...Supply and Demand In health care physicians are important commodities. Although the overall number of physicians is growing, demand is growing at a much faster rate. Understanding the specific aspects that influence supply and demand for physician services can aid in identifying the problem. Gauging and trending future supply and demand needs can also assist in preventing shortages and ensuring the health needs of the population will be met. Some studies have proposed that “current primary care scarcities are due to geographic maldistribution, which may not improve even if the supply increases without specific policies regarding training, recruitment, and retention” (Petterson, et. al., 2012, p. 2). Estimating the number of needed physicians...
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...Applying Supply and Demand Analysis to Health Care One out of every seven dollars spent in the United States is spent for health care services. This is a greater percentage than in any other industrialized country.1 The topic of health care arouses deep emotions and generates intense media coverage. How can we understand many of the important health care issues? One approach is to listen to the normative statements made by politicians and other concerned citizens. Another approach is to use supply and demand theory to analyze the issue. Here again the objective is to bring textbook theory to life and use it to provide you with a deeper understanding of health service markets. THE IMPACT OF HEALTH INSURANCE There is a downward-sloping demand curve for health care services just as there is for other goods and services. Following the same law of demand that applies to cars, clothing, entertainment, and other goods and services, movements along the demand curve for health care occur because consumers respond to changes in the price of health care. As shown in Exhibit A-1, we assume that health care, including doctor visits, medicine, hospital bills, and other medical services, can be measured in units of health care. Without health insurance, consumers buy Q1 units of health care services per year at a price of P1 per unit. Assuming supply curve S represents the quantity supplied, the market is in equilibrium at point A. At this point, the total cost of health care can be computed...
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...Health Care Economics Dana Carter HCS 440 November 17, 2010 Tom Flora, PhD Health Care Economics Health care costs have risen steadily for years. “Health care expenditures reported in 2008 exceeded $2.3 trillion” (Kaiser Family Foundation, 2010, para 1). This figure reportedly will increase throughout the 21st century unless the government, employers, and consumers can work together to stem this out of control growth. The history of health care is short but it provides a small view of how the United States made a simple choice of demand and supply through fee-for-service to managed care, PPOs, and other insurers of health care including the federal government. Fee-for-service in the early 1900s was the norm for the American public. Insurance companies did not provide health care, and if they provided the service it was only available to a few wealthy people. Physicians charged a set price based on the ailment or disease, they were paid in goods or money. In the 60s and 70s it was becoming popular for employers to pay health insurance and employers realized that if they provided this essential benefit, the productivity and profits would increase because his or her employee is healthier. At the end of the 70s Americans were demanding health benefits and in the advent of the demand the cost of health increased. The government entered the health insurance arena in 1965 with the passage of Medicare and Medicaid, which covered people without health insurance and elderly...
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...Health Care Economics 1 Term Comparison Paper Bernadette Cynthia Gibson July 28, 2014 HCS/552 Nancy Jennings Health Care Economics 2 Term Comparison Paper Demand, Economics and Supply Demand This paper will be discussing the definitions of demands, economics and supply and what how they play a role in health care. The definition of Demand: “The amount of a particular economic good or service that a consumer or group of consumers will want to purchase at a given price. The demand curve is usually downward sloping, since consumers will want to buy more as price decreases. Demands for a good or service are determined by many different factors other than price, such as the price of substitute goods and complementary goods. In extreme cases, demand may be completely unrelated to price, or nearly infinite at a given price. Along with supply, demand is one of the two key determinants of the market price.” When it comes to demands in health care, we can look at scheduling. Patients will need to make an appointment to be seen, and scheduling can be done the same day or in the future depending on what the visit is for. If there is a high demand of patients and the supply is not there then patients will be scheduled on the Backlog Reduction Plan. These are schedules for the future with the intent to keep the workload down. Example: can another physician see a patient and how can the person be treated without having to come back. Health...
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... 2013 Economic Tool and Concepts The health care industry has been experience for many century the shortage of nurses. It is perceive by the health care industry the shortage of nursing supply than the demand across the country. The demand for nurses in every health care organization growth in a daily basic as the technology advance. The consumers are always demanding for more personalize and quality of health care services at the time they are seeking for health care delivery creating nurses supply to be less in every health organization. A few probable reasons for nursing shortage within the health care industry can be the number of nurses in the workforce with a close retiring date, immigrated nurses from other country that works under constrained work permit, and also the population growth. As population increase the requirement for health care providers and services the growth of nursing and medical providers’ shortage will be notable. According to Getzen (2007), “There has recently been a growing recognition that instead of a surplus, a future shortage of physicians may occur. Since the number of U.S. medical graduates has not kept pace with the growth in U.S. population” (Chapter 7, p. 161). The nursing shortage and medical providers has become extremely demanded within the health care industry to provide a quality of health care. The following information will define economic concepts such as supply curve, demand curve, marginal analysis, and elasticity. According...
