Health Care Markets - Essay Example

Many health systems use market mechanisms and its related management principles. These principles comprise of competition and incentives as a way of driving reform. This reform has many perceived benefits. The most important of them is perhaps being more consumer oriented. After venturing into the market place as an industry supplying the commodity at a cost, healthcare market has demonstrated increased responsiveness to the needs of the patients and payers, the ability to increase and reduce supply quickly when required, greater efficiency, innovation, and a smart management. The market functions in a specific manner in all areas, but in all of them, the essential criteria are that the market delivers. Healthcare market is governed by the principles of fixed prices and limited margins as opposed to the other commodities in the market place that is being talked about. When talking about healthcare market, however, the essential thing remains the same, the competition. The creation of spare capacity, which is required for competition, carries an appreciable risk of creating supplier induced demand because providers need to make productive use of their assets. This creates an industry to manage demand, preauthorize treatment, review use of services, and many other parameters that pulls healthcare into the marketplace. These add to costs for a relatively low marginal benefit. Too much effort may be put into differentiating products or developing aspects of quality that are important for competition but will add to the costs and may deliver little value to the patients. The origin of today’s healthcare industry and its associated delivery system has developed itself in a stunningly rapid pace with developing technologies and consumer demands that is more akin to consumerism in the market place, where rules governed by supply and demand took precedence over the conventional norms of healthcare. This had further been complicated by rapid advancement of technology and its implementation in healthcare practice that led to investments and competition. Many new diseases have emerged that have complicated the scenario further demanding an approach that can lead to reduction in burden on the government as well as add to the government’s responsibility of catering state-of-the-art care to the citizens. Medicine, hospitals, public health, or managed care, whatever may be the discipline, no discipline would be where it is today, without the discipline of nursing. Medicine would not have reliable colleagues to manage patient care, hospitals would be without qualified personnel to deliver care, and public health departments would lack professional support to monitor infections, teach prevention, and promote health. Nursing has been the core of the healthcare delivery system and industry just as it has been instrumental in the step-by-step development of colleague disciplines. It is evident that the healthcare market is governed by application of economic theories in health and healthcare. Both consumers and producers are viewed as trying to reach an optimum situation such as maximising utility and maximising profits. In healthcare terminology, maximization of utility can be viewed simply in terms of consumer getting the highest levels of satisfaction and benefit from the services provided. Maximisation of profits involves the provider achieving the largest difference between the cost of the service compared with its market price. Macroeconomics involves the study of the entire economics in terms of supply or availability of healthcare services and consumption or demand of it in the population. This is in context of all services, income, use of resources, and the behaviour of the market prices. Thus, if it is healthcare market, macroeconomics looks at these issues on a large scale. Microeconomics on the other hand studies the economic behaviour of individual consumers, providers, and industries. It focuses on smaller-scale issues such as markets and the allocation of resources within a health service. In the UK, expenditure on the provision of National Health Service is steadily increasing with indications that it will continue to do so in the future. The users of the NHS and the service providers may be viewed as agents with a role in the healthcare market. Within this market system, primary care trusts, NHS hospital trusts, clinicians, nurses, allied healthcare professionals, and current and future patients act as economic agents. Providers with their superior knowledge about health and healthcare interventions, therefore, are in a position to influence demand for them. This phenomenon is termed as supplier-induced demand. This is important in relation to healthcare because there is a potential for exploitation on the part of the supplier. This is usually the case in the marketplace with business economics. With healthcare this asymmetry of information plays around in a different manner. A fully informed patient has not always the ability to choose freely from a range of services offered. Often the case is that, SID results in a greater or less use of an intervention, and this level is brought about by the provider. Imperfect information, moral hazard, agency relationship, SID, and externalities may cause market failure, and that is a potential problem in relation to healthcare provision. The automatic outcome of perfect market is efficiency, and market failure is important because it may lead to inefficiency in the healthcare market. This leads to generation of competition. The creation of spare capacity that is required for competition carries an appreciable risk for creating supplier induced demand because providers need to make productive use of their assets. This creates an industry to manage demand. Too much effort may be put into differentiating products or aspects of quality that are important for competition but ass cost and deliver little value to the patient. The impact of competition and markets on the quality of care is contested, and as far as nursing is concerned, it cannot automatically be assumed that quality will improve without supporting policies and regulatory machinery. Competition and market incentives can potentially lead to fragmentation of care and threaten continuity and integration, which are important for patients with long-term conditions. For example disconnecting management of chronic diseases from primary care is associated with poorer outcomes as is applicable to patients with several illnesses. Unique to healthcare market is that new providers carve out more profitable activities and narrow areas of expertise, leaving the remaining services struggling. In contrast to other industries in market place, healthcare increasingly requires collaboration between networks of providers, and it needs learning, experience, and maturity to collaborate with competitors. Markets can speed the adoption of innovation, but quality may suffer if these improvements are not shared because the providers want to protect the competitive edge. Market and target-based systems can, therefore, lead to information being withheld and/or distorted. This is not desirable and possible in healthcare market, since there are ethical standards to follow as mandatory principles on the grounds of accountability. Nursing specifically cannot stop updating themselves or should refrain from learning that can help extending advantages of developments to the clients. Unlike in the market place, healthcare market also must behave differently in another area. Poorly designed incentives are quite common in healthcare market as well as in nursing. The market economy on the other hand is unwilling to pursue any non-profitable venture, and they would stop providing anything that does not fetch profits. In the healthcare market, however, even though unwilling, the providers are forced to provide treatments for relatively high cost or high risk patients and are required to provide full range of treatments. From this analysis, it is evident that healthcare has ventured into the market, and healthcare market behaves in a different manner than other industries as far as the professionals are concerned, especially the nurses. Read More