Smith Orthopedic Clinic (SOC), a large specialty practice, was among the best known and most respected orthopedic practices in the world. It was affiliated with one of the world’s largest hospitals and maintained a dominant market share within its service area. Its domination of the local market was exceeded by its share of the regional market because it was recognized as the premier orthopedic group in the region. During the 1970s, SOC’s traditional patient base was moving to the suburbs. As a result, the inner city, where SOC was located, soon consisted of a relatively sick population with little ability to pay for healthcare. At the same time, the practice was losing its regional market share to specialists who had become established at secondary hospitals in the region. By the 1980s, SOC was facing significant competition from other orthopedic practices in the market area. Competitors had been quick to recognize the potential of the fast-growing suburbs and created niches for themselves essentially beyond the reach of SOC. By the 1990s, SOC was lagging behind its competitors and had to rapidly establish outposts in the now-established suburban markets. SOC belatedly abandoned its inner-city office for a major suburban facility. The practice’s failure to respond in a timely manner to changes within the market resulted in a loss of its market dominance. After reviewing the preceding case, address the following points:
• To what extent did forces beyond SOC’s control determine its position in the market?
• What were the implications for SOC of shifting residential distribution and regional patient flow?
• In what ways would monitoring developments within the service area have better prepared SOC for the changes that occurred?
• Did SOC have an opportunity to recognize the trend and its implications, and take preemptive action?
• What lessons can be learned from SOC’s descent from clear market leader to also-ran?