ECONOMICS ISSUES IN HEALTH SERVICES

Economics issues in health services

Abstract

Hospitals daily face competitive environments in which not only other hospitals but also their own medical staff providers often pursue competitive interests (e.g., inbuilding their own surgery centers and thereby pulling market share from the hospital). As professionals, health care leaders are going to find themselves faced with even more competition in the years ahead. They work in a world in which the tax exemption that favors them brings with it the cost of providing community benefits to the poor and needy in the community—and increasing pressure from community leaders to do so. They face increasing shortages of key personnel and growing demands among a public that is reaching deeper into its pocket to pay for medical care and correspondingly bringing higher expectations to the care setting. While leading in the turbulent times of the last decade, and facing a new decade of even more intense environmental pressures, hospital leaders are compelled to bring a strong sense of values and vision to their practice. This chapter will address some of the issues and promises that are the environment in which the health care leader functions—at whatever level of responsibility that leader is found in the hospital.

Economics issues in health services

Introduction

Economic issues in health services hinder an individual's ability to access basic healthcare facilities and services. These hindrances increase the costs associated with accessing healthcare and may also prevent an individual from gaining necessary chronic, preventive, or acute health care. Economic issues in health services can eventually increase the costs of care from both the societal and individual perspectives by increasing the probability of an individual becoming ill, increasing the severity of illness, or both, thereby increasing the health services resources needed to treat the illness. In addition, by reducing the quality and quantity of care provided, they decrease an individual's stock of health capital (Daschle, 2008).

The “New” Consumer

The evolving role of consumers in taking more responsibility for their health and the consequent rise of consumerism in health care have created the need for a shift in the way in which health care executives think about their customers. Compelled to reach deeper and deeper into their pockets to cover the cost of care, customers are more knowledgeable and bring higher expectations to their medical care experience. Effective leadership entails a move away from physician-centric operations to consumer-centric practices, from passive models of customer service to active models, one that measures success from the patient's perspective—which typically is focused on the health care experience.

Much of consumerism is being driven by the high cost of health care. Payment programs and employer benefit plans require more and more consumer financial participation in the cost of care through increased deductibles and copays. Increasing numbers of major employers are establishing consumer-directed health care programs, which are designed to provide each employee with a given annual amount of money that is placed into a health care account. The corollary health benefit insurance plan then places high deductibles ...