Introduction What is definition and law of supply Factors determine supply for health care services Factors determine price & quantity of health care What is the production function for health Market equilibrium Investing in the healthcare sector Cost production in healthcare Different healthcare system Models of non-profit agencies References

1. Faculty of Medicine
HealtH economics
Supply of Health and
Medical care

2. March, 2017
Contents
Introduction 2
What is definition and law of supply? 4
Factors determine supply for health care services 5
Factors determine price & quantity of health care 6
What is the production function for health 7
Market equilibrium 9
Investing in the healthcare sector 16
Cost production in healthcare 18
Different healthcare system 24
Models of non-profit agencies 26
References 29
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3. Introduction
Health economics is one of several disciplines that may be used to
analyze issues of health and health care, in particular as one of the set of
analytical methods labeled health services research. But from an
economics point of view, health economics is simply one of many topics to
which economic principles and methods can be applied. As Morris, Devlin
and Parkin (2007) put the definition: Health economics is the application
of economic theory, models and empirical techniques to the analysis of
decision-making by individuals, health care providers and governments
with respect to health and health care. Involving ’contestability’ to provide
some competitive pressures for efficiency.
Healthcare is classified as a merit good because consuming it provides
benefits to others as well as to the individual consumer. For example,
inoculation against a contagious disease provides protection and clearly
generates a private benefit as well as an external one, to those who are
protected from catching the disease from those who are inoculated.
However, few would want inoculation only to protect others. Therefore, the
demand for healthcare will be less than the socially efficient.
Economics analyses markets mainly through what is called price theory. A
market brings together the demand for goods from consumers and the
supply of those goods from suppliers. Consumers and suppliers base their
buying and selling on the price that they have to pay or will receive. Price
therefore acts as a signal to both groups as to what they should do in the
market.
The demand for health care can be analyzed as if it were any good or
service, but it has peculiarities that may mean that the usual assumptions
about the resource allocation effects of markets do not hold. Moreover, it
may well be that people wish resource allocation to be based on the
demand for health or the need for health care, neither of which can be
provided in a conventional market.
The supply side is the component that provides the goods and services,
so effectively this is the element that brings things to “market” for which
the consumer or demand side reacts.
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4. Special features of health care services pose challenges to the typical
supply model for other products. Three notable aspects include the
complexity of product, complexity of organization, and specialization of
input markets.
Specifically, product complexity involves the joint combination of goods
and services that have interdependent effects on health outcomes.
Furthermore, difficulties in objective evaluation of health care occur
because assessments of health quality may be subject to provider and
consumer opinions. Complexity of organization stems from the overlap of
institutions and markets that act as health care suppliers, and the
specialization of input markets is suggestive of the supply-side barriers to
market entry from professional regulations.
As a result, economic analysis more frequently interprets supply behavior
according to the inputs of health production function. Input bundles may
include traditional costs of labor and capital (physical or human), with
information limited to the amount of such data available from developing
countries.
How many firms are there supplying to a market and how do they behave
with respect to setting prices and output and making profits. There are two
well-known theoretical extremes of market structure. Perfect competition
has very many firms in the market so that none has any real economic
power, none makes any profits, prices are as low as they can be and
output is as high as can be. A monopoly has only one firm, which has
great market power, makes as large profits as can be had and has higher
prices and lower output. Other models are somewhere in between. The
behavior of some health care organizations, such as pharmaceutical
companies, providers of services like dentistry, ophthalmic services and
pharmaceutical dispensing and for-profit insurance companies can
relatively easily be analyzed using these models. It may be more difficult
for other organizations.
Within the healthcare industry, the supply chain associated with
pharmaceutical products is critical in ensuring a high standard of care for
patients and providing adequate supplies of medication for pharmacies. In
terms of cost, it is estimated that supply accounts for 25-30 percent of
operational costs for hospitals.
Therefore, it is essential that this is managed effectively to ensure both
service and cost objectives are met.
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5. The development of new technology, new treatments, and new drugs
increases ability to supply, but at the same time encourages demand to
such an extent that demand substantially exceeds supply. This creates
long waiting lists and shortages of hospital beds. A privatized health care
system would allow prices to rise to reflect the true cost of supply.
What is 'Supply'?
