Economic Tools Concepts Paper Write a 1 050 1 400 word paper economic tools concepts evaluate a current issue 'situation exists todays health care industry Some examples economic tools concepts 'supply demand curves marginal analysis elasticity

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Economic Tools Concepts Paper

There are many aspects to consider when researching healthcare industry/medical laboratories. As the conditions change and new information becomes available, one can easily realize that this industry has many components that drive it.

Prices

As demand for laboratory services is rather inelastic, laboratories can establish prices as they deem appropriate. Reimbursement for services is limited, however, by contracts which the laboratory holds with various healthcare plans (Daron 2008). These healthcare plans, including Medicare and Medicaid, will negotiate reimbursement fees with the laboratory that are lower than the laboratory's usual and customary fees (Eddy 2007). The laboratory agrees to accept the reimbursement received from the health plan as payment in full. Laboratories are often forced into contracting with the large health plans in its area because referring clinicians will often not send specimens to the laboratory for processing unless the contracts exist (Daron 2006). Because the reimbursement from the health plans is often very low, the laboratory must find other ways to recoup its expenses and make a profit. Unfortunately, the net result of this situation is that patients with no insurance generally end up paying the highest costs for laboratory services. This scenario is one that plays out in all areas of healthcare (Anna 2005).

Price Elasticity of Demand

Price elasticity of demand is the percentage of change in quantity demanded divided by the percentage change in price. (Anna 2005) An upper level manager in the laboratory industry would use this to see how sensitive the demand for a product can be affected by a price change. We will talk about the affects current price elasticity of demand has on the laboratory industry and where the price elasticity of demand may be going if the current trend stays the way it is (Eddy 2007).

According to Moffatt the formula for price elasticity of demand (PEoD) is "PEoD = (% Change in Quantity demanded) / (% Change in Price)" (Daron 2008). The continue increases in the cost of medical laboratories has made it very sensitive for consumer. An example from the laboratory industry is the Hemoccult Fecal Occult Blood Slide Test, which measures the amount of blood a patient may have in a stool. Normally this test…[continue]

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"Economic Tools Concepts Paper Write A 1 050 1 400 Word Paper Economic Tools Concepts Evaluate A Current Issue 'situation Exists Todays Health Care Industry Some Examples Economic Tools Concepts 'supply Demand Curves Marginal Analysis Elasticity" (2011, April 08) Retrieved July 1, 2015, from http://www.paperdue.com/essay/economic-tools-concepts-paper-write-a-1-50397

"Economic Tools Concepts Paper Write A 1 050 1 400 Word Paper Economic Tools Concepts Evaluate A Current Issue 'situation Exists Todays Health Care Industry Some Examples Economic Tools Concepts 'supply Demand Curves Marginal Analysis Elasticity" 08 April 2011. Web.1 July. 2015. <http://www.paperdue.com/essay/economic-tools-concepts-paper-write-a-1-50397>

"Economic Tools Concepts Paper Write A 1 050 1 400 Word Paper Economic Tools Concepts Evaluate A Current Issue 'situation Exists Todays Health Care Industry Some Examples Economic Tools Concepts 'supply Demand Curves Marginal Analysis Elasticity", 08 April 2011, Accessed.1 July. 2015, http://www.paperdue.com/essay/economic-tools-concepts-paper-write-a-1-50397

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