fixing the US healthcare system.
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