Supply is a fundamental economic concept that describes the total amount of a
specific good or service that is available to consumers. Supply can relate to
the amount available at a specific price or the amount available across a
range of prices if displayed on a graph. This relates closely to
the demand for a good or service at a specific price; all else being equal,
the supply provided by producers will rise if the price rises because all firms
look to maximize profits.
What is the 'Law Of Supply'?
The law of supply is the microeconomic law that states that, all other
factors being equal, as the price of a good or service increases, the quantity
of goods or services that suppliers offer will increase, and vice versa. The
law of supply says that as the price of an item goes up, suppliers will
attempt to maximize their profits by increasing the quantity offered for sale.
BREAKING DOWN 'Law Of Supply'
The chart below depicts the law of supply using a supply curve, which is always
upward sloping. A, B and C are points on the supply curve. Each point on
the curve reflects a direct correlation between quantity supplied (Q) and
price (P). So, at point A, the quantity supplied will be Q1 and the price will
be P1, and so on.
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6. Factors determine supply for health care services :
Innumerable factors and circumstances could affect a seller's willingness or
ability to produce and sell a good. We can list some supply shifters. The
following are exogenous determinants of supply; in other words, factors that
are held constant underlying the supply curve. The supply curve denotes
the relationship between the price of the output and the quantity supplied of
the output at the specified prices. Output price is considered an
endogenous determinant of supply. Some of these factors are :
• Technological change:
As technology improves for producing a healthcare product, the goods
become cheaper to produce. Certainly, technological changes that make
products more costly without improving quality are ignored. As the product
becomes cheaper to produce, suppliers are willing to offer more for sale at
a given price. This increases supply, thus shifting the supply curve to the
right.
• Input prices:
If the wages of physicians were to rise, this increase in an input cost
would result in suppliers’ willingness to offer as much for sale at the
original price. The supply would decrease, shifting the curve to the left.
• Prices of production-related goods:
The price of a good related to production, such as a rise in the price of
radiology services, also would be relevant. Because physicians can use
radiology for diagnosis as well as treatment, this will cause the supply to
decrease, thus shifting the supply curve to the left.
• Size of the industry:
As more firms enter the market, the supply of the product will be greater.
Therefore, entry of firms will cause the supply curve to shift to the right.
• Weather:
For a number of products, acts of God such as weather will tend to affect
production. The direction of the effect is obvious: good weather increases
supply.
• Expectations:
Sellers' expectations concerning future market conditions can directly
affect supply.
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7. • Government policies:
Government intervention can take many forms including environmental
and health regulations, hour and wage laws, taxes, electrical and natural
gas rates and zoning and land use regulations. These regulations can
affect a good's supply.
If the price of a good changes, there will be movement along the supply curve.
However, the supply curve itself may shift outward or inward in response to
non-price related factors that affect the supply of a good, such as
technological advances or increased cost of materials.
What factors determine the price and quantity of
health care?
Suppose we want to explain why health care is more expensive in the
United States than in Europe, Supply and demand offers two possible
answers.
The prices can be high because demand is high. For example, if the
demand curve is further to the right in the United States compared to
Europe (part [a] of Figure 1 ), this implies—all else being equal—higher
prices in the United States. The other reason for high prices is because
supply is limited. If the supply curve in the United States lies further to the
left than the supply curve in Europe part [b] of Figure 1 , then this also
would imply—all else being equal—higher prices for health care in the
United States.
Figure 1 Two Explanations for Why Health Care in the United States Is
More Expensive Than in Europe.
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8. Figure 1partA Figure 1part
Unfortunately, the health-care consumer often has very little idea of the
value of the particular treatment being received. The consumer is very
often not paying the full price for that treatment because the cost is
frequently covered, by insurance.
The supply side is problematic. First of all, some health-care suppliers
have significant market power. It is trickier to compare the price of health
care across countries because we have to consider differences in market
power as well. The standard economic approach presumes that firms seek
to make as much profit as possible, but government or not-for-profit
hospitals may not have profit maximization as their goal.
Health-care prices are not necessarily determined by supply and demand,
the government has a significant influence on prices, even if they are not
set by the government, prices may be determined by bargaining between
hospitals and drug companies rather than by supply and demand.
What is the production function for health?
A production function identifies how various inputs can be combined and
transformed into a final output, this is a technical point, like any firm, the
supply of health care is dependent on the inputs. Typically we classify inputs
into two categories, capital and labor.
