Policy Research of the Healthcare Industry

Economic Theories and Principles 

Economic Disparities 

Economic disparities simply lead to an inequality in health care services. They are described as the differences that are found in the financial well-being among individuals and organizations. Availability of healthcare in a health facility depends on economic disparities. The quality and distribution of health care services is affected by these differences. As a result, the quality of health care is not constant in all health care associations due to a difference in financial wellbeing (Sowell, 2018). In achievement of their goals of maximum profit, healthcare facilities invest in financial programs such as research and receive funds from third parties. 

In an evaluation of the relationship between the financial well-being of an organization and the availability of health care services can be based on two theories; the demand and supply theory or the market socialism theory (Olsen, 2013). To start with, the supply and demand theory influences the patient’s choice and preference. Where the choices of the service or medication that the patient chooses have the same outcome, the patient chooses the most economical choice. Again, the demand and supply theory groups goods by their value and target group. In this case, it applies in that the more fortunate patients go to expensive hospitals for maximum care while the less fortunate go to hospitals they can afford. For most healthcare organizations, they provide private care to target clients with high-income levels who are ready to settle their bills instantly. For the less fortunate, insurance schemes are set for them to make medical care more affordable. As for the market socialism theory, the public, cooperatives or social ownerships form the framework of market economy. This is utilized by organizations where they socialize with the public in a direct manner in order to coordinate their health care and medical programs within their societies. 

Economic Theories 

The most important economic theories that can be applied to health care are the classical management theory and the economics and systems theory 

Classical Management Theory 

In classical management theory, there is a belief that employees and workers have only physical and economic needs. Moreover, the need for specialization of labor, policy formulation and maximization of profit is advanced by this theory. When applied to health care, management and decision-making can be improved (Onday, 2016). Each management team has its own purpose and obligations. The highest team level is comprised of the senior management. It consists of the Chief Executive Officer and board stakeholders who are responsible for the long-lasting obligations for the health care facility. Next, supervisors set organizational goals based on the estimated expenses. At the lowest level are the employees. They run the daily operations in health care and include the nurses and doctors under contract. 

Economics and Systems Theory 

The economics and systems theory is one of the most important doctrines within the health care industries. Its application, it views the industry as a whole entity with many subsidiaries that are interworking with each other to achieve the common goal of quality health care. Therefore, through the activities of the subsidiaries, economic systems theory is applied to promote service delivery, developments and connections within the organization. In the eventual process, leaders within the organization are able to set a vision that is essential to the interconnected systems. In this way, it fulfills the profit based obligations of the organization (Thompson & Valentinov, 2017). 

Why Organizations Utilize Economic Principles to Guide Strategic Short-Term and Long-Term Decision Making 

In the process of defining its direction, an organization needs to apply economic principles that will guide decision making to implement strategies for long and short term purposes (Olsen, 2013). In the immediate sense, organizations need to use the principle of trade-offs to monitor their spending of finances in implementing their services such as health care. Monitoring the financial spending enables the organizations to prioritize on the services that they should offer first before others. Therefore, by following the trade-off principle, organizations are able to make decisions on the most important services of implementation (Olsen, 2013). The management and risk teams of healthcare associations acknowledge the challenges in forecasting weaknesses that may be detrimental to the operation of the organization. As a result, the trade-off principle is utilized in decision-making in order to distribute resources to the operations of the healthcare organizations in order of the most important to the least important. 

Economic principles provide a logical framework that is utilized during decision-making (Olsen, 2013). In long and short term planning, supply and demand, market competition and service availability are analyzed. The management of an organization and other economic experts come up with tested concepts that can increase demand and supply in the organization and reduce competition making the achievement of objectives easier. In the near and long future, an organization achieves its goals through formulation and implementation of these decisions. 

For-Profit and Nonprofit Organizations 

For-profit organizations are those that aim at maximizing profit levels and forward the benefits to the management and ownership of the organization (Zou, 2018). In contrast, non-profit organizations are primarily driven by the motivation of focusing their benefits on the society instead of profit maximization. 

Financial Differentiation 

In the first place, for-profit and non-profit organizations are different in terms of funding. For-profit organizations fund their operations through loans obtained from banks, investors and their own sales. However, non-profit healthcare organizations get funded through donations from private sectors and organizations, government grants and sponsorships. Moreover, the financial difference between the two organizations is due to their purpose in health care. Although all organizations have specific economic purposes that they serve, they may differ from others. For-profit organizations have a variety of goals in healthcare distribution but their primary objective is to maximize profits by increasing efficiency in gaining more capital from their medical services. As a way of maximizing profits, for-profit organizations offer private care to target clients with high-income levels and are ready to settle their bills instantly. Contrary, non-profit affiliations are concerned with the enhancement of societal cause as their priority as opposed to increasing financial gains (Ranger, 2018). 

