Dollinger index

Rivalry Among Existing Firms.The spec-
trum of existing firms offering RFID solu-
tions ranges from small start-ups to industry
giants such as Motorola, Siemens, and Texas
Instruments. However, only about four or
five firms offer RFID solutions to hospitals.
These companies are privately held and
appear to have started up or ventured into
RFID recently. Research on these companies
indicates less than a total of five RFID
implementations in hospitals. Rivalry
among these existing firms is likely to be
less, as the market appears to be wide open
to providers of RFID solutions. However,
consolidation and acquisition of successful
companies by large firms is a high possibili-
ty within the next few years. Acquisition of
a small provider by a large company like
Intel or GE could provide formidable chal-
lenges to MedTrack.

Macroenvironmental Influences

Political and Governmental. Raising
health-care costs and their impact on the
profitability of companies through employer-
provided insurance have not gone unnoticed
by the public and the government. The
unveiling of the president’s Health
Information Technology Plan and the estab-
lishment of the Office of the National
Coordinator for Health Information
Technology (ONCHIT) under the U. S.
Department of Health and Human Services
in 2004 have resulted in a sharp focus on the
use of IT as a means of improving health
care. ONCHIT data indicate that while most
industries spent about $8,000 per worker on
IT, the health-care industry has invested
about $1,000 per worker on IT, an invest-
ment level it hopes to increase. ONCHIT
also estimates that Health IT can reduce
health-care costs by about 20 percent,^7 which
establishes a favorable climate for investment
and development of technologies such as
RFID.

Macroeconomic.The overall state of the U.
S. economy appears to be improving steadily
since the recession of 2002-2003.

Macroeconomic indicators, such as the

unemployment rate, productivity, and inter-

est rates show measured progress in the econ-

omy.

The Kaiser Family Foundation^8 reports

that in FY 2000 total U.S. health-care costs

were about $1.1 trillion. About 36 percent of

this amount was directly spent on hospital

care (see Exhibit 3 below) and another 8 per-

cent was spent on nursing home care.

Twenty-nine percent of this amount was esti-

mated as having been spent on physicians

and professional consultation services—most

likely in clinics. Average health-care costs

have been increasing at about 9 percent per

year (see Exhibit 4) while inflation has been

steady at or below 3 percent per year.

These factors are expected to play a favor-

able role in the growth of MedTrack for the

next ten years.

Demographic Analysis. U.S. Census

Bureau data indicate that approximately 11

percent of the population is 65 years or older

and 54 percent of the population is between

19 and 64 years old. The demographics of

the health-care industry are rapidly changing

with the aging of the baby-boomer genera-

tion. Between the years 2000 and 2010, the

size of the 45- to 64-year-old and 85-year-

old-plus age groups is projected to undergo a

large increase. The next decade shows a pro-

jected 40 percent increase in people between

428 ENTREPRENEURSHIP CASE

EXHIBIT 3 Spending on Hospital Care

United States

Hospital care

Physician &

professional services

Drugs & other medical

nondurables

Nursing home care

Dental services

Home health care

Medical durables

Other personal health

care

Total

Percent

36%

29

13

8

5

3

2

3

Million $

$ 413,131

328,983

151,926

95,296

60,726

31,616

17,750

36,687

$1,136,115