The parallel in health care for capital include the hospital or clinic
itself, beds, diagnostic and treatment devices, operating rooms, stock of
pharmaceutical drugs, and research and development (R & D) equipment
etc. And for labor, we have the physicians, nurses, administrative
officers, R& D staff and sanitary workers.
The cost to the firm or government in providing the health care
institution will determine the final price. For public health care, it would
depend on their budget allocation, and tax revenues. Although in much of
the health care provision is provided for by the government in Canada,
there are some aspects of it that are private such as pharmaceutical
companies, and laws that determines property rights determine their
supply.
Similarly, health technology is guided by those laws. Organizational
Structures: Depending on the structure, whether they be privately
operated hospitals, government/public hospitals (which makes up almost
all hospital in Canada, England and Wales.) and not-for-profit hospitals,
the objectives may be different, and consequently their supply.
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9. Note that being a not-for-profit hospital does not preclude the
organization from earning profits, but rather it eliminates the residual
claimants to the profits, i.e. the shareholders. Final Product Price: Like in
your Introduction to Economics class, the supply of a product is
ultimately determined by the final prices prevailing. The higher the price,
the greater the profit, and the greater the supply. However, if the industry
is truly competitive, the extraordinary profits would bring about greater
entry driving down prices.
The supply of health care can be approached in a similar way as the
demand for health care. Suppliers include hospitals, which provide health
care directly, and medical equipment and pharmaceutical companies,
which provide inputs to the healthcare production process. The supply
side of the market is heavily dependent on theories of how firms behave
—this concept is often called the theory of the firm (Morris et al., 2007)
Figure 2, shows an upward sloping supply curve for office visits.
It illustrates, for example, that physicians would be willing to offer ten
office visits if the price were $90 per visit. At a higher price, say $100,
more visits would be offered.
Figure 2: supply of office visits
In any market, including the market for healthcare services, there is a
direct relationship between price and quantity supplied. That is, as price
increases, the quantity offered for sale in the market will increase. Several
other underlying factors affect the position of the supply curve, shifting it
to the left or right as noted previously
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10. We assume that osteopaths want to maximize their profits. What are
profits and how can they be maximized? Osteopaths earn money
(revenue) by selling their services e.g. by massaging away muscular
strains. Out of this revenue they need to pay for the factors they use to
produce the treatment (costs) e.g. pay their receptionist, pay the rent or
pay for a new ultrasound machine. Profit is the excess of revenue over
costs.
Changes in Equilibrium:
• Market equilibrium : A situation where the price in a given
market is such that the quantity demanded is equal to the quantity
supplied.
There are four basic causes of a price change:
1- Demand shifts to the right: An increase in demand shifts the demand
curve to the right, and raises price and output.
2- Demand shifts to the left: A decrease in demand shifts the demand
curve to the left and reduces price and output.
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11. 3- Supply shifts to the right: An increase in supply shifts the supply
curve to the right, which reduces price and increases output.
4- Supply shifts to the left: A decrease in supply
shifts the supply curve to the left, which raises price but reduces output.
Seeking to maximize profits leads each osteopath to want to sell more
care at higher prices. There is a reliable and predictable positive
relationship between price and quantity supplied. This positive
relationship is shown graphically by the supply curve. If the price
changes there is a movement along the supply curve (Figure 3)
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12. Figure 3 The supply curve for osteopathy treatments
SS is the supply curve for treatments. At price P′ osteopaths are prepared
to sell Q′ treatments. When the price rises to P″ osteopaths are prepared
to sell Q″ treatments.
If the level of factor costs change (e.g. nurses wages go up or rent
becomes less expensive) then the supply curve will shift (Figures 4 and 5)
Figure 4 Nurses’ wages rise
SS is the initial supply curve for treatments. Now nurses’ wages rise,
pushing up osteopaths’costs. Osteopaths react by being prepared to
supply less treatment at each price. The supply curve shifts inwards to S
″S ″. At a price such as P ″osteopaths are now only prepared to sell Q ′
treatments rather than Q ″.
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13. Figure 5 Rent falls
SS is the initial supply curve for treatments. Now rents fall and
osteopaths react by being prepared to supply more treatments at each
price. The supply curve shifts outwards to S ′S ′. At a price such as P′
osteopaths are now prepared to sell Q″ treatments rather than Q′.
We can now put the demand and supply together to get a picture of the
market for osteopathy. This is shown by Figure 6. Notice that there is
only one price at which the quantity of treatments people want to buy is
the same as the quantity the osteopaths want to sell. This is called the
equilibrium price (P ′on Figure 6). Equilibrium means a state of rest
where there is no pressure for change.
