Medical Products Inc.: Developing New Products for the Twenty-First Century

Medical Products Inc.: Developing New Products for the Twenty-First Century

Synopsis

MPI markets medical products and services as well as offers medical support products to its customers. In the mid 1970s, the growth of MPI was the highest attained by any corporation. MPI build a reputation in the field for building high quality products coupled with professional field sales and customer support. New products had to be developed for MPI to stay competitive and profitable in the changing medical industry. But due to the change in the medical equipment industry, MPI had to consider environmental changes that would shape in the future.

MPI entered the 1990s as one of the world’s leading suppliers of electronic management, communication and information systems for hospitals, medicals clinics and other health care facilities. Throughout its 30 year history MPI’s medical customers were typically medium sized to large hospitals. The 1990s had brought a radical transformation of the manner in which medical care in the U.S. was provided. With medical costs out-pacing inflation by almost four to one, the pressure to control costs mounted. Managed care or health maintenance organization (HMOs) was the primary vehicle used to control these costs.

HMOs integrate the functions of financing and the delivery of medical care. The primary that an HMO uses in controlling costs is its method of reimbursement, which shifts most of the financial risk to providers (doctors and hospitals). Certainly the rise of HMOs coincided with the 1990s slow down of health care costs. Clearly, some of the sectors of the health care industry were winners or losers. It appeared that HMOs efforts to hold down medical costs had relied primarily on three factors which were shifting services away from hospitals and doctors, decreasing funding for technology and research, and shifting services to out patient centers. The great unknown in the future of the health care industry was the role of government.

Three health care plans had achieved almost equal public acceptance. (1. all government single payer option where a single health plan financed by the government would give a basic benefits package to cover all medically necessary services to the entire population. 2. Expanded use of the market to encourage and enable the individuals to purchase insurance. The core idea was that individual decisions were better than collective decisions. 3. Managed competition in which employer provided plans and employee has little choice. This plan was a compromise between the two previous alternatives and was defeated.

By the late 1990s MPI’s competitors in the medical equipment industry could be divided into 2 groups, traditional once whose strategy evolved from their ability to introduce technological innovations. For e.g. Acuson Corporation and ATL Ultra Sound, a Philips medical system company and secondly large corporate competitors whose distinctive advantage was their ability to produce low cost, high quality medical equipment and provide outstanding servicing of that equipment. The new corporate giants were Toshiba, Siemens AG, General Electric Co.

Questions/Answers

1. Evaluate the various health proposals (universal care, market solution and President Clinton’s managed competition) for Sally Roan, vice president of MPI. Who would be the various supporters of each plan (political party, union, AMA, AARP, private HMO health insurers, corporate managers, potential competitors, etc.). Which plan should MPI support? What is the likelihood from any of the plan enacted by U.S. congress?

Universal health care is a situation in which all residents of a geographic or political region have access to most types of health care. This was also known as Single-payer option health-care plan. This term is used in the U.S. debate to describe a funding mechanism meeting the costs of medical care from a single fund. Although the fund holder is sometimes assumed to be the government allocating funding from taxation, its proponents do not rule out the possibility of some other mechanism. It is therefore as yet undetermined whether a future U.S. single-payer universal health care system would be funded from taxation, from compulsory insurance or a mixture of both. Most of the low-income or union people would support this option as it provides basic benefits package to all irrespective of income.

Market Based solution revolves around the core idea that individual decisions are better than collective decisions. In this health-care plan the market approach to health-care reform was most commonly associated with the use of tax-code to make people more sensitive to the cost of medical care and health insurance reform to improve