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...Economic Terms in the Health Care Industry Nicole Hunter HCS/440 Economics: The Financing of Health Care August 27, 2012 Kristin McFarland, MSA, AASPR Economic Terms in the Health Care Industry In this paper the history of economics will be discussed and how economics pertains to today’s health care world. Understanding terms that are used in economics can help with better understanding this subject. We will discuss terms such as economics, supply and demand, macroeconomics, microeconomics, elasticity, inelasticity, and GDP. Supply and demand will also be researched further and the different issues that it can apply to in the health care industry. Economics Economics is a science that focuses on distribution, production, and consumption of services and goods. Resources that can be used include talent and time available, buildings, land, knowledge, and equipment. Knowledge of how to use all of these resources to create a successful products and services is also useful in economics. Some choices that are made in economics are, just how much time to dedicate, how much money to save, how much money to save, combining of resource, and the role of the government. Supply and Demand The price of a commodity is the relationship between supply and demand. Supply and demand is essentially the backbone of the economy. Demand refers to the quantity of products and services that buyers wants and are willing to buy within a certain price range. Supply is how much can be offered...
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...From a health economics perspective, there are, in principle, two alternative views on the demand for health care. One suggestion is that the individual demands care as an input into her production of health (Grossman, 1972). This view – sometimes referred to as the Grossman model – suggests that the demand for health care is a derived demand in the process of investment in health capital. The Grossman model of the demand for health thus views health care as an input along with other health inputs such as nutrition and personal exercise. Specifically, the model views the individual as the sole decision maker as to if and how much health care to use. Over the past decade, however, the Grossman model of the demand for health has been challenged by a complementary view that sees the demand for health care within a principal-agent framework (Sarma, Simpson, 2006). In this view, the individual decides if and when to seek health care while the provider of the services decides how much care to use once the first decision has been taken. One of the criticisms of the Grossman model is the fact that many of its predictions are not supported by the empirical analyses. Depending on the particular view of the demand for health care that one adopts, the methods for analyzing the effect of for instance health insurance on the demand for care will vary. This is further discussed in the Methods section below. The role of insurance in health financing is twofold, one to raise revenues for...
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...Terms Comparison Paper Economics is basically the management of an administration. The focus of economics is to determine the primary behavior of supply and demand. In health care the demand is made through technology, cures, and needs. Although the supplies are available to the consumers not all consumers receive the same amount or type of supplies. That depends upon the economic status and if he or she can afford the supply or service. In health care demands develop because of economic growth, knowledge, social factors, and inexpensive public health care. With insurance and government programs health care becomes available to people no matter what socioeconomic differences. Still economic factors do persist with socioeconomic differences even with government programs. According to Getzen (20074) economics is the trade, or “making a buck” in the marketplace where buyers and sellers exchange dollars for goods and services. Economics is the study of the forces between supply and demand and the impact they have on allocation of scarce resources. Demand is the wants or needs of a product by a buyer and what he or she is buying at a specific price. Supply is the amount of a product for sale for a specific price. Then variability is the event of random changes in demand and supply over time. Economist will look at microeconomics to determine how business, consumers, and the government will affect the economy. Macroeconomics is economist...
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...core of economics is known as the law of demand. Every time you pull out your pocketbook to purchase something, the law of demand is at work. The better you understand the law of demand, the better you will understand why you pay different prices for different goods. Demand is the relationship between the quantities of a good or service consumers will purchase and the price charged for that good. The law of demand states that the quantity demanded for a good rises as the price falls, with all other things staying the same. The law of demand also states that if factors remain equal the higher price of goods, creating a lesser demand for the product (Getzen, 2007). Current issues such as health care and the effects on the economy are subjects that could be assessed through economic tools and concepts. The United States of America spends billions on the health care industry. This has proven to cause a negative effect on the United States economy, for example, this has brought about inflation and unemployment and definitely not suitable for economic growth and development. These negative aspects affect sectors of the economy households, corporate markets, and the government, and an essential role in the financing and funding the United States health care system. The local and federal government collects taxes from individuals and corporations to provide funds for the health insurance programs. Corporations offer employment and issue health insurance to their employees but many individuals...
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...Economic Terms and Health Care History HCS 440 December 19, 2011 Lori Geddes Economic Terms and Health Care History This summary will show the history and evolution of health care economics. The readers will also get a timeline of health care funding. Once you have read everything the summary shows you then you will have an insight to economical terms can help to understand the history and the timeline the terms are going to be: Economics, supply and demand, microeconomics, macroeconomics, elasticity, inelasticity, and gross domestic product. With these words this will show you about economics in the health care history. Once the American Medical Association (AMA) was founded healthcare was just getting off the ground with hospitals and doctors (American Medical Association, 2011). During this time doctors would see patients on a bartering system. The doctors at this time would make house calls and for the services they gave to the patients the patient at this time would give the doctor goods. The supply and demand at that time would be food, and anything that the people would not have. During this time they would pay with cooked meals, animals, things that they made, and their time such as working for the doctor however he wanted them to. During the time frame of 1901 to 1940’s healthcare and medicine took made great improvement. Medicine and hospitals became very important at this time. President Truman proposed a national health care plan, but it was shot out of...
