Technological Solutions Health Economics Questions What Are

Technological Solutions Health economics questions What are the two basic tools of economics? Give an example of each with respect to health, medical services, and hospitals. The two basic tools of economics are marginal analysis and optimization techniques and supply and demand analysis. Marginal analysis and optimization techniques underline the fact that economics is the science of studying scarce resources. Only though setting specific criteria when deciding how to use scarce resources can costs be minimized and outputs be maximized.

In the field of healthcare such analysis is particularly critical, given that hospitals must often make decisions about what types of technology to spend money on and which types of specialists to hire, based upon the needs of the population. Health insurance agencies are famously criticized for refusing to cover specific procedures because they deem less costly measures to be equally effective, even if the patient or his or her doctor feels otherwise.

Finally, one problem which may arise is that an organization may ineffectually use data when making decisions about resources, such as using data from the organization's past which fails to take into consideration new technology. The second tool is that of supply and demand analysis. Organizations try to predict whether supply or demand will increase when making decisions about pricing and offered services. For example, new technology can create more demand for treatment of formerly untreatable conditions at a hospital.

A decrease in the supply of nurses can force the organization to reallocate its resources and try to attract more new nurses. Deciding how much flu vaccine will be needed requires the organization to specifically anticipate a level of supply. And even health insurance organizations must anticipate demand of their neediest policyholders, which will hopefully be offset by less of a need for care from customers who are healthy. Q2.

What are the various purposes that prices serve? Can you provide an example of how a particular purpose of price has affected an organization you are familiar with? There is little secret that healthcare costs are rising. Prices in an economic sense should reflect the costs of production and the demand for the product. However, the healthcare market is structured differently than conventional markets. "Technological advances go hand in hand with productivity gains in most industries, but in medicine, better technology almost always means higher expenses" (Arnst 2008).

Technology is more expensive, but in healthcare, having a better screening device will not necessarily reduce costs. In fact, it might increase costs because this means that cancer can be found and thus must be treated in patients earlier and earlier than ever before. While many Americans still do not have health insurance or are under-insured, patients that do have comprehensive plans tend to over-consume what they need, given that they are not subjected to the need to pay for their benefits given of their employer-provided health insurance (Arnst 2008).

Thus, if the patient's insurance company pays for screenings that may or may not be necessary, the consumer is likely to take such tests, rationalizing that there is no harm or financial cost in not doing so. This increases the potential rate of false positives and encourages overconsumption of procedures of dubious value to the patient.

Healthcare organizations may find themselves, because of cost pressures, thus offering more procedures and treatments for patients that are likely to have insurance (such as ageing baby boomers) and ignoring the needs of patients who do not or who have Medicaid, which traditionally reimburses doctors at a much lower rate than private insurance. Q3. Show how an increase in the quantity of medical care consumed can be achieved through either a demand or supply subsidy. What are the advantages and disadvantages of general vs.

targeted demand and supply subsidies? If patients receive subsidies for antibiotics and flu shots, they are more likely to get such treatments. It is not uncommon for pharmacies to offer antibiotics and flu shots for free. As price decreases, demand goes up. (Lower cost flu shots and expanded coverage of flu shots is one reason why there have been shortages of the inoculation in recent years).

It is also fairly easy to measure the efficacy of such subsidies to justify them from year to year, if rates of illness go down. However, there are problems with such strategies. They do not address chronic issues that give rise to ill health which can be detected with comprehensive wellness exams which the working poor may not be able to afford if they do not have insurance.

Antibiotics may actually be over-consumed because people assume that they need one every time they feel sick, even if they likely have a virus. There is no financial disincentive not to give an antibiotic a try. Even the flu shot is not a panacea: it does not treat some of the underlying conditions that may make someone more susceptible to respiratory infections, such as asthma.

Targeted demand and supply subsidies thus focus on a single public healthcare issue that is gaining popular attention, even though the chronic healthcare conditions that actually cost the public more (such as obesity) remain untreated. Diabetes, heart disease, and lifestyle-related illnesses are difficult to eradicate with a 'silver bullet' like a vaccine or a pill. They require consistent dialogue between patients and their providers, and for the patient to take holistic, radical health measures to improve his or her diet and exercise habits.

But the best way to address such concerns from a medical perspective (much less the psychological and economic components of obesity) can be challenging, and thus it is much easier to have targeted interventions, even if their overall impact upon the health of the public may be less significant in the long-term, than would a decline in obesity. Even more broadly-targeted health subsidies, such as providing healthcare to specific populations such as the elderly or children can be problematic.

Despite current concerns over government-provided medicine, at present there is effectively government-provided and government-subsidized medicine for certain groups, including the poor through Medicaid and the elderly.