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14. Figure 6 The market for osteopathy treatments DD shows how many
treatments consumers wish to purchase at each price while SS shows
how many osteopaths are prepared to sell. Q ′, P ′are the equilibrium
quantity and price.
Source: Green (1995)
At any other price either buyers or sellers are dissatisfied and act to
change the price. Figures 7 and 8 illustrate this. If there is excess demand
consumers bid up the price while if there is excess supply sellers cut the
price. Both these processes continue until equilibrium is reached. So the
free interaction of buyers and sellers in the market automatically leads to
a single price at which the quantity traded ‘clears’ the market i.e. the
quantity supplied equals the quantity demanded.
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15. Figure 7 Excess demand At P ′ consumers demand Q but osteopaths are
only prepared to supply Q ′. Excess demand leads to the price being bid
up to P ″.
Figure 8 Excess supply At P osteopaths wish to sell Q but consumers
only wish to buy Q ′. Excess supply leads to prices being cut to P ″.
Source: Green (1995)
• How the market responds to a shock?
A shock is anything which moves a market out of
equilibrium. Suppose people’s incomes rise: how will the
osteopathy market react? Figure 9 illustrates this situation.
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16. This process will occur whenever there is a shock leading to
either a shift in demand or supply.
Figure 9 Impact of increase in income on market for osteopathy
DD and SS are the initial demand and supply curves and P ′/Q ′ is the
initial equilibrium. The increase in income shifts the demand curve
outwards (DD to D ′D ′) reflecting the fact that osteopathy is a normal
good. This shift in demand throws the market out of equilibrium. Now
people want to buy Q treatments at price P′ but the osteopaths are still
only prepared to sell Q ′. The result is excess demand and unsatisfied
buyers who react by ‘bidding up’ the price. The market regains
equilibrium at price and quantity P ″/Q ″.
Changes in Equilibrium
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17. Investing In The Healthcare Sector
The healthcare sector is made up of many different industries – from
pharmaceuticals and devices to health insurers and hospitals – and each
has different dynamics. Investments in this sector are affected by many
variables, including positive trends related to demographics and negative
trends related to reimbursement.
Healthcare investing requires a multifaceted approach to understand
the underlying drivers. Investors can profit from investments in both
the overall sector and/or its industries. This article will detail the
differences among the various healthcare industries and which metrics
investors should follow before making an investment.
Trends in the Healthcare Sector:
When deciding on a healthcare company in which to invest, keep the
following prevalent trends in mind. Changes to or continuations of these
trends can have implications for a variety of areas within the healthcare
sector.
Positive trends include:
• The aging population
• People living longer with chronic disease
• Obesity and diabetes epidemics
• Technological advances
• The global reach of disease
• Personalized medicine
Negative trends include:
• A single-payer system
• Expenditure as an increasing share of gross domestic product
(GDP)
• The uninsured
• Cost controls
• Consumerism
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18. Investing in healthcare stocks can provide generous returns,
but it is also tedious due to the many factors affecting stock
prices. The healthcare sector is vast, and there are many
large and small companies to choose from in various
industries. To help ease the burden.
Take One Pill and...
Pharmaceutical and biotech companies both manufacture "drugs", but
differ in how those drugs are created. Pharmaceuticals are generally
considered small chemical compounds that easily pass through
barriers or membranes in the body, while biotechs are considered large
protein compounds that have trouble passing through membranes
These companies often spend a significant percentage of revenue on
research and development (R&D) to discover new compounds. The
"hit ratio" is very low as discovery of new compounds is very difficult
and tedious. When investing in the drug companies, there are several
things to keep in mind. You need to have some understanding of:
• the underlying disease or condition that a specific drug treats
• the number of people affected
• the number of compounds currently available
• the process of discovery and coming to market, specifically the
rigorous clinical trials required by the Food and Drug
Administration (FDA)
• the availability of substitutes, including generic versions of
drugs
• patents
The overall marketing framework, which may include
revenue or profit-sharing agreements with other companies.