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...Health Economics- HSA510 Project Paper Foundations of Health Care Economics Supply and demand or demand and supply, which comes first in the study of consumer behavior regarding health care choices. Such questions can boggle the mind; however, healthcare economists and researchers have made it easier for professionals, health care managers and others to decipher how rational individuals make consumption choices when faced with limited choices, especially in the health care environment. In economics, the simplest way to determine the demand for a particular health care service can be illustrated through supply and demand curves. The theory of demand proposes that when prices increase for a health product or good then there will be less demand for that product or good. A further assumption of this theory is that all other things are equal or held constant. Therefore, if consumers buy less at higher prices then the demand curve will slope downward. Consideration should also be given to other variables that may affect the demand for a health product or good. Those variables or demand shifters would include income, other prices, insurance, and tastes. Supply can also be determined in the same fashion as demand. If a health supplier or producer is willing to offer a health product or good for at a certain price, generally if the price raises, so does the supply and in this case, there would be an upward sloping demand curve. The supply shifters in this case would...
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...hospital then loses money finding it very difficult to offer quality care and to keep their doors open. Customers will lose quality care and have to pay higher cost and insurance premiums keeps getting higher each year. Medications are very expensive and your health insurance can force you to get fill your medications from different pharmacies. For example I was filling my prescription at Stop and Shop and one day the pharmacy told me that they no longer accept my insurance and I would have to go to CVS to fill all my prescription from now on. These insurance companies control everything whether you pay or not. What is a demand curve in health care? Provide an example of a demand curve in health care. How could this example affect the economics of health care? This predictable relationship between price and quantity demanded allows us to define demand formally as the quantity of a good or service that buyers are willing and able to buy at every conceivable price. The demand curve shows this relationship graphically. A graphical representation of this economic relationship produces the classic downward sloping demand curve and the upward sloping supply curve. At some point in time however, the treatment plan is completed, the patient is satisfied, and additional services are not needed. This is known as market equilibrium. When an industry becomes more competitive – either by too much supply or too little demand – market equilibrium fees tend to become elastic while patient...
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...Demand Versus Supply Paper Troy D. Burks University of Phoenix HCS/552 Health Care Economics JAYME CARRICO February 17, 2014 Demand Versus Supply: Home Health Care Services It is not a secret the health care industry in the United States is highly competitive, that demand for medical services and products grows faster every year, and that supply in certain areas is shortening. The demand for health care products and services is the result of the society’s desire of living longer and maintaining a better health status. In the present, patients are very interested in learn about the new alternatives the market offers to improve their wellbeing and suppliers are more alert of the population’s wants and needs. Additionally, the multiple advances in technology have created a whole new scenario for delivering health care increasing the demand and supply of technologic advanced goods (products and services). Population’s requirements for better services in terms of quality and effectiveness are also crucial determinants of the trends in the demand and supply of certain health care goods. A service that has become highly demanded not only for the reasons aforementioned but also because the increasing of the aging population and the government needs of cutting health care expenditures, is the home health care. As its name indicates it is an array of services that patients receive in their home as part of an illness, chronic condition or injury treatment. Services include...
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...May 11, 2015 Nancy Jennings Terms Comparison Paper This paper will discuss three terms and there definition that relate to each other in the health care system. The three terms that will be discussed is value, derived demand and terms of trade. These all relate to each other in the health care because, patients or the people will benefit from the care they receive. Value because, what people are willing to pay for services of their health, terms of trade because, the buyer and seller will decide what is best for the facility or business to give the patients or their people the best products possible and derived demand because, it will do good for others and not just for itself. Definition of Terms Value is where health is all the things we possess. People are willing to pay the cost of health care because, if a person wants the proper care or treatment to stay healthy they are willing to spend the money on physician training, public health and health insurance to satisfy their needs and what the physicians or health care facilities or insurance companies produce to their patients or the people is or will be valuable to the patients and the people who are seeking the treatment they need (Getzen, 2013). Value is also the physical health and the sense of well being achieved at the right cost and means getting the right care at the right tie to the patient or person at the right price. According to Muir Gray (2013) value is also expressed as what we gain relative to what...
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...An Economic Analysis of Health Care in China (draft 8/8/06) Gregory C Chow Princeton University Abstract After describing the institutions for health care in China as they evolved since 1949, this paper presents statistical demand functions for health care. It applies the demand functions to explain the rapid increase in health care demand and the resulting rapid increase in price when supply failed to increase. The failure in increase in supply was traced to the system of public supply of healthcare in China. The reform experience of Suqian city in the privatization of healthcare is reported to demonstrate the positive effect of privatization on supply. The government’s health care program for the urban and rural population is described and an evaluation of it is provided. Outline 1. Introduction 2. Changes in Health Care Institutions 3. Demand Functions for Health Care 4 Supply for Health Care: Public or Private? 5. Government’s Program for Health Care 6. Evaluation of the Current Health Care System 7. Conclusion 1. Introduction With a population of over 1.3 billion China has received much attention, including its spectacular economic development since 1978 and the accompanied deterioration of health care for a substantial segment of its large rural population. Section 2 of this paper...
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