Porter's+Five+Forces+on+Malaysia+Private+Healthcare

**Michael Porter - How Competitive Forces Shape Strategy**

**1. Treat of New Entrants**
All private medical facilities in Malaysia are required to be licensed under the Private Healthcare Facilities and Services Act 1998. Some legal requirement could become barrier to new medical business to enter the Malaysia market. (Ministry of Health Malaysia, 2011)

RESULT: This make new entrant high due that government licensing may give difficulty for them to start off if they do not meet the requirement of government.

For medical tourism, Thailand and Singapore are more popular medical tourism destinations to be visited by patients, but medical tourism is a small portion in Malaysia’s private healthcare market(for KPJ it is about 6%). (KPJ Healthcare Berhad ,2011)

RESULT: Sector admission of private healthcare in Malaysia is being still low compare to other country such as Thailand and Singapore which initiate the chances of foreign patients to visit Malaysia medical center including KPJ Hospital were low.

The limited supply of specialist doctors in Malaysia forced hospital group to establish a strong reputation and performed a system which have an edge in recruiting doctors.

RESULT: The shortage problem of specialist doctors in our country has slowly reduce.

**2. Bargaining Power of Suppliers**
Supplier power of health industry such as hospitals, medical devices and pharmaceutical companies have low price sensitivity to the intense of the high price and many customer unable unable to afford the cost as the price are high.(Helium.cm, 2012)

RESULT: a healthcare industry should include medical care comprising with the health insurance as per now days to ease the burden of the consumer

Malaysia has a tight supply of specialist doctors so their bargaining power is high. KPJ is relatively well positioned to peers as it already has the largest panel of specialist doctors and has an established working system with doctors (centralized collection, etc).

RESULT: Extra work or burden of the unnecessary works have been resolved. Extra cost has been reduced by working with the system.

**3. Bargaining Power of Customers**
Currently there is a lot of private medical centers available in Malaysia. Private sector will face the difficulties to compete with public hospital in the pricing subject. Other than that, there are quite number of private hospitals that already have a good reputation across countries as well. The highly price is so sensitive because customer also will not hesitate to move to another hospital if the prices are too high. In this age, more customers are purchasing insurance service.(GCC Healthcare, 2011)

RESULT: The bargaining power of customer is high due that customer may move to another hospital if price is high.

For the private healthcare market, patients are generally less sensitive to pricing as they seek the best healthcare service provider.

RESULT: With the best services provided by the private hospital, pricing are always the second factor that considered by the customer since they have the confident with the private sector in health care environment.

**4.Threat of Substitute Products**
Malaysia is quite well-known for its traditional healing method such as Chinese herbs or acupuncture. These act as alternative medicine/healing for locals as well as foreigners. This is mainly from grandmother recipes that people use to recuperate from certain sicknesses. However, treatments that deal with internal body organs such as heart, lungs and brain, the chances for the recovering from treatments limit the industry’s profit potential is weak. (Shah. J, 2011)

RESULT: The threat from substitute products and services is low for the cardiology and neurology industry firms at present.

Existence of substitute may increase the chances of the customers or consumers to have alternatives and change their options on daily basic.Substitutes may be influenced by customers (patients)’s willingness to switch costs as well as performance of substitutes. for instance, some people are willing to go traditional medication as a substitute to the hospitals like Ayurveda. (Tangient LLC,2012)

RESULT: the substitute of the environment change could initially bring the customers confident up at times. but in other hand, the disadvantage of traditional medication could be hazardous as the traditional medication is not safe n 0 percent trust.

**5. Rivalry among Current Competitors**
Most private sector hospital are specialized only in certain type of medical treating with the provision of outpatient care facilities. Therefore, the hospital itself is comfortable promoting their treatment due the fact other hospital may not have such specialist on that hospital. Nevertheless, they are competing based by business opportunity given such as the needs of better services and better doctor.(Moshiri. H, 2009)

RESULT: Rivalry among current competitors are high due business opportunity may is achievable by each private hospital.

There are many hospitals in each state in Malaysia, the competition is high. However, the Malaysia government has been recommended a rules which is the 20km distance between each hospital to be built in a certain area.

RESULT: The high competition can be controlled as the rules and regulation have been listed in the Ministry of Health. (Ministry of Health Malaysia, 2011)

**Reference**
Equity Research (2011), Malaysian private healthcare industry: Porter’s five competitive forces model [Online] Available at: [] [Accessed on 6 June 2012]

GCC Healthcare Industry (2011), Increasing Private Sector in Healthcare drive high bargain power for customer [Online] Available at: [][Accessed on 6 June 2012]

Helium.com(2012),Health insurance industry analysis[Online] Available at:[] [Accessed on 6 June 2012]

KPJ Healthcare Berhad (2011) Steady and defensive [Online] Available at: [] [Accessed on 21 July 2012]

Ministry of Healthcare (2011), Act Pertaining to Health Profession [Online] Available at: [] [Accessed on 6 June 2012]

Moshiri. H(2009), Hospital Efficiency: Concept and Management [Online] Available at: [|http://www.pppkam.org.my/mjphm/journals/Volume10.2/5.(Last)HOSPITAL%20EFFICIENCY(35-43)M%20(Last).pdf][Accessed on 6 June 2012]

Shah. J (2010), An Insight into Malaysia's Medical Tourism Industry from New Entrant Perspective [Online] Available at: [][Accessed on 6 June 2012]

Tangient LLC(2012), Private Medical Health in Malaysia [Online] Available at http://unitybit.wikispaces.com/Private+Medical+Health+in+Malaysia [Accessed on 6 June 2012]