Porter’s Five Forces in Podiatry: A Strategic Model for Practice Growth and Competitive Advantage

This author outlines how Michael Porter’s Five Forces framework reveals the competitive, financial, and operational pressures shaping modern podiatric practice—and how DPMs can respond strategically.

Key Takeaways

• Competition in podiatry extends beyond local rivals: DPMs must account for hospitals, ASCs, mid-level providers, and even emerging care models as part of a broader, interconnected healthcare ecosystem. 
• Reimbursement and payer dynamics shape profitability more than pricing power: Insurance, Medicare, and managed care significantly influence revenue, limiting provider control and increasing the importance of operational efficiency. 
• Differentiation and adaptability are critical to long-term success: Subspecialization, patient experience, and strategic positioning can reduce competitive pressure and protect against substitutes and new market entrants.

In my experience, I hear traditional podiatry described as being different from other industries for a number of reasons, including:
 
1. The role of governmental regulation and reimbursement
2. The limitless demand for health care
3. The necessity of having local providers
4. The removal of patients from the direct purchase because of insurance purchasing
5. The difficulties in quantifying health and the quality and costs of care.
 
And so, Michael Porter’s model from Harvard Business School¹ applies to a company operating within a specific industry, like healthcare, which contains numerous subsets interacting with each other. These subsets may include hospitals, nursing homes, home health agencies, ambulatory surgery, and urgent care centers. These facilities and providers, along with the administrators, equipment suppliers, pharmaceutical companies, and other support and managerial providers may all be considered part of the “healthcare industry” because they share the common goal of maximizing human health. This is not an easily quantifiable outcome, but it is nonetheless a common denominator among all facets of the healthcare industry. A hospital that does not acknowledge the local independent podiatry practice working in the same industry as a competitor may have missed the point. In my observation, there is a complex relationship between podiatry and the healthcare industry, so any competitive evaluation should examine several different perspectives on these relationships. Below, let's examine specific examples of Porter's model, and what podiatry can learn as a result.
 
1. Competitive Forces: When we think of competition, we think of the DPM down the street, at the local hospital, the ambulatory surgery center, public health clinic or podiatry school. As a result, I’ve observed high-priced marketing battles that might mean a competitive advantage. These tactics can stimulate podiatrists to continue their education but can also erode profits through tuition costs, office time outs, and market stability. Several factors contribute to the intensity of a competitive rivalry in the podiatric community: 

• The number of competitors: More podiatrists mean more of a struggle for market share.
• Industry growth: Competition is usually less dramatic during periods of rapid market growth, as in a growing city. But the converse can be true if a market is shrinking, such as in a declining city.
• Similarities in offerings: Competition tends to be intense because patients can easily switch when podiatric services are similar. However, a unique offering or subspecialization can differentiate oneself in the space.
• Exit barriers: When it's difficult or costly for DPMs to retire or leave practice, they may choose to stay and compete even if the market prospects grow dimmer. For instance, ambulatory surgery centers (ASCs) have high costs, which means that when doctors that are owners in an ASC face a shrinking market, they can't retreat from the market quickly. 
• Fixed costs: Doctors have a strong temptation to cut prices rather than see fewer patients when demand drops because of their fixed costs. 

2. Threat of New Market Entrants: Historically, I’ve witnessed some podiatrists believe that there is a low risk (or even no risk) of new market competitors due to the entry barriers specific to their geography or their segments of the industry. I’ve heard podiatry is characterized as a local business because providers must deliver services to patients in person. However, technology and communications, as well as the ability to recruit providers nationally, are changing some aspects of the podiatrist–patient relationship so that this is no longer universal or true. New entrants no longer must be based in their local market. Overall, the threat from new entrants may be related to the size of the financial return in that particular segment of the industry. Healthcare differs from many industries as financial return does not always drive the decision process. The goals of altruism, education, and community service can make some decisions in the business of healthcare to seem financially or economically irrational.
 
3. Bargaining Power of Suppliers: Podiatrists are professional services providers. Other suppliers include durable medical equipment (DME) companies and pharmaceutical companies. Suppliers can impact a podiatry practice if they can raise costs. Podiatric prices are often controlled or influenced by the necessity of accepting what a private insurance company, Medicare, or Medicaid, will pay for services.
 
4. Customer Power: When patients have more strength, they can exert pressure to provide better podiatric services or products at lower prices. This force intensifies under certain conditions:  

• The number of buyers: Fewer patients mean more power to them. Managed care has significant leverage in negotiations and can demand favorable terms because podiatrists depend on their business.
• Purchase size: Managed care can negotiate better payment terms for podiatric services and products.
• Switching costs: In locations where it is easy for patients to switch providers, they have to offer competitive service terms.
• Price sensitivity: Where payers are highly price-sensitive, DPMs must keep their prices low to attract cost-conscious patients.
• Informed buyers: In many sectors, the younger patients may be financially savvy and know the competitive terrain and thus negotiating better professional fees. 

5. Threat of Substitutes: When patients feel they can find substitutes for podiatry-related goods or services, like through other clinical and non-clinical entities, there is a major challenge for DPMs. 

• Relative price performance: If a substitute cost is lower and its performance is comparable or better, patients are likely to switch.
• Patient willingness to go elsewhere: The threat is high if patients find it easy to switch to a substitute foot care provider. 
• The sense that services or products are similar: If patients think that there are few differences between your practice offering and a substitute, they may be more likely to switch doctors.

Assessment

There is a complex relationship between podiatry and the health care industrial complex so that any competitive evaluation should take different perspectives on these relationships. Additionally, it is important to ascertain how to overcome some of the challenges these relationships and perceptions pose. Is the answer in patient and community education, re-examination of insurance relationships, a geographic analysis, or any number of other pathways? And so, do you appreciate Michael Porter’s “five rule model” and more importantly, how well do you apply or execute it in your podiatry practice?  
 
Dr. Marcinko is a former Professor and Endowed Department Chair in Economics, Finance and Entrepreneurship. His many textbooks, dictionaries and manuscripts are redacted in the Library of Congress, Library of Medicine, National Institutes of Health (NIH) and Amazon.
 
References
 
1.     Teisberg EO, Porter ME, Brown GB. Making competition in health care work. Harv Bus Rev. 1994 Jul-Aug;72(4):131-41. PMID: 10135458.
 
Additional Resources
 
Marcinko DE, Hetico HR. Dictionary of Health Information Technology and Security. Spriger Publishing, NY, 2007.
 
Marcinko DE, Hetico HR. The Business of Medical Practice [3rd Edition]. Springer Publishing, New York, 2010.
 
Marcinko DE, Hetico HR. Hospitals & Healthcare Organizations [Management Strategies, Operational Techniques, Tools, Templates & Case Studies]. Productivity Press, New York, 2012.
 
Marcinko DE, Hetico HR. Financial Management Strategies for Hospitals and Healthcare Organizations. Productivity Press, New York, 2013.