Implications of Health Economic Concept for Healthcare

Implications of Health Economic Concept for Healthcare

Value Healthcare Professionals and Decision Makers Derive From Understanding The Discipline Of Health Economics.

Value creation in all systems, processes, and procedures involved within the healthcare system is necessary to ensure maximum derivation of utility among healthcare consumers. This can be effectively and efficiently achieved through the application of health economics. Health economics always apply economic theories of social choices, production, and consumer behavior in understanding the behavioral patterns of all stakeholders involved within the healthcare sector (Tordrup, Chouaid, Cuijpers, Dab, Van Dongen, Espin, Bertollini, 2017). It is essential for all healthcare professionals to understand the discipline of health economics to maximize the value and the quality of healthcare services consumers receive.

Health economics allows for deep analysis and study of healthcare providers such as clinics and hospitals. This helps in discerning the level at which an organization is at in relation to its growth. Through this, it helps healthcare professionals to make concrete and effective decisions in regards to what kind of resources are needed within the healthcare facility and the number of the population the facility can serve effectively at any given time. It also helps the decision-makers within the organization to weigh the intervention options that are available for the facility in ensuring efficiency in service delivery. Through these decisions, healthcare professionals can ensure they promote healthy lifestyles and achieve positive health outcomes in a cost-effective manner in relation to their organization’s growth stage.

Additionally, the application of health economics theories in relation to market competition ensures healthcare professionals understand their market accordingly and the landscape of operation in relation to technological inventions and innovations. Through this they can conduct an effective appraisal of new technologies and determine their efficacy in relation to the organization’s level of operations, thereby helping these professionals in ensuring they deliver their services in a cost-effective manner while still creating value and controlling a considerable market share (Tordrup et al., 2017).

Critique Of Apply Healthcare Economics Principles in Service Delivery

The healthcare system is a little bit complex in nature; this is in consideration of new diseases as well as the cost a patient is to incur to ensure they obtain effective medical attention and full recovery, among other factors. Application of health economics principles in some of these complex decisions always help in solving some of these problems but at a cost. The application of the principle of incremental analysis and the margin in service delivery among healthcare providers compromises the quality of service delivery among healthcare providers (Parkin, 2017).

The incremental analysis focuses on the effect of change that results from the utilization of resources. On the same note, marginal change is a change in an economic variable that results from the smallest change in another variable (Parkin, 2017). The application of incremental cost principle among healthcare providers in relation to reducing the length of stay among surgery patients. Logically, the cost of each inpatient day in practice always differ over time. At the beginning of an inpatient’s stay, there are high costs involved through surgery and high dependency on nursing care. However, with time as the patients near full recovery, these costs reduce drastically, which can make healthcare management to discharge these patients even before they gain full recovery to create room for new patients. On the same note considering a healthcare provider that specializes in performing a specific operation and its surgical unit has reached full capacity of its operating theatre, yet there is one more operation that needs to be performed, which means there is a need to build another theatre. The healthcare provider will not build that new theatre because its marginal cost will be high. The application of such principles always compromises the quality of service delivery and can sometimes put the lives of healthcare consumers at risk.

The Primary Potential Benefits of Learning about Health Economics Related To Government Involvement in Healthcare Economics, Financing, and Delivery

The government is always involved in ensuring that the American population is safe health-wise. The government, through its different agencies, always put in place frameworks and structures to be followed by all stakeholders within the healthcare system in ensuring that the level of service delivery is efficient and effective. Additionally, the government helps in financing different health-related projects within the country, which include investing in health-related research and development (Lakdawalla, Doshi, Garrison, Phelps, Basu, & Danzon, 2018).

A cost-benefit analysis is crucial for the government in discerning the economic benefits a specific intervention can have for the American population.  Acceptable interventions should be those that their costs are less than the benefits received. For instance, an intervention that needs $2 million to be implemented for an economic gain in terms of work absence to save $10 million is worth considering and implementing.

Additionally, efficiency and equity principles help the government in allocating the available scarce resources in an effective manner to produce economic good for the country and, at the same time promoting equity and fairness among the American population. Achieving efficiency in healthcare entails achieving technical efficiency, social efficiency, and economic efficiency. Technical efficiency in relation to government involvement entails approving viable technological innovations and inventions that can help in enhancing the quality and safety standards among healthcare providers. Social efficiency entails upholding the principles of equity and fairness by allocating scarce resources in an effective manner. While on the other hand, economic efficiency entails achieving economic good in a cost-effective manner.

The Potential Benefits of Learning about Health Economics Related To Private Sector Government Involvement in Healthcare Economics, Financing, and Delivery

Close cooperation between the private stakeholders in the healthcare sector, with the government, always results in several benefits accrued by all the stakeholders involved. It leads to efficiency, affordability, and enhancement of service delivery as well as quality. Understanding of economic concepts involved in the healthcare sector helps both the government and the private stakeholders in discerning the health products and services that can be included in public health benefits, and as a result, the vulnerable groups in the public can easily access these services and products. Through this, they achieve affordability and equity among the public. Additionally, through understanding the economic concepts involved, the government can control the treatment cost of privately sponsored patients (PSPs)by setting favorable prices for these services that accommodate the interest of healthcare providers and ensuring the PSPs can afford them.

Further, through understanding the economic concepts involved in the healthcare sector, the government can ensure effective control of the technical quality of care (Masters, Anwar, Collins, Cookson & Capewell, 2017). Incorporation of technological inventions and innovations in healthcare systems and procedures helps in enhancing quality. The government can sanction the adoption of a newly developed technology in as long as the technology will enhance quality in a cost-effective manner. The government can also suggest a favorable acquisition plan in case the required capital is too much for private healthcare providers.

References

Harris, C., Allen, K., Waller, C., Green, S., King, R., Ramsey, W., … Thiagarajan, M. (2017). Sustainability in Health care by Allocating Resources Effectively (SHARE) 5: developing a model for evidence-driven resource allocation in a local healthcare setting. BMC Health Services Research, 17(1). doi:10.1186/s12913-017-2208-1

Lakdawalla, D. N., Doshi, J. A., Garrison, L. P., Phelps, C. E., Basu, A., & Danzon, P. M. (2018). Defining Elements of Value in Health Care—A Health Economics Approach: An ISPOR Special Task Force Report [3]. Value in Health, 21(2), 131-139. doi:10.1016/j.jval.2017.12.007

Masters, R., Anwar, E., Collins, B., Cookson, R., & Capewell, S. (2017). Return on investment of public health interventions: a systematic review. Journal of Epidemiology and Community Health, 71(8), 827-834. doi:10.1136/jech-2016-208141

Parkin D. (2017, May 9). Principles of health economics, including the notions of scarcity, supply, and demand, distinctions between need and demand, opportunity cost, discounting, time horizons, margins, efficiency, and equity. Retrieved from https://www.healthknowledge.org.uk/public-health-textbook/medical-sociology-policy-economics/4d-health-economics/principles-he

Tordrup, D., Chouaid, C., Cuijpers, P., Dab, W., Van Dongen, J. M., Espin, J., … Bertollini, R. (2017). Priorities for health economic methodological research: results of an expert consultation. International Journal of Technology Assessment in Health Care, 33(6), 609-619. doi:10.1017/s0266462317000666