External Market Analysis
The Ontario Ministry of Health and Long-term Care is influenced by a number of external factors, including political, economical, social, technological, legal and environmental (PESTLE) changes in the external environment.
There is growing political pressure and focus on heath care authorities across provinces. Ontario government’s health care cost currently stands at 42% of the total program spending and this is projected to rise to 50% if health care costs continue to grow faster than other areas of government spending. Ontario has a decentralized health system following the establishment of the Local Health Networks (LHINs) and their legislative authority (World Health Organization, 2008). The introduction of a decentralized LHIN model will influence funding and delivery mechanism in different ways. This new model might require organizations to adapt to varying approaches to service delivery and funding across decentralized boundaries. Ontario’s political environment is relatively stable and it would be conducive for a new entrant in the marketplace.
The government reports in Ontario shows an increase on healthcare expenditure despite the existence of global economic crisis. The growth of home care among the elderly demonstrates how the nursing services have moved to the private sector, which has become a key business opening. The increasing cost of labor is also affecting the provision of health care services to the increasing number of elderly people. Venturing into health care industry requires high cost of capital. New enterprises intending to venture Ontario need to put in place systems, processes and structures to support cost containment and improved productivity. These economic pressures have resulted into increased growth in strategic buying groups who are forcing down prices (Benjamin, Edwards, Guitard, Murray, Caswell, & Perrier, 2011). New firms entering the market should consider forming mergers and acquisitions.
The increasing aging population in Ontario offers a range of opportunities and threats to providing health care services to the aged people. Aging population of Ontario is a key cost driver because use of health care services significantly increases after the age of 65. According to (Ontario Ministry of Health and Long-Term Care, 2012), the largest amount of spending on health care services usually occurs within the last years of life. Majority of health care services in Ontario are directed at seniors. It is projected that seniors’ share of Ontario’s total population will double by 2030. The demographic shift will result into increase in demand for health care services. The social/demographic environment in Ontario would be conducive to a new entrant into the market due to the increased demand for health care services.
Digitalization, standardization, de-tethering mobile networks, nanotization and biogenomics are just to mention a few of technological advancements that seem to offer potential shift in provision of health care services. The market for home monitors is expected to grow from the current $500 million to more than $5 billion in ten years (). Aging service device technology is on the rise. All these technologies have the potential of transforming giving home care to the aging population. The current challenge to new entrants is the high cost of adopting technologies since most systems and services are provided by the private sector. New entrants into the marketplace should consider new funding models since new technology pose the risk of creating an economic divide with high-income population getting access to more benefits.
Ontario’s Ministry of Labor (MOL) is placing increased focus on increasing workplace compliance with the requirements of Occupational Health and Safety Act (ASHA) and standards. New entrants in the marketplace must equip themselves with occupational health and safety responsibilities under OSHA on their duty of providing health care services to the aging population. Ontario has a comprehensive legal framework for business entities including competitive bidding for health care service providers to the aging population. The legal environment in Ontario is conducive for a new entrant in the marketplace. New entrants must however ensure that they comply with all the legal requirement of the industry.
There is growing awareness of environment protection and the key stakeholders are becoming more aware of the being more proactive in this field (Goldstein, Groen, & Ponkshe, 2007). In addition, there is increased community awareness on importance of environmental conservation. Ontario government is introducing new legislation that will give healthcare professional wider power (CBC News, 2009). New entrants in the marketplace need to ensure that their market and business plans are in line with environmental issues. An opportunity also exists to incorporate environmental agenda within their corporate social responsibility. The environmental situation in Ontario would be conducive for new entrant into the marketplace if they are able to identify eco opportunities in the market. Giving healthcare providers more powers will enhance service provision and reduce the number of professional required to take care of a patient. This will help new entrants require fewer personal to operate in the market place.
Ontario Ministry of Health and Long-Term Care (2012). http://www.health.gov.on.ca/en/
Benjamin, K., Edwards, N., Guitard, P., Murray, M., Caswell, W., & Perrier, M. (2011). Factors that Influence Physical Activity in Long-term Care: Perspectives of Residents, Staff, and Significant Others. Canadian Journal on Aging, 30(2), 247-258. doi:10.1017/S0714980811000080
Goldstein, D. P. J., Groen, S., & Ponkshe, M. W. (2007). Medical Informatics 20/20. Jones & Bartlett Publishing Co.
World Health Organization (January 2008). Climate Change and Health, downloaded on October 2, 2012 from http://www.worldwatch.org/node/5659
CNC News (May 11, 2009). New legislation in Ontario will give health-care professionals wider powers. CNC News. http://www.cbc.ca/news/health/story/2009/05/11/ontario-health.html