Select terms from this week’s readings and discuss how these terms compare to each other in the world of health care economics. Some examples of terms are resources, quality, technology, and costs.
Write a 750- to 1,050-word paper that is a comprehensive comparison of these terms.
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Health Economics and Financing, 5e
Chapter 1: Health Economics and Financing, 5e
ISBN: 9781118184905 Author: Thomas E. Getzen
Copyright © John Wiley & Sons, Inc. (2013)
The economics of our world are changing at a fast pace. Health care leaders must monitor political agendas, fiscal challenges, and other world economic events, all of which impact the health care industry. Some of the current issues impacting U.S. health care economics are the current presidential election, consumer health behaviors, resource scarcity, and an unanticipated high number of local and world catastrophic events (Hurricane Katrina, Iraq War, etc.). These current economic issues have the potential to change health care services delivery in many ways including the cost of services, access to services, and a general shift in demand for services.
“The overall cost of health care — everything from hospital and doctor bills to the cost of pharmaceuticals, medical equipment, insurance, and nursing home and home-health care — doubled from 1993 to 2004, said the report from the Centers for Medicare and Medicaid Services” (Kaufman & Stein, 2006, p.1). In the United States, per capita spending on health care is increasing. In 2007, the United States spent $2.3 billion, or 17 percent of GDP, on health care, translating to $7,556 per person annually. In 2007 the United States had approximately 46 million people or 16 percent of its population uninsured (Getzen, 2007). With rising costs and more and more individuals not able to pay for health care services, health care economics are taking priority for many health care leaders.
According to a study on rising costs in healthcare by the Robert Wood Johnson Foundation, several key issues were identified. These issues include the following:
• Health insurance is becoming increasingly difficult for workers or employers to afford.
• U.S. spending on health care (as a percentage of Gross Domestic Product) is more than six percentage points higher than the average for other developed countries.
• Technology (not demographics or medical malpractice) is the key driver of health spending, accounting for an estimated half to two-thirds of spending growth.
• Other important drivers of health care spending include poor health status (i.e., obesity). (Ginsburg, 2008)
This course will focus on the application of macro and micro economic tools to conduct analysis of the impact of changes in the health care industry. The contents of this health care economics class include topics such as: demand management; concepts of efficiency, production, and distribution of health care services; impact of regulation and reimbursement; and economic incentives in health care. You will begin to build a foundation of economic principles and a strong knowledge base related to the economic impact on health care. The application of these economic principles will be discussed as they relate to a variety of health care business models.
THIS WEEK IN RELATIONSHIP TO THE COURSE AND THE PROGRAM
During Week One, you will be focusing on key economic terms. It is important to understand key terms to apply the concepts correctly in any health care setting. Some key terms include:
1. Economics – is the study of the forces between supply and demand and the impact they have on allocation of scarce resources. Economics can be subdivided into two categories one is microeconomics and the second category is macroeconomics.
a) Microeconomics – looks at the behaviors of businesses, consumers, government, etc.
b) Macroeconomics – looks at the impact of inflation, industrial production, unemployment, etc.
1. Demand – the amount of product that a buyer is willing and able to buy at a specified price.
2. Variability – the extent of random changes over time.
3. Supply – the amount of product that a producer is willing and able to sell at a specified price.
Week One will introduce students to the skills of discussing and analyzing the impact of current local, national, and international economics in the health care environment. This analysis covers many aspects related to health care including resource allocation, supply and demand for services, consumer trends, political changes, etc. Students will gain a foundation of economic principles, such as how to differentiate between the balance of funding and economic resources, and will continue to build on this fundamental knowledge each week.
HINTS FOR A READING STRATEGY OF THE ASSIGNED MATERIALS
Whenever you start out in a new subject area, part of the initial task is to become accustomed to the terminology and key concepts. This week’s reading assignment helps familiarize you with economic terms, principles, and concepts.
Part of the reading for this week includes information about national health care economic trends and the impact on society. It is important to consider current political, fiscal, and international events that are impacting health care services. In addition, it is essential that you begin to form your own opinions related to health care spending and future resource allocation with continued rising health care costs.
SOME QUESTIONS TO ASK AS YOU HONE YOUR CRITICAL THINKING
As you read the material, create “why” and “what” questions that will sharpen your ability to apply these concepts. Start asking: What economic characteristics can change health care delivery? Other questions you might ask while reading includes: If I were an economist or was managing a new health care organization, how would economic updates and information help me meet objectives or enhance revenue capture? It might also be helpful to think of situations in which you have participated that can illustrate some of the ideas mentioned in the readings.
As you review your readings and discuss the impact of economical events of health care service delivery, think of the following critical thinking questions:
1. What are the trends in health care spending, both historically and projected for the future?
2. Are health care costs too high, or are we simply expecting more health care services as consumers?
3. How does U.S. spending on health care compare among regions within our nation and with other developed nations?
4. With the current state of the economy, do you anticipate continued growth in health care spending? Why or why not?
5. What are some short-term suggestions to slow health care spending?
Economic trends can impact the characteristics and the strengths and weaknesses of an organization’s fiscal foundation. Your learning during this course will better prepare you as an economist.
In summary, Week One will provide you a broad knowledge of health care economics in which to build upon over the next six weeks. This foundation is meant to stimulate interest in researching concepts and trends related to economic pressures or changes impacting the health care delivery system. Your constant diligence on monitoring economic changes will assist you as a leader in health care to ensure your organization adapts to these changes appropriately. This course is designed to enhance those critical thinking skills necessary to interpret the economic dynamics in our country and abroad.
America may finally be coming to grips with the health system’s runaway costs. The coming economic difficulties may help, both by forcing politicians to rise above petty politics to pay attention to serious issues like health reform—and by limiting the menu of options they have for pursuing such reform.
Getzen, T. E. (2007). Health economics and financing. (3rd ed.). John Wiley and Sons, Inc., Hoboken, NJ.
Ginsburg, P.B. (2008, October) High and rising health care costs: Demystifying U.S. health care spending. The Synthesis Project, Issue 16. Robert Wood Johnson Foundation; Princeton, NJ.
Kaufman , M. & Stein, R. (2006, January). Record share of economy spent on health care. Washington Post Staff Writers; The Washington Post Company.
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