This research attempts to provide direction for the advancement of knowledge and practice in the field based on a number of considerations: first, it is possible to provide a more consistent definition of competition in health care in relation to patient satisfaction second, it is important to identify and understand the mechanism of competition in the health care industry if premium services and products are to be offered to patients third, it is possible to apply theories, concepts, and principles from other disciplines to gain insight concerning competition in health care and fourth, there is a need for greater comprehension in delineating the impact of increased competition via the use of a more precise definition as well as the knowledge from other disciplines. While there are different types of customers within a health care system, we limit discussion of customers to patients. Specific consideration is given to the impact of competition, in the context of a volatile external environment, on the health care organization’s strategic mission and goals and its internal environment in terms of health care quality and health care system costs, and how these relate to customer satisfaction. This paper reviews relevant literature and develops a model that can be used to empirically investigate a number of complex issues and relationships associated with competition in the health care industry. Quality and process improvements lead to decreased costs, which in turn results in increased customer satisfaction. These studies show that competition is capable of increasing value for customers over time. For example, several studies have examined the relationships between competition and quality of health care ( Zwanziger and Melnick, 1996 Enthoven, 1993 Kassirer, 1995 Chassin, 1997) between competition and health care system costs ( Robinson and Luft, 1985 Robinson and Luft, 1987 Robinson and Luft, 1988 Zwanziger and Melnick, 1996 Zwanziger and Melnick, 1988 Robinson, 1991) and between competition and patient satisfaction ( Miller, 1996 Brook and Kosecoff, 1988). Within the health care industry, competition impacts several relational perspectives with numerous studies reporting the impact of increased competition.
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