In Palestine:
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19. • The total rate of doctors (20 doctors per 10,000 people) of the
population, as dentists rate (5.2 doctors per 10,000 people) of
the population, and the rate of Pharmacy (10 pharmacists per
10,000) in 2010
• The total number of hospital beds (including psychiatric
hospitals and neurological) (5,108) beds, at a rate of (793)
people per bed, including the family of East Jerusalem
hospitals, (751) people per bed in the Gaza Strip, and (828)
people per bed in the West Bank. In 2010
• Life expectancy at birth 80.7 years in 2010
In the United States:
• There are fewer physicians per person than in most other OECD
countries. In 2010, for instance, the U.S. had 2.4 practicing
physicians per 1,000 people
• The number of hospital beds in the U.S. was 2.6 per 1,000
population in 2009, lower than the OECD average of 3.4 beds.
• Life expectancy at birth 78.7 years in 2010, more than one year
below the average of 79.8 years.
Cost production in health care
We can define cost production of health care as the cost related to making
or acquiring goods and services that directly generates revenue for a
health firm. This cost may include effort, material, resources, time and
utilities consumed, risks incurred, and opportunity forgone in production.
Economists and accountants refer to costs differently. Accountants
considers only the explicit costs of doing business when determining the
accounting profits of a medical firm. Explicit costs are easily identified
because a recent market transaction is available to provide an accurate
measure of costs .Wage payments to staff, utility bills, and medical
supply expenses are all examples of explicit costs of healthcare firm.
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20. Economists consider both the explicit and implicit costs of production.
Implicit costs reflect the opportunity costs of using any resources the
medical firm owns. For example, a general practitioner (GP) may own the
physical assets used in producing physician services. In this case, a recent
market transaction is unavailable to determine the cost of using these
assets. However, an opportunity cost is incurred when using them
because the physical assets could have been rented out for an alternative
use. For example, the clinic could be remodeled and rented as a
psychological counseling center, and the medical equipment could be
rented by another physician. Therefore, the foregone rental payments
reflect the opportunity cost of using the physical assets owned by the GP.
The economic cost includes not only the explicit cost but also the implicit
opportunity cost, so they may not be objectively verifiable , and usually
used for forward looking . Economists believe it is important to
determine whether sufficient revenues are available to cover the costs of
using all inputs, including those rented and owned.
Economic profit = Total Revenue – Economic Costs
• Cost function
The cost function expresses a functional relationship between costs and
output that determine it. Symbolically, the cost function is
C = f (Q) Where
C = Cost
Q = Output
So cost function models the relationship between the production cost of
different levels of output accounting for input prices .In any cost function
estimation the adoption of short- run or long-run perspectives is the
fundamental determination facing the researcher.
Short run is a period of time in which certain factors of production can’t
be changed and called fixed factors. The costs incurred on fixed factors
are called fixed costs. The factors whose quantity can be changed in the
short run are variable factors, and the costs incurred on variable factors
are called variable costs
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21. Fixed costs are costs that are independent of output change. So the fixed
cost is a ‘fixed’ amount, which must be paid by a firm in the short run
whether the output is small or large. E.g. contractual rent, interest on
capital invested, salaries to the permanent staff, insurance premia and
certain taxes.
Variable costs are costs incurred on the employment of variable factors of
production whose amount can be altered in the short run .So total variable
costs change with the level of output. It elevates by output expansion and
falls by output contraction, when output is nil, variable cost becomes
zero. Such costs include wages of labor employed, prices of raw
materials, fuel and power used and the transport costs.
Total costs (TC) are the total economic cost of production, consisting of
fixed and variable costs, from the definitions previously, total cost will be
changed by any change in the variable cost , because fixed cost is the
same irrespective of the output .(4)
Total Cost = Total Fixed Cost + Total Variable Cost
TC = TFC + TVC
Short Run Cost Curve:
Cost theory on the production theory of the medical firm previously
outlined relates the quantity of output to the cost of production. As such,
it identifies how total costs respond to changes in output. If we assume
the two inputs of personnel hours, n, and capital, k, the short run total
costs, STC, of producing a given level of medical output, q, can be
written as:
STC (q) = wn + rk
Where w and r represent the wage for personnel and the rental or
opportunity costs of capital, respectively.
The equation above implies that the short run total costs of production are
dependent on the quantities and prices of inputs employed.
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22. The total product curve not only identifies the quantity of healthcare
output produced by a particular number of personnel hours, but also
shows, reciprocally, the number of personnel hours necessary to produce
a given level of healthcare output. With this information, the short run
total cost can be determined for various levels of healthcare output.
