Effect of Technology on the Cost of Healthcare

¶ … Supply and Demand theory show up in your company's strategies?

In sharp contrast to the need for health care services, demand is associated with the costs of health care services. It is therefore reasonable to suggest that Smith's (2011) assertions concerning the demand for health care increasing if its costs were reduced is accurate, and it also reasonable to conclude that companies of all sizes and types can become more competitive by reducing their costs. Indeed, it health care could be provided cheaply enough, there would be no need for health care insurance because pocket change would cover a visit to the emergency room and no one would have to forego other necessities of life such as food or heat in order to have a prescription filled. According to Smith (2011), "Such a world could only be achieved by changes on the supply side. Health care would have to become cheaper to produce" (para. 3).

The research to date confirms that companies that become complacent in their operations and ignore changes in consumer preferences risk losing market share to their competitors that do, and the health care industry is no exception to this rule. Nevertheless, most consumers do not necessarily want the cheapest health care services that are available, at least for those who can afford it and whose condition warrants expert care. Shopping for a heart or cancer specialist is a far different enterprise than shopping for an alarm clock or even a car or house. In many cases, health care consumers are afflicted with life-threatening diseases and the demand for the best practitioners will continue to outpace supply unless and until innovations in health care technology produce the type of "Star Trek" gadgetry conceptualized by Smith with the "Universal Health App" and consumers become comfortable using these technologies in lieu of a visit to their primary health care provider.

2. Do you agree or disagree with the author's conclusion as to the reason why health costs have not declined? Why?

In truth, Smith makes a number of valid conclusions concerning the reasons health care costs have not declined despite the integration of information and communications technologies (ICT) in virtually all types of health care settings. Certainly, these ICT solutions have provided the health care industry with enormous cost savings by automating previously manual operations and introducing additional securities for the administration of pharmaceuticals and rehabilitative therapies. Despite these innovations, the costs of heath care have continued to skyrocket and many have experienced even greater losses following their implementation of the Affordable Patient Care Act's provisions.