Healthcare market analysis involves researching and evaluating data to determine the financial stability and growth prospects of the industry, including revenue sources and competition. It requires both quantitative and qualitative research, and is used to speculate on future growth or profit prospects. The industry is assessed based on market size, demand, competition, vendor bargaining power, and barriers to entry.
Analyzing the healthcare market involves researching and evaluating data to determine the financial stability and growth prospects of the healthcare industry. It does this by identifying revenue sources and competition. Another term for healthcare market analysis is healthcare environmental analysis. In the business world, a company’s environment consists of customers, competitors, and suppliers of resources.
For a healthcare company to make a profit, customers must pay a price for products or services that exceeds the cost of providing those services. Competition limits the amount a company can charge, while suppliers can reduce profits by raising their prices. Consequently, analyzing the healthcare market requires quality research. A quality analysis helps an investor or entrepreneur determine potential profits based on the economic characteristics of the industry and the level of competition.
There are two types of research in healthcare market analysis: quantitative and qualitative. Quantitative research uses statistical data to calculate ratios or percentages that delineate the financial health of the healthcare industry. Qualitative research is based on personal interpretation of data, news, statistics and industry knowledge.
Such market analysis is typically used to speculate on future growth or profit prospects. Relevant data needed for quantitative and qualitative research can be found in published reports from healthcare trade publications, financial analysts, and healthcare companies. The information is also readily available for free on the internet, however the source should be judged on how current it is, its reputation and its authority in the healthcare industry.
Once data is captured, analyzing the healthcare market requires that the industry be assessed based on market size, demand, competition, vendor bargaining power, and barriers to entry. The size of the market is determined by looking at the sales data of the leading companies or organizations in the market segment. Smaller markets equal less demand and lower profits for companies. For example, an analysis of the healthcare market might suggest that the healthcare sector is large and will continue to grow due to rising life expectancies and advances in medicine and technology.
Competition in healthcare market analysis depends on the industry in which a company operates. The market for sanitary equipment, for example, can be controlled by some companies. Hospitals, however, could compete for patients and contracts from insurance companies offering managed care plans.
Barriers to entry determine how difficult it is for a new company to enter the healthcare sector. Analysis of the healthcare market may reveal that startup costs for healthcare professionals are high, recognizing the number of new companies that can enter the field. Additionally, government regulations designed to ensure quality products and care could limit competition and drive up prices due to compliance and licensing requirements.
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