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Economics of healthcare
Economics of healthcare
Cost containment strategies in healthcare and profitability pdf
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The healthcare industry is very complex and is contentiously changing. There are many key elements that affect healthcare policy. One of those key elements is cost. When the price of a gallon of gas or a pound of hamburger rises, consumers can anticipate how the increase will affect what they have left to spend on other goods. It is far less obvious to consumers how increases in health care costs hit their pocket book. In the past several years, medical spending has risen faster than inflation and the economy as a whole. The reason for this is due to high deductible health plans, providers rising operating and regulatory costs, employers desire to offer a health benefit while managing their own costs, and the opaque pricing and payment
Without question the cost of medical care in this country has skyrocketed over the last few decades. Walk into an emergency room with an earache or the need for a few stitches and you’re apt to walk out with a bill that is nothing short of shocking.
The U.S. spending on health care is an outlier compared to other industrialized countries. On an individual basis heath care in the U.S is approximately double what other industrialized countries spend. On a total spend basis, the $3 trillion currently consumed in this sector represents the world’s fifth-largest economy. This high spending on healthcare is unsustainable in the long term. Businesses, individual consumers, and the government are consequently not insulated from the shrinking economic growth due to the ramifications of the high healthcare costs. In a global competitive market the U.S. business will lag behind other industrialized countries unless these high healthcare costs are curtailed. In addition, individuals, even those with insurance face the grim prospect of bankruptcy due to the high cost of care.
Module two deals with external influences in healthcare administration and the conflicts that may cause lack of growth in the organization. External influences can range from society, stakeholders, staff, and patients. Health administrators should be in agreement with staff and physicians to maintain proper ethics and safety for everyone. Society has a big influence of healthcare organizations with spending their money towards health insurance, medication, treatment services and exams. As long the healthcare organization has a well reputation built on trust, then consumers will spend on that healthcare organization. The stakeholders that take part in external influences on ethics are the vendors, technology specialists, maintenance, insurance
For the last five years of my life I have worked in the healthcare industry. One of the biggest issues plaguing our nation today has been the ever rising cost of health care. If we don't get costs under control, we risk losing the entire system, as well as potentially crippling our economy. For the sake of our future, we must find a way to lower the cost of health care in this nation.
The United States (U.S.) has a health care system that is much different than any other health care system in the world (Nies & McEwen, 2015). It is frequently recognized as one with most recent technological inventions, but at the same time is often criticized for being overly expensive (Nies & McEwen, 2015). In 2010, President Obama signed the Patient Protection and Affordable Care Act (ACA) (U. S. Department of Health & Human Services, n.d.) This plan was implemented in an attempt to make preventative care more affordable and accessible for all uninsured Americans (U.S. Department of Health & Human Services, n.d.). Under the law, the new Patient’s Bill of Rights gives consumers the power to be in charge of their health care choices. (U.S. Department of Health & Human Services, n.d.).
However, our system is based on money. The more money you have to spend, the better medical services you will receive. ?According to the Bureau of Labor education at the university of main (2003), America spends more money oh health care than any other nation, "$4,178 per capita on health care in 1998?, compared to the average of $1,783. (BLE., 2003, p.23). Still an estimated "42.5 million Americans are living without health insurance", which prevents them from receiving medical treatment. (Climan, Scharff, 2003, p.33). The numbers of un-insured Americans continue to rise. Tim Middleton (2002) states, ?insurance premiums grow at a rate greater than wages,? when you have a low-income job. (¶ 9). With our current economy recession, taxes are rising and small business employers are unable to purchase health plans for their employees. Employees are realizing that they are unable to gain insurance from their jobs and beginning to speak out about the high price of health care.
Healthcare is one of the most dynamic industries in our great nation. To truly understand just how dynamic the industry is, one needs to understand that healthcare in and of itself is a living, breathing industry that is ever changing and conforming to meet the ideals set forth from a broad group of stakeholders. When one looks at the evolution that healthcare has undergone in the past 165 years, the picture of the true dynamics of this industry is painted. One must take this evolutional history into account when looking at the next ten years in our industry. When looking at these evolutional processes, one can see that the systems have changed as our country and its people have required it to (Williams & Torrens, 2008). When looking at how this industry will change or evolve over the next decade, one can ascertain that it will be by the demands of those involved that change will come.
Formed in 1998, the Managed Care Executive Group (MCEG) is a national organization of U.S. senior health executives who provide an open exchange of shared resources by discussing issues which are currently faced by health care organizations. In the fall of 2011, 61 organizations, which represented 90 responders, ranked the top ten strategic issues for 2012. Although the issues were ranked according to their priority, this report discusses the top three issues which I believe to be the most significant due to the need for competitive and inter-related products, quality care and cost containment.
