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Introduction
The ability of the buyers and sellers to pexert perceptible control over the possible market outcomes is what is known as market power, its main advantage is it allows them to gain higher outcomes individually on welfare levels as compared to normal competitive market environs. In the health care understanding, the relationship that exists between market power and market structure in environments or institutions that have repeated strategies engaged by multiple agents interaction has been an area of interest for empirical, analytical and human subject experimental researches in institutions and organizations. This has granted some GPs practitioners the ability to have substantial market power considering how they use it to their advantage, it is not considered illegal. It can be harmful only in cases where it is used for purposes that are anti-competitive and can cause harm to other practitioners or competition like engaging in unethical practices. However, if looked at from the perspective of the competition the market power can be used to bargain for better health quality, lower prices for service delivery, more innovation and greater choices of service delivery.
The GPs in Perth metropolitan area market structure can be described as one that exhibits more of a monopolistic competition tendency; this can be seen through the evident competition for clients that is exhibited by various GPs and health insurers, which has been used positively to enhance efficiency. This applies particularly to contain the health care sectors fluctuating costs mainly by taking the market power of the health providers into account, its suitability for the aim of health care sector intended competition lies mainly on the efficiency of the competition institutional framework. This can be explained due to the certain type of market power that is induced by physicians since they are better informed about the suitable treatments and illnesses than their patients are, in that the demand for the patients need of the services of health care is determined by recommendations from physicians, which the physicians consequently approve themselves. The monopolistic competition is also a means of attracting and capturing the market power of the physicians, which can be perceived as a homogenous good by the patients, in this manner the acquisition of the monopolistic competition power is achieved in the health care service. Consequently, the framework of the monopolistic competitiveness is also evident by the way it is used as a mode of effecting communication between patients and physicians (Johar, Jones & Savage, 2013).
GPs can charge different prices for different patients due to the fact that medical practitioners should at all times be regarded as being free and can make their own judgments on prices since they are indeed duty bound and can make their own choices regarding the prices that they think are suitable for their services. In each individual case, the medical practitioners can satisfy themselves by dictating the charges based on their assessment of the particular illness circumstance, medical practice cost experience and by assessing the patient. The medical practitioners are encouraged by the AMA to determine their costs based on their own practice cost, and the medical operational practice costs, travel expenses, experience and knowledge, time used on the service, ethical considerations, opportunity costs, and professional expenses and running costs. The main reasons why there is a difference in the charged prices lies in the fact that the prices by GPs will have to be set in a way that the clients in the eastern suburbs can afford. This has to be lower as compared to the western counterparts and this makes it a more likely reason for them to have fluctuating prices (Jeyendra, et.al, 2013).
The main reason that this causes the GPs in the western suburb as compared to the eastern suburbs to charge more lies mainly in the prices settings and the incentives they are being offered for their services, which actually affect their demand on their service delivery. This directly affects doctors demand in the area due to the infinite demand that is artificially created in the free health care system. AMA as a major issue has identified bulk billing and the shortage in the medical workforce. Not only does it contribute to the uneven distribution but due to the incentives and the flexibility to set own prices it tends to influence the scarcity of medical workforce to be heavily skewed towards the major cities as compared to the rural settings (Australian Medical association, 2006).
The main reason why there are sufficient GPs in the western suburb as compared to the eastern suburbs can be summed up on the aspect that there is a strong preference between the medical practitioner to work and live in major cities. Most preferences particularly stressed on inner suburbs, given the demographics and educational backgrounds of the current medical workforce is not surprising. This reason emphasizes the difficulty of possibility of attracting young professionals to the rural locations.
GPs may choose to move toward western suburbs and away from eastern areas mainly due to the fundamental reason that states that the eastern regions have disadvantages that include downgraded services, red tape services, hindrance to lifestyle factors, lack of critical mass of likeminded doctors and frequency of hospital closures. Others include inefficiency on the administration in the hospital administrations, lengthy working hours, and increase in work intensity, poor employment opportunities for other practitioners and other family members, continuous withdrawal of funds and support for the hospitals services, professional isolation and inadequate enumerations (Johar, Jones & Savage, 2013).
Either the adjusting process that the market self-adjusts from equilibrium and disequilibrium with the price can decrease or increase in response to a surplus or shortage to restore the equilibrium between quantity supplied and quantity demanded. Interventions like government regulations can be implemented if the normal equilibrium regulations of self-correction do not work. In cases that these self-regulations do not work, there are other implications, like the introduced, commonwealth government federal budget overhaul of incentives by the rural workforce that is backed by added fund support, that would help support fundings, to help retain and attract more doctors to rural and regional areas. However, the rural health government programs remain complex, underfunded, too restrictive and fragmented. Incentives ideally have to be free of tax (Satterthwaite, 1979).
Policy initiates as described by AMA can also be applied in order to provide rural and regional areas with more adequate work force shares. It is important to outline these policy measures by recognizing that the problems cannot be solved overnight, but through an incremental fashion, the results can be delivered. Some of these measures are worthwhile to note and are considered relevant to the workforce within the metropolitan areas medical workforce. These include flexible training arrangements, general practitioners improved remuneration and better management of hospitals even though some measures are not specific to rural or regional areas, which will still have a positive impact and on this basis is included in this position statement (WA News, 2013).
Conclusion
The monopolistic competition model exhibited with the GPs in Perth metropolitan area can be used to analyze the care providers bargaining power on the health care services. This is with the assumption that the physicians have an individualistic relationship, it would be possible to review the health care services supply by using this model aspect. Under such circumstances, health insurers incur higher costs when they compete among themselves, since they can get high remunerations, which bring about an increase in the number of physicians or extra profits for the physicians.