Healthcare practice is affected by a variety of economic issues which impact patient care and treatment and overall decision-making in the practice setting. This is further exacerbated by the development of strategies which impact resource allocation, the recruitment of staff members and physicians, the costs of specific care services, and different tests required for care and treatment. There must be a greater emphasis on economic concepts to better understand the dynamics of healthcare and to be proactive in working towards models which impact healthcare delivery in different settings. The true measure of healthcare is not the care that is provided, but the outcomes that are achieved by providers (Hicks, 2014). Therefore, it is important to acknowledge this concept and to be mindful of the risk factors that must be addressed during healthcare delivery from an economic perspective that could impact patient care quality. The challenges of healthcare include the economic limitations of care and treatment which are exacerbated by the rising costs of procedures and hospital stays, and this requires an evaluation of the key concepts which drive healthcare practice to the next level and support a framework for achieving successful outcomes. The following discussion will address some of these objectives in greater detail and will emphasize the importance of economic value in healthcare practice and how to best deliver care and treatment under specific cost parameters which has a positive impact on patient outcomes.
The concept of risk shifting is particularly prominent in today’s healthcare practice because this involves the purchase of health insurance to cover the costs of many healthcare services required by a physician (Hicks, 2014). Patients without health insurance may face major risks of losing their savings in some cases because the costs of healthcare are excessive, and at the same time, the costs of insurance premiums are also unaffordable and skyrocketing for many customers (Hicks, 2014). This level of risk is also placed upon the insurance provider, who assumes the risk of carrying customers who may have preexisting conditions or who require extensive care and treatment for a variety of conditions, thereby complicating the willingness of insurers to cover these persons out of fear of losing profits (Hicks, 2014). Although the current law states otherwise and insurance companies cannot discriminate on the basis of preexisting conditions, these laws could be changing and could impact how patients receive care going forward, thereby creating a situation in which a healthcare provider cannot offer the same level of value to the consumer (Hicks, 2014).
Another economic issue to consider is the cost of activities, whereby the services provided by healthcare employees typically come at a high cost, as noted in the $814 billion spent in the United States annually on hospital care (Hicks, 2014). Costs may be direct or indirect and reflect the differences between true expenditures (direct costs) and other resources needs, such as electricity, space, lighting, etc. (indirect costs) (Hicks, 2014). Furthermore, social costs are described as the costs of healthcare that burden society due to illness and disease, thereby creating an environment in which there are significant costs attributed to urgent and chronic healthcare needs (Hicks, 2014). Healthcare costs continue to rise and create many challenges for healthcare providers and consumers in different ways, thereby creating a significant burden on individuals and society which impact decision-making and other inputs at the practice level (Hicks, 2014).
The demand for healthcare continues to grow, due in part to older adults living longer lives, along with increased prevalence of many chronic diseases, such as diabetes and hypertension. Each of these issues requires ongoing medical treatment in some form and leads to additional costs when obtaining these services, either out-of-pocket or via insurance premiums. With respect to the older adult population, there is likely to be an increased need for a workforce that is specialized and appropriate in treating this population at different levels, including primary care (Dall, Gallo, Chakrabarti, West, Semilla, & Storm, 2013). This reflects the importance of meeting the demand for these services for older adults through expanded programming and other tools which are designed to improve primary and preventive care (Dall et al., 2013). These findings suggest that the healthcare workforce must also evolve and create new opportunities for healthcare workers in specialized fields to accommodate the demand for services and to be cognizant of the factors which impact decision-making and long-term care for these patients (Dall et al., 2013).
The evolution of technology has a significant impact on the economics of healthcare practice because it demonstrates the importance of creating value through innovative practices and tools which drive healthcare practice to the next level and create opportunities for growth and development that may have lasting benefits for healthcare organizations and for patients (Groves, Kayyali, Knott, & Kuiken, 2016). From this perspective, it is evident that the concept of “big data” drives healthcare economics in many ways and creates new opportunities to evaluate the effectiveness of specific treatments under some conditions, recognize patterns which cause readmissions, and create new tools to improve the use of healthcare information (Groves et al., 2016). From this perspective, there are significant issues related to data collection that may have a positive impact on the economics of healthcare practice and create new alternatives to improve patient care (Groves et al., 2016).
Finally, healthcare consumption is a significant issue with many implications for providers and patients because human capital investment is required due to a high rate of consumption of healthcare activities (Hicks, 2014). The consumption of different forms of healthcare activities is driven by the need for healthcare services in different areas, such as the emergency department, which drives consumption to the next level and requires further evaluation to prevent frequent re-hospitalizations (Edgren et al., 2016). Furthermore, healthcare consumption appears to be unequal in some respects due to ethnic and racial disparities among patients, thereby creating the need for additional research and insight to determine how these differences impact decision-making for patients and long-term implications for healthcare practice (Essink-Bot, Lamkaddem, Jellema, Nielsen, & Stronks, 2013). These are important concerns from a healthcare perspective and require a greater understanding of the risk factors that patients face relative to their healthcare needs and drive the demand for services, along with the consumption practices of patients, in a variety of ways.
The healthcare industry faces critical challenges and opportunities for improvement that are necessary to achieve greater sustainability and economic growth. These issues are driven by the rising costs of healthcare, the insurance industry and the premiums which are charged to the consumer, the demand for healthcare services due to an ever-changing and diverse population, the consumption of healthcare services at high levels, and the need for additional insight regarding innovations and data collection practices in healthcare. It is important for providers to continue seek ways to improve cost containment and control and to be cognizant of the risk factors that they face in managing the healthcare needs of a diverse population. These efforts are important in advancing the practice setting and in recognizing the value of patient care and treatment for all persons. At the same time, greater cost efficiency must be achieved to ensure that the populations who require healthcare services can receive them in a timely manner and without the exorbitant costs associated with these practices.
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- Groves, P., Kayyali, B., Knott, D., & Kuiken, S. V. (2016). The big data revolution in healthcare:
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- Hicks, L.L. (2014). Economics of Health and Medical Care, 6th Edition. Burlington: Jones and Bartlett.