It is a persons personal decision on the time they feel it is appropriate for them to visit a doctor. They come up with such decisions to prevent illness, when they feel sick, or if they are in a scheduled operation. The steps in coming up with this decision are very complicated in the health industry as compared to other consumer purchases. These resolutions are made after taking opinions from different people, friends, health care practitioners or family members. Looking at potential benefits as well as risks of the procedure and the opportunity cost of taken to acquire medical care (Mengiste, 2011).
Issues affecting health care demand services
Cost of medicines or treatments
A higher health care demand is directly proportional to the cost of providing the service. However, Gertler & Hammer (1997) asserts that it is considerably less proportionate when compared to other consumer services or goods. The demand curve for health care services has a downward-sloping feature just like the demand curve for other products and services. It means that like any other product, the health care demand responds to changes in prices charged. The significant impact of health insurance is to reduce the money one gets out of their pockets to acquire the services. Health care consumers pay for services up to a level where the marginal gain of the item is just the same as the resources spent. Thus, health insurance acts as an incentive for consumers to use health services that have a small value albeit the full cost of duty is amply greater.
Needs of the Consumer
Consumers of health care use the available resources at their disposal to purchase the health services. These consumers have different alternatives on how to spend their resources, but they have to make a choice. When they go for health services, it means that they highly value it to the extent that their health will be improved. Thus consumers go for health care when the value for health is alleged to be important.
Individual behavior of a consumer
Changes in attitude towards health affect the demand for the services. For instance, magazines, media, movies or commercials may change one's preference for aesthetic surgery. Moreover, advancement in medical science has made consumers ascertain that there is a cure for almost all ailments. Subsequently, consumers would favor purchasing larger quantities of medical services at any given fee.
Importance of understanding the health care demand services among consumers
Recognizing the health care application services will enable users to appreciate the logic behind the pricing of health care products. The consumers also get awareness in the health care market hence lowering asymmetry of information.
The cost structure for the delivery of health care services
Effect of different markets on cost of health care
Insurance companies have sprung up to help meet some of the health care costs hence most of the services are provided at low prices regarding money. Consumers have a sufficient demand which results to minimal expense on offering medical services. Underutilization of health care in the rural areas due to small demand leads to an increase in the marginal cost. The result is a hike cost of health care (Rice, 2009).
Effect of specialized services on the cost of health
The supply curve shifts downwards due to the high costs of resources which are basic in the provision of health care. Changes in technology are the biggest cost explaining increased spending in health care. There is a great advancement in equipment such as those for surgery and diagnosis which is costly. Salaries, wages and costs related to these equipment raises medical costs to a higher margin (Kaiser Family Foundation, 2007).
Differences between specialized service centers and traditional hospitals
A traditional hospital is aimed at providing short-term health care to patients with severe health issues occurring from genetic abnormality, injury or disease. It is usually opened throughout the week and works on a 24-hour basis. It picks physicians in different specialties, several medical technicians, skilled treatment staff, and health care administrators with specialized apparatus to provide care to people with chronic and acute health conditions.
Specialized services, on the other hand, are meant to give mostly specific services to the public. An example of this is the nursing home. Nursing homes are meant for patients who need regular care but do not need to go to the hospital and cannot be afforded that care at their homes. It is usually connected with the older people who require custodial care in a housing facility (Top Masters in Healthcare Administration, (n.d.).
Objective of for-profit and non-profit health care service providers
Both non-profit and profit heath providers have at least the same mission under regulations provided which is to ensure value in the health care. However, for-profit health care providers add a particular aspect to the mix: generating income for investors. This additional constituent grants the health care provider a culture that adds a different flavor that is not present in nonprofit counterparts.
Why consumers have to understand the cost structure
There is an absolute market failure due to information asymmetry. The ability consumers of healthcare understanding cost structure are a step towards full market statistics. Understanding cost structure also facilitates clarity of the prices, effectiveness, value, and costs of providing health care goods and services which are a major instrument in improving outcomes and lowering costs (Shea et al., 2007).
Sources of Healthcare spending
Trend of health care costs
Over the years, the health care growth rate has exceeded the population, inflation, and GDP in the United States. From the early 40s to the late 90s, the per capita increase in health care spending changed from around 3.7%-6.7% in 1960s-1990s. Likewise, the allocation of Gross Domestic Product budgeted costs for health care grew from around 3.9%-12.2% in the early forties to nineties. In 2005, expenditure on health was approximate $3 trillion, equivalent to $7,000 per capita (16% of GDP) (Catlin et al., 2007).
Impact of technology on health care costs
Technology may impact negatively or positively on health depending on the particular technology in use. However, on average, progresses in technology in the health care sector have contributed to a rise in health care spending in the U.S.
Benefits of knowing consumers the primary sources of health care spending
As mentioned before, users need to lower the existing gap in information that exists in the health care market. Understanding sources of health care spending by consumers is a step towards full market information (Shea et al., 2007).
Payment sources and mechanisms in the health care industry
Primary sources of payments
Other than out-of-pocket costs and private insurance, the government (federal, state and local) pays the medical expenses (above 50 percent). The taxpayers generate the amount paid by the government.
Impact the government has on payment sources for health care services
The government being the single biggest entity paying so much of the revenue for an industry, it has a significant influence in the industry. It is competent of determining and relocating the health care market significantly. For instance, the government has major effects on compensation to providers, particularly through Medicare. Also, the state, through ACA exchange plans, acts as a point of reference for private operators, which has a possibility of causing a series of effects in defining prices charged by service providers (Troy, 2015).
Value derived by consumers when they know payment sources for health care services
As mentioned earlier, understanding the financing in health care helps reduce information asymmetry. Therefore, understanding sources of payments for health care services will assist in facilitating transparency.
Catlin, Aaron et al. (2007). National Health Spending In 2005: The Slowdown Continues. Health Affairs, January/February, p. 142-153
Gertler, P. and Hammer, J. (1997). Strategies for Pricing Publicly ProvidedHealth Services. Policy Research Working Paper 1762. World Bank, Washington, D.C.
Mengiste, F. (2011, December 20). Demand for health care. Retrieved from http://www.slideshare.net/Fasika-Mengiste/demand-in-health-care
Rice T, Unruh L. (2009). The Economics of Heath Reconsidered. 3rd ed. Chicago: Health Administration Press.
Shea K, Shih A, Davis K. (2007). Health care opinion leaders views on the transparency of health care quality and price information in the United States. 2007. Retrieved from http://www.commonwealthfund.org/usr_doc/Shea_HCOLtransparencysurveydatabrief_1078.pdf?section=4039.
The Henry J. Kaiser Family Foundation. (2007, May 2). Snapshots: How Changes in Medical Technology Affect Health Care Costs. Retrieved November 11, 2016, from http://kff.org/health-costs/issue-brief/snapshots-how-changes-in-medical-technology-affect/
Troy, T. D. (2015). How the Government as a Payer Shapes the Health Care Marketplace / American Health Policy Institute. Retrieved from http://www.americanhealthpolicy.org/Content/documents/resources/Government_as_Payer_12012015.pdf
Top Masters in Healthcare Administration. (n.d.). 5 Types of Health Care Facilities. Retrieved November 11, 2016, from http://www.topmastersinhealthcare.com/lists/5-types-of-health-care-facilities.
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