Healthcare Economics – A Journal Entry

Question: Discuss about the Healthcare Economics for A Journal Entry. Answer: Healthcare economics deals with the efficient financial management of healthcare, and the effective functioning of healthcare systems and the influence of habits and behaviors affecting health. Viewing healthcare as a service, it also involves the analysis of the demand and supply of healthcare, and the mechanisms of its monitoring and evaluation at the bigger picture.(Wiseman, 2011) The factors that decide the impact of healthcare economics are the stakeholders of health, namely the healthcare beneficiaries, the healthcare providers, the management staff and the investors, in the order of benefit by the service. Five main principles in economics and their relevance in healthcare are discussed below. Scarcity Given that there is a limited quantity of resources actually available, even though the quantity of resources desired is much higher, the concept of scarcity occurs. In order to bridge the gap between the desired and the available resources, there must be effective utilization of resources. For example, during resource scarcity, the resources needed to build a hospital with advanced infrastructure can be cut down, to provide for availing better technology in medicine.(Feldstein, 2012) Supply and demand Analysis of supply-demand chin in healthcare is a bit complex, as the product is not a material commodity, but a service, or rather a much desirable physical and mental state. Demand in healthcare denoted the individuals intentions and actions to maintain good health, or in other words to invest on the health capital. This invariably leads to increase healthcare production by the providers, thus aiming to achieve equilibrium in the healthcare economics. Margin Healthcare margin is defined as the efficacy of the change in the healthcare scenario by slightly altering the decisions made on a particular issue. For example, if changes made in the allocation of the healthcare budget, such as purchasing a new advanced diagnostic device altogether would make the marginal cost high whereas reducing the allocation from infrastructure management to the purchase of medical devices would lower the marginal costs. Marginal benefit is the extra benefit gained by altering fund allocation. Efficiency Efficiency is the ability to produce good results by employing as minimal resources as possible, and utilizing them to their complete capacity. In healthcare, efficiency is achieved by applying the use of optimal resources at optimal costs, and by calculated allocations in each sector.(Scott-II, Solomon, McGowan Jr., 2001) In a hospital set up, the efficiency of services can be managed by proper utilization of services, avoiding hospital readmissions by ensuring patient compliance, etc. Equity Equity is defined as the availability of resources to the people who need them. For example, healthcare resources must be made available to all the consumers irrespective of their differences. Equity differs from equality with respect to fairness; the latter mandates an equal share to all stakeholders while the former mandates more share to the most deserving. The concept of equity is an important factor in the allocation of the healthcare budget.(Parkin, 2009) A calculated application of economics in healthcare is essential for providing healthcare, for preventive measures, for research purposes, and in emergency situations. Bibliography Feldstein, P. J. (2012). Health care economics. Cengage Learning. Parkin, D. (2009). Principles of health economics (including the notions of scarcity, supply and demand, marginal analysis, distinctions between need and demand, opportunity cost, margins, efficiency and equity). Public Health Action Support Team CIC. Scott-II, D. R., Solomon, S. L., McGowan Jr., J. E. (2001). Applying Economic Principles to Health Care. Emerging Infectious Diseases , 282-285. Wiseman, V. (2011). Key concepts in health economics.