The disease distribution has increased globally. Thus, the trend has progressed from communicable disease to non-communicable disease. This change comes along the increase in life expectancy. These lead to a steep increase in disease burden on the government's economy. But on the other hand, the overspending of the government on health also aids in increasing the burden of disease instead of reducing it, according to the concept of supply induce demand. This paper aims at illustrating the role of economics in healthcare from a health perspective, and address the effective use of economics in both health and healthcare. As such, the paper aims at developing, or directing the effective economic models, theories, and assumptions that can be used to develop a compelling economic model for the healthcare industry .
One of the models that could come in handy for the healthcare industry would be one of the Non-stochastic models. These models can either be qualitative, or quantitative or a combination of both. This makes it more convenient because it is more effective as far as the rationalization of financial variables and the specific forms of functional relationships between variables are concerned. This makes it effective in handling both the quantity and quality of healthcare. In the medical industry, use of non-stochastic models quantifies the rationale of using drugs for the best of the patient without underdosing or overdosing the patient (Murray & Lopez, 1997). Unrationed use of drugs in the medical industry has led to increased incidences of disease progression and drug resistance. The rate of adherence to the pharmaceutical prescription due to increased quantities in the volume of the prescriptions has significantly reduced (Schmitt-Grohé & Uribe, 2003). This has overburdened the government in the provision of quality healthcare to its citizens. The medical industry has tried coming out with combined drug formulations to help reduce on the volume of the drugs and the level of adherence. This has significantly reduced the disease burden of the nation per se. But as far as quality is concerned, it gives a rationale of tracking the effectiveness of the mechanisms in place, ensuring that in as much as the quantity of health care is regulated; the quality is held at a high value .
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As far as the non-stochastic models are concerned, it offers a variety of theoretical frameworks that could come in handy in developing mechanisms. One such theory is the social choice theory. This provides a theoretical analysis of combining individual opinions, preferences, interests, or welfares to reach a collective decision or social welfare in some sense. The reason why I consider the theory more useful is the fact that it takes into account the opinions of the general society, including the patients and the healthcare providers, thus formulating a strategy that cuts on both the patients (quality) and the healthcare provider (quantity). The hospital would be more concerned with implementing a cost-effective plan which would include cutting down on the number of supplies. On the other hand, the patients would be more interested in getting access to high-quality health care services, especially when the government is the party that has to bear the costs. Thus this theory and policy takes into account the expectations of both parties and tries to come up with solutions that are considered of high quality and cost-effective at the same time. As opposed to such models, there are theories and assumptions that consider one desired outcome (either quantity or quality) at the expense of the other (Sen, 1986). This approach in both model and method is broader and open to possibilities, hence are more effective and flexible enough to adapt to possible future changes, both in the nature of diseases, and the manner in which healthcare services are dispensed.
Another dimension of the healthcare dimension is the fact that the health network to date has continued to grow horizontally focusing more on adding beds, physicians and patients. The healthcare industry may try to measure its success according to the number of patients it receives, and the number of medics available to treat these patients. To ensure the vertical growth of the industry, there has been a steady flow of mergers, acquisitions, or joint ventures with strategic alliances to transform the healthcare markets across America. Giving rise to health networks to ensure growth in size, geographical reach, and economic power. As such, there are economic assumptions that come in handy as far as the role of economics in healthcare is concerned. These assumptions would be termed as the principles of health economics. These include the notion of scarcity, supply and demand, distinctions between need and demand, opportunity cost, discounting, time horizons, margins, efficiency, and equity. Health economics is one of the many disciplines that may be used to analyze issues of health and health care, primarily as one of the sets of analytical methods that are labeled Health Services Research (Folland, Goodman, & Stano, 2007). It is also one of the many topics to which economic principles and techniques can be applied. To adequately understand this approach, I consider one analytical method in economics: production, resources, scarcity, and opportunity cost. The resources used to render health care are finite, and only more of them can be used to create and deliver health care, yet the society’s wants for healthcare have no bounds. Since even in the healthcare industry there cannot be enough resources to satisfy all the needs and wants, there is the need of choosing which needs are met, and those that are not met, hence the need for a clear guideline; economics.
References
Folland, S., Goodman, A. C., & Stano, M. (2007). The economics of health and health care (Vol. 6). Upper Saddle River, NJ: Pearson Prentice Hall.
Murray, C. J., & Lopez, A. D. (1997). Alternative projections of mortality and disability by cause 1990–2020: Global Burden of Disease Study. The Lancet , 349 (9064), 1498- 1504.
Schmitt-Grohé, S., & Uribe, M. (2003). Closing small open economy models. Journal of international Economics , 61 (1), 163-185.
Sen, A. (1986). Social choice theory. Handbook of mathematical economics , 3 , 1073-1181.
