Case- Herman has been working in healthcare administration for ten years. He has finally taken a health strategy course and learned about different market structures. He wondered why different segments of healthcare respond differently in negotiations. One of his responsiblites is negotiating with phsicians, insurance comp[naies, and hospitals in his company's managed care unit. He has found that his ablity to exact price concessions from different groups varies dramatically. Primary care phsicians' market structure is a monopoly power. Insurnace marlets, on the other hand, often are oligopolies. He now believes that the introduction of national quality standards for primary care pgysicans may make outcomes among physican offices easier to compare and thus reduce their differentiation. As a result, he may be able to gain greater price concessions from physicians in teh future. Often, however, he almost has to beg prominent hospitals to join his ystem's network, and in turn he pays full prices. In insruance markets of only three or four major companies, each organization seems to offer the same terms. Herman think he now understand beter what is happening with each group.
Questions:
1. How are Herman’s perceptions regarding his negotiations and market structure correct? Incorrect?
2. How would specialist physicians fit within the market structure, and how would Herman negotiate with them?
3. Could perfect competition exist in healthcare? How would one negotiate in this type of market?