First, through the production function, the necessary number of personnel
hours, n, for each level of medical output is determined.
Second, the quantities of personnel hours are multiplied by the hourly
wage to get the short run total variable costs (STVC) of production, or
wn. Third, the short run total fixed costs are added, (STFC or rk) to the
STVC to derive the short run total costs (STC) of production. This three-
step procedure for each level of output can be used to derive the short run
total cost curve.
Factors Affecting the Position of the Short Run Cost Curve:
A variety of short run circumstances affect the position of the total cost
curve. Among them are the prices of variable inputs, the quality of care,
the patient case-mix, and the amounts of the fixed inputs. Whenever any
one of these variables changes, the position of the cost curve changes
through either an upward or a downward shift depending on whether
costs increase or decrease.
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23. Long Run Costs Curve:
Long run economies of scale refer to the notion that average costs fall as
a medical firm gets physically larger due to specialization of labor and
capital. Larger medical firms are able to utilize larger and more
specialties in the various labor tasks involved in the production process.
For example, people generally get very proficient at a specific task when
they perform it repeatedly. Therefore, specialization allows larger firms
to produce increased amounts of output at lower costs.
Another way to conceptualize long run economies of scales through a
direct relation between inputs and output, or returns to scale, rather than
output and costs. Consistent with long run economies of scale is
increasing returns to scale. Increasing returns to scale result when an
increase in all inputs results in a more than proportionate increase in
output. For example, a doubling of all inputs that result in three times as
much output is a sign of increasing returns to scale. Similarly, if a
doubling of output can be achieved without doubling of all inputs, the
production process exhibits long run increasing returns, or economies of
scale.
Most economists believe that economies of scale are exhausted at some
point and diseconomies of scale set in. Diseconomies of scale result when
the medical firm becomes too large. Bureaucratic red tape becomes
common, and top-to bottom communication flows break down. As a
result, poor decisions are sometimes made. Consequently, as the firm gets
too large, long run average costs increase. Diseconomies of scale are
reflected in the upward sloping segment of the LATC curve.
Diseconomies of scale can also be interpreted to mean that an increase in
all inputs results in a less than proportionate increase in output, or
decreasing returns to scale. For example, if the number of painter hours
doubles at a dental office and the decision maker is forced to triple the
size of each input(staff, office space, etc.) in order to have some increase
in services, the production process at the dental office is characterized by
decreasing returns or diseconomies of scale.
Another possibility shown in Figure 10 is that the production process
exhibits constant returns to scale. Constant returns to scale occur when,
for example, a doubling of inputs results in a doubling of output. In terms
of long run costs, constant returns imply a horizontal LATC curve; in turn
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24. implying that long run average costs are independent of output.
Figure 10
Marginal cost and Marginal benefit in health care:
Marginal cost: is the incremental increase in a health firm's input costs
to produce one additional unit of output. For example, to increase the
capacity of a hospital for sites to sleep in it requires a cost to build a new
rooms in the hospital that is the marginal cost.
Marginal benefit: is the incremental increase in a benefit to a
consumer caused by the consumption of an additional unit of good.
Marginal benefits normally decline as a consumer decides to consume
more and more of a single health service.
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25. The size of the supply response differs across types of
services :
While the expansion of health insurance coverage did not increase the
numbers of clinics and nurses even in the long term, the number of beds
increased in response to the expansion of the health insurance coverage.
It is not surprising that we observe a robust positive effect only on the
number of beds because it is less costly for existing hospitals to add beds
than for new hospitals and clinics to enter the market by paying large
fixed costs.
Also, the total supply of physicians and nurses was limited by the
capacity of medical and nursing schools, it takes years to be a typical
specialist physician practitioner in the Phil from high school onwards.
The insurance coverage has a significant causal effect on treatment
intensity, health outcomes. It is found that uninsured patients receive less
intensive treatment and are more likely to be discharged home rather than
transferred to another hospital or unit within the same hospital for
continued care, results are consistent with the possibility that patients
with no coverage, or relatively limited coverage, are more likely to be
discharged from the hospital in an unhealthy condition it is found that
patients and their healthcare providers increase their use of hospital
services when insurance coverage is available, and that these additional
hospital services appear to produce better health outcomes.
Different healthcare systems :
A healthcare system consists of organizational units and processes by
which a society determines the choices concerning the production,
consumption, and distribution of healthcare Services. Healthcare systems
are huge, complex, and constant changing as they respond to economic,
technological, social and historical factors. Healthcare performance is
strongly dependent on the economy.
