Demand Verses Supply Paper
HCS/552 – Health Care Economics
March 4, 2013
James Brown

Demand Verses Supply Paper
Demand of health care services within the health care industry will inherently continue to rise as American society ages. Technological advances in diagnostics and treatment provide individuals the opportunity to seek quality care that can prolong health and wellness for those seeking treatments. The key for the health care industry is to attempt to meet the demand with an adequate supply of quality services that enhance the health and well-being of those seeking care. The value of a new medical technology is determined by supply and demand (Getzen, 2007). Diagnostic radiology is a prime example of the value being determined by both supply and demand. As radiologic imaging advanced from two dimensional x-ray images to three dimensional ultrasound images, magnetic resonance imaging (MRI), and Computed tomography (CT) providing better image quality and increased accuracy of diagnoses, the demand for these services rose. Statistics show that from 1996 to 2006 the frequency of radiology imaging increased nearly 60%, from 61 million studies to 99 million (Klein, 2008). This significant increase in use is directly related to enhance image quality used for diagnosis. This figure will continue to rise as more baby-boomers use these services to diagnose potential health issues that can be determined through radiologic imaging. This paper will discuss the demand and supply of outpatient radiologic imaging centers within the United States health care industry.
Outpatient Radiologic Imaging Statistics indicate the growing use of radiologic imaging for diagnosis of health ailments. This demand has created a strain on the ability of hospitals to adequately supply all patients with access to diagnostic radiologic imaging without delay. This fundamental lack of supply creates an opportunity for the demand to be met by private standalone radiologic imaging centers offering the same radiologic services to patients as they would receive at an established hospital system. For example, the University of Maryland Medical Center’s (UMMC) Department of Radiology, an establish hospital provider providing services to over 230,000 visits annually (University of Maryland Medical Center, 2013), provides imaging services through MRIs, CTs, Ultrasound, and Positron Emission Tomography (PET). With over 170,000 outpatient visits per year the supply of radiologic equipment is limited. Smaller community based radiologic imaging practices like Advanced Radiology Clinics provide the same services using similar equipment (Advanced Radiology, 2009); however, they are able to manage their patients without halting outpatient care due to emergency situations that require room use, as found in hospitals like UMMC. This results in reduced wait times for imaging studies allowing for quicker diagnosis and treatment for an individual’s ailment. Studies have shown that reducing wait times for diagnosis increases the success of treatments and reduces expenditure of excess care that would have otherwise been eliminated if diagnosis occurred sooner (Canadian Medical Association, 2008). Coupling the benefits of early diagnosis with patient satisfaction of reduced wait increases the demand for fast quality imaging, something outpatient radiologic imaging centers can capitalize on. Support Perspective and Rationale Other influences on demand are income, population growth, personal preference, health of individuals, and other treatment modalities available (Getzer, 2007). For outpatient radiologic imaging centers to successfully tackle the growing demand for imaging they must adequately weigh all the nuances of the demand for services. Analyzing the surrounding demographics is the first factor to consider in determining demand for a given good or service. Setting up a center in a community with an older population would be ideal for any health care service being offered as it is more likely the population base will need those services. It is also worthwhile to understand the economic demographics of the area to be served. Lower income areas tend to be less likely to seek health care services due to their limited access to adequate health insurance. Reimbursement rates received for treatment of Medicare and Medicaid insured individuals is lower than those received by private insurance agencies, thus, providing services outpatient services in moderate to higher income levels has the potential to yield higher reimbursement rates. Ease of access is another important factor that enhances or detracts from demand. Outpatient radiologic imaging centers can be established within the community without the need for an expansive architectural footprint that would be required of a full scale hospital facility. This provides the opportunity for centers to be placed much closer to the community being served resulting in easier access for those seeking service. For example, the world renowned Johns Hopkins Hospital, which offers state of the art radiologic services similar to those found in outpatient clinics, is located in downtown Baltimore. For most individuals seeking care at this facility it requires a lengthy drive, most of which through traffic, finding and paying for parking, and then navigating the expansive campus to ultimate receive your services. On the contrary, a private radiologic center located in the suburbs of Baltimore could reduce the travel time needed to reach the facility. Alleviate additional expenditures of gas and parking, as most private outpatient centers have free parking, and allow for patients to easily locate their imaging center through store-front signage. These factors lead to much easier access for patients seeking services, which can be a deciding factor when all other factors are considered equal. Technological advancements in image processing and diagnosis dissemination can also play a pivotal role in increasing the demand for outpatient radiologic imaging. Health care information systems have become significantly more advanced over the last decade allowing for the secure sharing of vital patient information between providers. Advancements in fiber Internet networking have allowed for speedy transfer of large imaging files created during digital diagnostic imaging procedures. This creates the ability for teleradiology to enhance the speed at which images are processed. No longer are facilities required to have radiologists on site to provide readings for the images being taken. Teleradiology, or off-site reading of imaging through systems such as Picture Arching and Communication (PACS), allows for continuous radiologist support during over-night hours. Outpatient centers using tele-radiologists have the ability to process imaging needs at a faster rate than those with just on-site radiologists. Having results provided faster results in more providers utilizing these services, thus increasing demand. Conclusion The adequate supply of access to quality health care in comparison to the every increasing demand is still something that eludes all aspects of the health care industry of the United States. Diagnostic imaging, a service that enhances the capability of care providers can offer is not immune to this supply deficiency. Increasing the opportunity of providing outpatient radiologic imaging services can be seen as a necessity in the health care industry as quicker diagnosis can lead to better treatment results for those seeking care. This knowledge coupled with an aging society leads one to determine the potential economic success of establishing an outpatient radiologic imaging center.

References
Advanced Radiology. (2009). Retrieved from http://www.advancedradiology.com/practice
Canadian Medical Association. (2008). Retrieved from http://www.cma.ca/multimedia/CMA/Content_Images/Inside_cma/Media_Release/pdf/2008/EconomicReport.pdf
Getzen, T. E. (2007). Health economics and financing (3rd ed). Hoboken NJ: John Wiley & Sons, Inc.
Klein, C. (2008). AuntMinnie.com. Retrieved from http://www.auntminnie.com/index.aspx?sec=ser&sub=def&pag=dis&ItemID=82104
University of Maryland Medical Center. (2013). Retrieved from http://www.umm.edu/center/fact_sheet.pdf