In order to make ones’ health care coverage more affordable, the nation needs to address the continually increasing medical care costs. Approximately more than one-sixth of the United States economy is devoted to health care spending, such as: soaring prices for medical services, costly prescription drugs, newly advanced medical technology, and even unhealthy lifestyles. Our system is spending approximately $2.7 trillion annually on health care. According to experts, it is estimated that approximately 20%-30% of that spending (approx. $800 billion a year) appears to go towards wasteful, redundant, or even inefficient care.
American people look at their insurance bills, co-pays and drug costs, and can't understand why they continue to increase. The insured should consider all of these reasons before getting upset. In 2004, employee health care premiums increased over 11 percent, four times more than the rate of inflation. In 2003, premiums rose 10.1 percent and in 2002 they rose 15 percent. Employee spending for coverage increased 126 percent between 2000 and 2004. Those increases were lower than expected. (National Coalition on Health Care, 2005, Facts on health care costs). Premiums have risen five times faster than workers wages, on average. If medical spending continues to rise by just two percent more than personal income, by 2040 Medicare and Medicaid would hit 18.5 percent of the gross domestic product, leading the federal deficit to be 20.7 of the gross domestic product. (Melcer, R., 2004, St Louis Post-Dispatch, Rising Costs of healthcare pose huge challenges).
Since the 60s, government budgets have been influenced by the need to finance healthcare especially the cost of Medicare and Medicaid benefits. According to CMS’ National Health Expenditure Projections , total health care expenditures have grown by an average of 2.5 percentage points faster per year than the nation‘s Gross Domestic Product. For about 60 percent of workers who receive some form of health care coverage from their employers, the cost of their health insurance premiums and out-of-pocket expenses have increased significantly faster than their own wages; and between 1999 and 2008, both average health insurance premiums and out-of-pocket costs for deductibles, co-payments for medications, and co-insura...
Healthcare is a dynamic, ever-changing environment. The complex circumstances around daily conversations that encompass life-threatening decisions are critical. In order to deliver high quality care, individuals must be able to communicate effectively. In the perfect world of communication, everyone receives the exact same information and is able to respond the exact same way. Unfortunately, communication breakdown is a prevalent issue among hospitals. On any given day of the hospital arena, multiple interactions take place. Some of the dialogue is planned, and some is not. While hospital departments are living in different silos within the same organization, the cultures may vary among the employees. Hospital leadership fosters the importance of collaboration within the organization and depends on the employees to ultimately drive the process. In order to overcome communication barriers in the workplace, conversations must occur. Engaging in daily face-to-face meetings with employees increases positive work culture, morale and overall productivity.
I also know that the issue hangs in the balance of our elected leaders while citizens and providers sit and wait. We wait and we wait and we wait some more. Meanwhile, my personal health insurance coverage has increased by a little more than 300% per month in the last 24 months with a higher deductible and less coverage. I repeat, 300% increase PER MONTH just for the premium. This does not include the higher copays for office visits and never mind the gargantuan annual deductible. Many of my peers have chosen to forego coverage due to this. American citizens who are electing to decline coverage because of these costs are being penalized by a tax because of that choice. How is it possible to be taxed on something because you can’t afford it? Alternatively, some people are choosing to accept the penalty because it’s more economical for them. So basically, you’re darned if you do and darned if you don’t. There are rumbles in the health care community about physicians and providers no longer wanting to provide care or closing their practices altogether. I personally have experienced this. One of my physicians close her private practice merely because it costs more to keep her office open than what she was being reimbursed for by insurance. Additionally, I have experienced many patients over the recent years that have had to cease having treatment or not receive the full extent of their treatment plan because they can’t afford it. It is
Competition among health care providers: helpful or harmful? According to Barros, Brouwer, Thomson, & Varkevisser, 2016, competition in health care provoke reactions with some for and against. The advocates of competition believed, this competition will essential value of market-based resource allocation and potential to correct the failures of government regulation. The advocates expect competition to give people what they want in the least costly way possible.
The cost of US health care has been steadily increasing for many years causing many Americans to face difficult choices between health care and other priorities in their lives. Health economists are bringing to light the tradeoffs which must be considered in every healthcare decision (Getzen, 2013, p. 427). Therefore, efforts must be made to incite change which constrains the cost of health care without creating adverse health consequences. As the medical field becomes more business oriented, there will be more of a shift in focus toward the costs and benefits, which will make medicine more like the rest of the economy (Getzen, 2013, p. 439).