The health care is three classification, The first classification scheme
centers on the dimension of the degree of government involvement in
funding and provision of healthcare. The second basic type of health
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26. system is the social insurance model. The third type, and the one which
might approach the government monopoly in its pure form, is the
National Health Service (NHS or Beveridge) model.
Some alternative methods of financing can be ascertained by examining
the different methods used in Germany, and the United Kingdom.
Germany
The Socialized Health Insurance Program (SI) in Germany is based on
government-mandated financing by employers and employees. The
premiums of unemployed individuals and their dependents are paid by
former employers or come from public sources (e.g., public pension
funds). Sickness funds, which are private nonprofit companies, are
responsible for collecting funds and reimbursing healthcare providers and
hospitals. Statutory medical benefits are comprehensive and there
are small copayments for some services.
The United Kingdom
The UK healthcare system under the auspices of the National Health
Service (NHS), offers universal health insurance coverage financed
through taxation. The NHS provides global budgets to district health
authorities (DHAs). Each district health authority is responsible for
assessing and prioritizing the healthcare needs of about 300,000 people
and then purchasing the necessary healthcare services for public and
private healthcare providers. Hospital services are provided by
nongovernmental trusts, which compete with themselves and with private
hospitals for DHA contracts.
MEDICAL TECHNOLOGY IN CANADA, GERMANY AND THE UNITED
KINGDOM,
The availability of technology has a profound effect on the healthcare
costs and the availability of medical care. Technologies such as drugs,
medical devices, and procedures may offer cost savings or higher quality
services.
Four stages are associated with the development and diffusion
of medical technology. According to the National Science Foundation,
the first stage, basic research, is defined as research for the advancement
of knowledge without commercial motivations. Basic research produces
new medical knowledge about areas in biomedical sciences, for example.
In the second stage, applied research, the basic knowledge is applied to
yield solutions for the prevention, treatment, or curing of diseases. At the
clinical investigation and testing stage, new medical technologies are
tested on human subjects—the benefits and safety of the technologies are
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27. tested at this point. The final stage, diffusion or imitation, involves the
commercial introduction, adoption, and spreading of medical
technologies.
Example 1: In addition, only Germany had more computed tomography
(CT) scanners per million people than the united king dome . There is
also a much greater prevalence of coronary artery bypass procedures
(CABG), coronary angioplasty procedures, and patients undergoing
dialysis in the United Kingdome than in the Germany . Besides having
the most CT scanners, Germany has the second greatest number of MRIs
and persons undergoing dialysis and coronary angioplasty. Germany,
however, is last among the four countries in terms of coronary bypass
procedures.
Models of non -profit agencies
American Heart Association
Who We Are
The American Heart Association is the nation’s oldest and largest
voluntary organization keen to fighting heart disease and stroke. Founded
by six cardiologists in 1924, our organization now includes more than
22.5 million volunteers and supporters. We fund innovative research,
fight for stronger public health policies, and provide critical tools and
information to save and improve lives. Our nationwide organization
includes 156 local offices and more than 3,000 employees. We moved
our national headquarters from New York to Dallas in 1975 to be more
centrally located. The American Stroke Association was created as a
division in 1997 to bring together the organization’s stroke-related
activities.
What We Do?
To improve the lives of all Americans, we provide public health
education in a variety of ways. We’re the nation’s leader in CPR
education training. We help people understand the importance of healthy
lifestyle choices. We provide science-based treatment guidelines to
healthcare professionals to help them provide quality care to their
patients. We educate lawmakers, policymakers and the public as we
advocate for changes to protect and improve the health of our
communities. Our volunteer experts select scientific research most
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28. worthy of funding – with great results. The association has funded more
than $3.8 billion in heart disease and stroke research, more than any
organization outside the federal government.
Why We’re Needed
Heart disease is the No. 1 killer in the world. Stroke ranks second
globally and is a leading cause of severe disability. Too many families are
losing loved ones of all ages. Each year, these diseases kill more than
786,000 Americans, which is larger than the population of several states
(Alaska, North Dakota, Vermont and Wyoming).
Some form of cardiovascular disease affects more than one in every three
adult Americans.
