Terms Comparison Paper Raven Childers HCS/552 February 27, 2012 James Brown

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 determining the effects of inflation, industrial production, unemployment, and other factors on the economy. Economics works on the principal that buyers want what the sellers have to offer no matter if it is a good or a service. The demand will determine the price. For example children’s toys around Christmas become a demand not a want. Many companies will research the toy and determine the demand but if the production is not able to reach the demand the price will increase. This allows businesses to profit from the under production of the high-demand toy. The more specialized a trade the more valuable the service. With the exchange of services and good each party is better off which is the fundamental theorem of exchange. No matter what the service or good the “terms of trade” must be specifically set for the buyer and seller. An example of this in health care is a surgery done to improve eye-sight. The surgeon agrees to perform the surgery while the patient pays the schedule of fees due. The surgeon is responsible for all tasks before, during, and after the surgery. His or her responsibility goes until the patient is well, while the patient pays for these services. While the simple version of financing involves the buyer and the seller the transaction involves several parties. Extensive or elective surgeries involve financing. Many surgeries are expensive so payments involve the patient, insurance, and financing. Basically with financing many parties provide payment over-time. With this in mind the well-off will pay more for better services and extra services. These extra charges allow professionals to care for the unfortunate patients. For pharmaceutical companies research funds come from overpricing of current popular drugs. With this overhead the companies can research the next popular drug. Pharmaceuticals researches do a financial analysis that will determine the timing and risk. With wonder drugs research will put a value on the risk of the drug. Uncertainty makes the risk even higher, if the drug works it was worth the time and risk if the drug does not work than the time and risk were a waste. With health care many risks are taken and are discounted. Most are not paid for upfront or right away by the patient, and financed by insurance. Insurance companies and patients put a value on health care. When people are confronted with death many will pay anything to be healthy or better. As a society health insurance companies, the government, and employers all put a price on health care because society values health. If society did not care about health care new advances would not be produced. With each passing day new ideas, cures, and advances come from research in health care because as a society health care is important. With new advances comes demand. For old facilities trying to keep the cutting edge technology or for new facilities with the cutting edge technology a demand is made for these advances. Once the public is aware of the advances the demand will produce a need among facilities for the advancement. Basically the consumers drive the demand which makes the facilities owners and employees spend and become consumers as well. This allows the flow of funds through the economy. At the same time the consumer is not ultimately making the decision about his or her health care. A professional makes the health care decisions for the consumer because the choices made for the consumer are done on a quality basis rather quantity. The economic flow of health care requires that the facilities stay up-to-date and maintain licensures. With these demands money must be spent but patients need pay the facility even if through a third party payer. Pharmaceutical company’s facilities need funding for these new items, but patients also need these supplies. So this provides a demand and supply cycle. For the economist health care provides a complex supply, demand, and payer situation unique to health care.

References Bayoumi, A. M. (2004). The Measurement of Contingent Valuation for Health Economics. Pharmacoeconomics, 22(11), 691-700. Getzen, T. E. (2007). Health economics and financing (3rd ed.). Hoboken NJ: John Wiley & Sons, Inc.