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In the competitive model of healthcare resource allocation, services are distributed based on market competition among healthcare providers. Health facilities compete for patients, and allocation is influenced by factors like cost, quality, and efficiency. This model assumes that competition fosters efficiency and encourages providers to deliver high-quality care.
Strengths of the competitive model include increased efficiency due to market-driven incentives, potential cost reduction through competition, and innovation driven by the need to attract patients. However, it has notable weaknesses, such as the risk of underserving marginalized populations, focusing on profitable services rather than essential ones, and potential for unequal access.
One example of competitive bidding in healthcare is when hospitals compete for contracts with insurance providers to be included in their network. This bidding process aims to secure favorable terms for both parties but may also impact patient access if certain hospitals are excluded.