Many suffer terribly from disabilities caused by these diseases. The
American Heart Association wants everyone to understand the threat –
and to know that cardiovascular diseases and stroke are largely
preventable. Risks can be lowered by adhering to what we call Life’s
Simple 7: not smoking, being physically active, maintaining a healthy
body weight, eating a healthy diet, controlling blood pressure, controlling
cholesterol and controlling blood sugar.
Our 2020 Goal
We are working toward improving the cardiovascular health of all
Americans by 20 percent, and reducing deaths from cardiovascular
diseases and stroke by 20 percent, all by the year 2020.
Voluntary hospitals
Although some of the voluntary hospitals, like London’s St
Bartholomew’s (‘Barts’), could claim a medieval origin, it was in the
mid-eighteenth century that the major foundations began. Early examples
from the 1710s to 1730s include Guys and the Westminster in London,
the Edinburgh Royal Infirmary in Scotland, and in the provincial cities
Cambridge’s Addenbrookes and the Bristol Royal Infirmary. The
following decades saw more founded in the burgeoning centers of
industrial Britain, like the Manchester Royal Infirmary (1750s), the
Birmingham General (1760s) and the Glasgow Royal Infirmary (1790s).
Through the nineteenth century additional general hospitals opened in the
great cities and larger towns. Special hospitals devoted to areas like
maternity care, orthopedics, eye, and ear nose and throat medicine also
flourished in London, Dublin, Edinburgh, Cardiff and the other big cities.
The cottage hospital movement took off from the 1860s with the aim of
providing small institutions run by general practitioners in rural areas.
The twentieth century saw further foundations as well as mergers and
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29. relocations of long-established institutions, like the Bath Royal United
Hospital, the Aberdeen Royal Infirmary and the Birmingham Queen
Elizabeth Hospital.
The voluntary hospitals had no monopoly on care, and both local
government and the Poor Law also provided hospitals before the NHS.
For example, asylums for psychiatric patients were overseen by the
county councils, while municipal and district councils controlled the
many isolation hospitals. And for those in poverty requiring long-term
care in sickness and old age, the Poor Law workhouses and infirmaries
were the final refuge. In the 1890s the voluntary hospitals contained
about 26% of beds, rising to 33% by 1938, with 20% in the Poor Law,
and 47% in local government. However, it was in the voluntaries that
acute medical care was practiced and most medical education was
located.
Until the interwar years, when general hospitals began to be opened by
city councils, the voluntaries represented the cutting edge of medicine.
Doctors without Borders
Médecins Sans Frontières (MSF) was founded in 1971 in France by a
group of doctors and journalists in the wake of war and famine in Biafra.
Their aim was to establish an independent organization that focuses on
delivering emergency medicine aid quickly, effectively and impartially.
Three hundred volunteers made up the organization when it was founded:
doctors, nurses and other staff, including the 13 founding doctors and
journalists.
MSF was created in the belief that all people should have access to
healthcare regardless of gender, race, religion, creed or political
affiliation, and that people’s medical needs outweigh respect for national
boundaries.
In 2014, MSF provided humanitarian assistance in 63 countries.
Some 59 per cent of activities were carried out in settings of instability.
More than 60 per cent of programs were in Africa, while 26 per cent were
in Asia and the Middle East, 5 per cent in the Americas, 4 per cent in
Europe and 2 per cent in the Pacific.
MSF spent 1,066 million euros: 80 per cent was spent on humanitarian
activities while 20 per cent was spent on management and fundraising.
Almost 90 per cent of our income came from more than 5.7 million
private donors. (see figure below)
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30. References :
(-) Essential of health economics by Diane M. Dewar.
(-) Introduction to Health Economics by Gashaw Andargie.
(-) Health Economics for Developing Countries: A Survival Kit.
(-) The economics of health care an introductory text by Alistair
McGuire, John Henderson and Gavin Mooney.
(-) Effect on Supply Curve due to Changes in Other Factors by Smirit
chand.
(-) Theory and Applications of Economics.
(-) Introduction to Health Economics by David Wonderling, Reinhold
Gruen&Nick Black.
(-) www.who.int
(-) www.oecd.org/
(-) ww.businessdictionary.com/definition/supply.htm
(-) http://www.freeeconhelp.com/2011/10/why-marginal-benefit-equals-
marginal.html
(-) http://www.investopedia.com/
‫زززز‬‫ززززززز‬‫ززززززز‬‫ززززززززز‬2013
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1 overview of MSF's medical activities in CAR, Jan-May 2014

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