A Changing Market: New Regulations, New Trends

Decreasing competitiveness of the local health care cluster can partially be attributed to a complex and changing market environment which creates new challenges and obstacles to growth. For example, state qualifications for hospital growth are high and restrict traditional service expansion. Local facilities are not allowed to carry out more complex procedures. Moreover, the investment climate is uncertain due to changing rules on health insurance reimbursement payments. Other changing health care market trends, such as the rise of outpatient care and decline of hospital utilization, also provide new challenges for the local cluster.

Industry Response: Diversify and Specialize

Lagging growth of the local health care cluster suggests that we are not adapting as quickly as our competitors to the changing face of the health market. This cluster would like to further enhance its export ability by innovating new lines of business and diversifying into new areas by leveraging existing health care-related businesses. Untapped opportunities for partnerships with regional businesses in medical equipment (Stryker), pharmaceuticals (Pharmacia-Upjohn), and cancer treatment (DeVos cancer research center) offer possible linkages into new markets. Local medical facilities could cultivate these linkages by serving as clinical testing sites for medical device and drug development. Developing local R&D in existing and new pharmaceutical and medical equipment firms could also offer a distinctive regional asset that would stimulate higher value added growth in a larger and related medical cluster. In addition, specialization offers another route to increased competitiveness. Local hospitals can differentiate themselves and increase market share by developing specialized staff in certain types of surgical and treatment specialties. However, to pursue these new directions will require aggressive attraction of talented people. The industry already faces difficulties recruiting and retaining personnel as young professionals are difficult to draw to the region.