Implications of Health Economic Concepts for Healthcare
Introduction
Health economics is a type of economics that is concerned with the matters that are related to the effectiveness, efficiency, behavior, and ethics in the production and consumption of healthcare and health. It is important since it helps to establish the needed health improvements and lifestyle patterns. This is done through interactions with individuals, healthcare providers, and clinical environments. These interactions help to promote healthy lifestyles and positive health outcomes. Health economic concepts help to determine the various problems found in healthcare and how they can be addressed.
According to Babalola (2017), health demand is an economic concept that refers to giving up any possession to get the desired quality service. In case all the other components are consistent, an increase in the cost of a service will lower the demand and a decline in the price of a service will grow the demand. The demand in healthcare is on the rise and the most contributing factor is the increased pervasiveness of diseases that could be preventable and the substandard utilization of resources. When resources are used in some type of way, they are not available to develop another service and therefore the benefits are foregone. Individuals have to allocate resources to produce and consume health. The choices consumers make influence these factors. Consumer’s lack of living a healthy life and preventing chronic diseases leads to a bad use of the healthcare scheme and has led to increased costs. Factors that impact healthcare demand include, prices, consumers, supply, governmental influence, and the income
Supply is a concept in economics that illustrates the number of a certain service that is accessible to consumers. Supply is determined by the demand, the competing services, and the price. According to Babalola (2017), demand and supply in healthcare are linked up together since in this case, the service provider is the determiner of the service that a sick consumer deserves. This may result in a conflict of interest in a case where the service provider may want to make a profit and so they ask the consumer to have many unnecessary tests which make them pay more than they should have.
Everyone prefers to be healthy rather than being sick and this is where the healthcare demand originates, the wish of a consumer to be healthy Babalola (2017). The health measures concept is used to ensure that the value of money is obtained by considering the cost-effectiveness of the provision in healthcare. The demand in healthcare is relatively inelastic. Elasticity is low in healthcare since it is of major importance in life and therefore the demand is slightly affected by price changes. Price elasticity usually changes depending on the service being offered. The cost is a concept that affects the demand for health services and its impact on the health services demand is higher than the cost. When factors that influence demand are steady, the income elasticity is used to measure the effect of the changes in income on the amount of demanded services.
Economic evaluations by healthcare professionals and decision-makers enable decisions to be made with ease Snoswell, Smith, Scuffham, & Whitty, (2017). This is in terms of the different types of healthcare provision, the strategies, and the delivery of new services and interventions. To enable the existing services to be compared with the new services, economic analysis is important to evaluate the cost and benefits that are connected to the different services. This is important, not only in terms of healthcare efficiency but also for the value of money. For healthcare professionals and decision-makers, it is important to understand and apply economic methods to promote productivity and the sustainability of healthcare.
Healthcare delivery is complex and financial challenges are among the problems that face the healthcare system. The Future of the Public's Health in the 21st Century (2002) states that the systems that fund, organize and deliver healthcare work to frustrate the organizations that ensure effective strategies to quality patient care. It is important to consider that many parts of the healthcare system are economically sensitive. Insurance plans and companies fight to survive in healthcare which is a very competitive market. The disparities among the insurance plans in either being eligible, beneficial, the compensation policies among other attributes create confusion and managerial burdens for the consumers and the providers.
Government involvement in healthcare plays a major role in ensuring great quality and value in healthcare Straube (2013). Through financing, making policies and regulations of government programs, quality healthcare delivery for consumers has been influenced. The promotion of preventive services has been influenced by the government. This has enlightened people on how the prevention of diseases is effective and saves costs. Government involvement in healthcare ensures that consumers get affordable and quality services. It has ensured consumers have access to insurance coverage. To get healthcare compensation with better quality and value, value-based purchasing and gain sharing programs are used.
According to Liaropoulos & Goranitis (2015), the government uses taxes and labor contributions to fund for health care systems. Financing is the process used to mobilize, accumulate and allocate money to cover the health needs of the people together and as an individual. The role of financing is to ensure that funding is available and to place the correct financial motivations for providers to enable all consumers to have sufficient and effective public and personal healthcare. The public health systems that are financed through taxation are more effective in economic expense consolidation and are responsive to economic pressures. General taxation to meet healthcare needs can lead to economic growth.
The involvement of the private sector to provide healthcare includes activities that are performed by non-governmental sectors. Private sector involvement ensures the provision of healthcare, financing and the supply of healthcare-related items intending to achieve universal healthcare coverage. According to Hallo De Wolf & Toebes (2016), private sector involvement in healthcare may include activities from other nongovernmental institutions to help and ensure the delivery of a good health system. These activities from the different institutions include the manufacturing of health care goods and services such as medicine and rehabilitation. They provide direct healthcare and help to manage healthcare organizations and also provide financing for healthcare products and services. These activities are even made possible in public healthcare systems. When the government is not capable or is not willing to provide healthcare services, the private sector ensures the provision and effective delivery of healthcare.
Conclusion
Healthcare is an economic activity whereby people and organizations put their time and investments. Economic concepts help to explain the decisions which consumers make regarding their health and healthcare. In many cases, consumers try to increase their benefits while they reduce the costs of services or goods. Health economics help to enlighten on the performance of individuals, healthcare providers, the public and private institutions and the government while making decisions.
References
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