Economics presentation on demand and supply determinants of healthcare industry.

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Information about Economics presentation on demand and supply determinants of healthcare...
Health & Medicine

Published on March 10, 2014

Author: divyangshu



Economics presentation on demand and supply determinants of the healthcare industry and various other macro and micro economics factors.

HEALTHCARE WHAT IS IT ALL ABOUT? Health care (or healthcare) is the diagnosis, treatment, and prevention of disease, illness, injury, and other physical and mental impairments in humans. Health care is delivered by practitioners in medicine, optometry, dentistry, nursing, pha rmacy, allied health, and other care providers. It refers to the work done in providing primary care, secondary care, and tertiary care, as well as in public health.

Consumer ignorance. Government Control. Non-profit motive. Large components of personal service. The uneven and unpredictable incidence of illness. External effects e.g. Herd immunity. Mixture of consumption and investment elements.


Individual/client factors E.g. age, sex, education, occupation Health care resources factors E.g. supply, access, acceptability Environmental factors E.g. physical, economic, social, cultural Prepayment factors E.g. private insurance, tax based health Insurance, national health system, Out of pocket payment DEMAND Health is a consumption commodity—it makes the consumer feel better Health is an investment commodity—a state of health will determine the amount of time available to the consumer for productivity ACCORDING TO MICHEL GROSSMAN, CONSUMERS HAVE A DEMAND FOR HEALTH FOR TWO REASONS

According to this model every one inherits a stock of health when born Health depreciated overtime, however an investment is required to sustain health As peoples’ age advances there is an increase in rate of illness and in the utilization of health services. The stock of health can be sustained by investment to maintain health., such as use of health services and health promoting activities DERIVATION FROM THE GROSSMAN’S MODEL

PRICE With increase in prices of healthcare the demand decreases. PERSON’S INCOME demand for medical care increases with income. STATE OF HEALTH AND QUALITY OF CARE if the state of health decreases demand will increase, COMPLEMENTS two goods which go together, E.g. Optometrist and optical Lenses. SUBSTITUTES other goods which satisfy the same wants, or provide same characteristics, E.g. Generic Drugs and Branded Drugs. TASTES AND PREFERENCES depends upon person’s choice of Medication and Healthcare. INSURANCE increases demand for healthcare if person is insured. FACTORS AFFECTING DEMAND FOR HEALTHCARE

FACTOR INPUTS- No. of beds, Equipments, Staffing, Budget and other such factors impact supply. RESOURCE PRICE with increase in resource prices the supply goes down. NO. OF SERVICE PROVIDERS with increased no. of service providers the supply in healthcare increases. WAITING TIME if waiting time is more the supply is less. GOVERNMENT POLICIES pro health policies like health security bills and other social infrastructural changes like hospitals and health centers impact supply. FACTORS AFFECTING SUPPLY OFHEALTHCARE

FUTURE SCOPE OF HEALTHCARE an efficient system to triage health queries manage patients based on urgency, severity, and available capacity. Furthermore, technology must enable doctors to care for larger patient populations more quickly and without compromising quality of care. Smart dashboards, alerts, reports, automated follow- ups, synchronous and asynchronous communication, data sharing all will become part of a doctor’s “command center” that helps him or her monitor the health of thousands of patients simultaneously. Innovation can expand the “production possibilities frontier” for any capital- and labor-constrained market. The potential impact of technology is immense. For example, of the $1.8 trillion spent annually on healthcare in the U.S., roughly $500 billion is spent on doctor-patient visits alone. Roughly 25 percent of these visits are purely informational (no procedures are performed, and no prescriptions are written) . If technology can efficiently serve patients seeking such visits, annual healthcare costs could immediately and dramatically drop by $125 billion.


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