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HCA333 Competition in Long-Term Care




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Competition in Long-Term Care
HCA333 Introduction to Long-Term Care

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Competition in Long-Term Care 2
All developed countries face uncertainty about how to cope with the anticipated growth
of their aged populations regardless of whether care is provided in specialized residential settings
(i.e., Long-Term Care Centers) or in individual’s homes. In the past the long-term care market
has never had to worry much about competition in the marketplace. In this paper I will discuss
three different factors that drive competition within the long-term care market. I will also discuss
the advantages and disadvantages of competition within the long-term care market. I will also
address three different stakeholders perspectives. Faced with a changing marketplace it is
important to address these conditions.
Drive Factors
The most important driving factors within long- term care market are the influence of
individual buyers or sellers, the collusion to fix prices or quantities, and free and easy entry into
the market. Because the government financed most long-term care, they played a much larger
role in controlling it than would buyers in any form of market-based competition. “Sellers
(providers) of long-term care services have no say in the prices set, nor were they able to
influence them in any significant way”(Pratt, 2010). Private long-term care insurance is
growing, but it is still not a key player. “However, the very move toward market competition
among buyers of long-term care services has been enough to force providers to be aware of their
own need to be competitive in winning the business of those buyers”(Pratt, 2010). Cost and
efficiency are paramount among the continuing concerns regarding the long-term care system.
“One side-effect of increased competition has been the increase in the number of multi-facility
chains and corollary decrease in the number of single-site, privately owned, long-term care
organizations”(Pratt, 2010). Future strategies will be robust enough to deal with the potentially
large variation in levels of need and demand. One disadvantage was “In the noncompetitive

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Competition in Long-Term Care 3
system within which they functioned, most long-term care providers made little attempt to know
what their competitors were doing, how well they were doing it, or what changes they might
have planned”(Pratt, 2010). On the other hand one of the advantages is “The benefit is the
greater purchasing power of large groups”(Pratt, 2010).
Health care is a labor-intensive field and the groups within this field are major
stakeholder to changes in workforce composition and functions. Some of these stakeholders are
the provider based integrated delivery systems, community care networks, and MCO’s that are
key in this arena. “The breathtaking pace of change in the way health care is financed and
delivered has brought challenges and new activities to all participants in the health care
system”(Greenwald, 2010). Changes in financing and market structures are affecting long-term
as well as acute care providers and services. “MCO’s rely heavily on organizational efficiency
much of the time it is more cost-effective for them to acquire many of those services through
contractual agreements with existing providers. Because their environment is so competitive,
they seek a high level of exclusivity in those contracts. They form service networks that are
highly integrated”(Pratt, 2010). Policies that aim to bring about structural change in the
workforce must enlist the support of the complex mix of occupational groups and trade unions,
recognizing that these sectors can facilitate or block efforts to improve access and services.
“Purchasers began by enlisting managed care organizations to hold down prices and in some
cases went on to seek greater value rather than simply better prices”(Greenwald, 2010).
Coordination of care has been a major reason for the success of integrated health systems.
Integration can improve use of manpower. A major advantage is they are able to coordinate both
clinical and management information. The pace of change does not appear to be slowing and

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