Economic Differentiation 

Their economic difference is due to their policies of employment and taxation laws. The workforce of a for-profit healthcare facility is utterly different from that of a nonprofit healthcare. In for-profit health care corporations, the dominant members of the workforce are paid, employees. Interns are also part of the labor force of for-profit organizations and have a freedom to being salaried (Ranger, 2018). For-profit organizations seek to remain in the frontline in employing competent doctors and nurses. They then offer them suitable employment benefits that are satisfactory so as to increase their working morale. Contrary to this approach, non-profit healthcare organizations rely heavily on volunteers to provide services of the organizations. In terms of legislation, the registration and taxation of the two groups of healthcare organizations are different. In the United States, non-profit organizations not taxed by the federal government and are at liberty of providing services to the societies for goodwill. However, for-profit healthcare organizations are monitored by the federal government and must pay taxes as provided by the federal law. 

Policy, Changes and Disparities 

Economic Policy and Disparities in Care 

The relationship between economic policy and disparities in care is; in the two instances, education is the key factor in health inequalities. Educational policies were imperative for the improvement of education in addition to the spreading of finance in the United States. Disparities in health care among Africans were very costly to the private insurers and investors according to the WHO research in 2009 (Sowell, 2018). In order to stabilize the economy, the eradication of health care disparities is the best option that can be implemented. Differences in health care services are the major cause of economic burden reducing the efficiency of the services that patients receive (Sowell, 2018). 

In terms of differences, economic policies and disparities are not constant in the treatment and diagnosis of acute and chronic diseases (Sowell, 2018). Due to a rise in social statuses, discrimination in terms of race, origin, and influence is common in the societies. People who are considered to be of lesser status get low standard health care services. In particular, the low-income groups and those discriminated through race are in danger of getting access to poor health care due to lack of insurance. Furthermore, job creation and securing of insurance cause differences in health care. While an increase in job opportunities raises the cost of healthcare, insurance terms are put in place to lower the cost of health care. 

Policy Changes 

In consideration of the impacts of legislative changes on health care economic policies, the overall influence of the private insurance sectors and federal governments can be assessed. Advancement in technology and enactment of health acts has led to the redistribution of finances in the healthcare industry through federal initiatives. To start with, the implementation of the Affordable Care Act (Obamacare) and the Medicare Modernization Act led to a better regulation in the remuneration of medical care services. In the objectives of the Affordable Care Act, it was to emphasize on the importance of insurance schemes on the improvement of medical care of the American population (Katz, 2014). The federal government enacted legislation that required all the Americans to secure health insurance. Insurance schemes eased the access to medical care as it was made more affordable. 

Disparities Planning 

Disparities in care which are figured in healthcare strategic planning have created a wide opportunity in the improvement of medical care and delivery. For instance, the Medicaid insurance has been very influential in medical care for a large patient population by providing initiatives for patient care and payment. Societal status influences health care depending on the occupation, residence and societal influence of the patient. Education and job creation are the major factors that have propelled health care delivery and availability to the patients (U.S Department of Human and Health Services, 2018). Healthcare facilities understand the problems that would emanate from health disparities in the community. In general, the healthcare industry is driven by organizational goals in their mission and vision statements. The most common goals are: offering quality care, maximizing profits and satisfying the community of patients. Nonetheless, they are driven by the values of honesty, integrity and equality. As a result, there are competent measures that are enacted by the management bodies of these hospitals and facilities in order to reduce high mortality and morbidity rates suffered by patients especially the less fortunate. 

References 

Katz, M. S. (2014, October 26). Is the Affordable Care Act Working? The New York Times , pp. 13A-14B. 

Olsen, J. A. (2013). Principles in Health Economics and Policy (2nd ed.). Oxford: Oxford University Press. 

Onday, O. (2016). Classical to Modern Organizational Theory. International Journal of Business and Management Review, 4 (2), 15-59. 

Ranger, L. (2018, August 2). More Healthcare Professionals Choose Employment with Organizations Over Self-Employment. The Medical Bag , pp. 28B-29A. 

U.S Department of Human and Health Services, (2018, July 7th). HHs Disparity Action . Retrieved August 8, 2018, from U.S Department of Health and Human Services: https://minorityhealth.hhs.gov/omh/browse.aspx?lvl=2&lvlid=10 

Sowell, T. (2018). Discrimination and Disparities . Washington: Basic Books. 

Thompson, S., & Valentinov, V. (2017). The Neglect of a Society in the Theory of the Firm. A Systems-Theory Perspective. Cambridge Journal of Economics, 41 (4), 113-118. 

Zou, D. (2018, July 17). For-Profit pyramid Healthcare Buys Walden. Somd News , p. 5B.