The Financial Impact of Increasing Cost of Care on the Health Care Industry

The Financial Impact of Increasing Cost of Care on the Health Care Industry

The increasing cost of care is a significant financial factor in the healthcare sector. The main aspects that are spurring the increment include increasing population, higher demand for care, greater spending ability, more healthcare treatments, disruption, fraud, regulations, and globalization. In the USA, the out-of-pocket model of care is used (Lewars, 2022). This model requires patients to co-pay with the insurance providers or cater for their care in full if they are uninsured. This significantly contributes to the expensive care in the USA. As the highlighted aspects increase the cost of care, they also lead to improved quality and easy access. However, the increasing cost of care can hinder equalized care, especially for citizens who live below the poverty line or are uninsured. This outcome could negatively affect access to care as only those with sufficient resources receive care. Our assignment writing help is at affordable prices to students of all academic levels and academic disciplines.

The Economic Trends of the Health Care Payment System

Transparency is one of the trends observed in the healthcare payment system today. The increasing cost of care shows no signs of subsiding. Consumers are getting actively involved in the value of care that they access. Thus, they demand more transparency as well as conscious decision-making. This conscious decision-making can be referred to as consumerism. Organizations and providers that adequately meet the needs and demands of their patients can achieve significant success (Vogenberg & Santilli, 2019).

Supply and Demand Challenges For Health Care Services

The Covid-19 pandemic created a significant overflow of patients requiring tests. The need for more staff to meet this demand is a significant challenge. It is also associated with test backlogs as the shortage of staff members continues to loom. In addition, the need to provide appropriate protective gear increases the demand and supply challenges. As the need for vaccines gains priority among patients, healthcare providers are still struggling with clearing the backlogs and eliminating the various bottlenecks (Bohmer, Pisano, & Sadun, 2020).

Reasons for Increasing Costs in the Health Care System

The cost of care is increasing due to various reasons. First, more individuals around the world have attained middle-class status. This means that they can allocate more financial resources for healthcare and actively seek quality care. Secondly, there is a wide variety of healthcare providers that patients can choose from. These providers offer different treatments to meet the dynamic demands of patients. As more scientific breakthroughs are realized, it becomes easier for patients to seek alternative treatments. In 2020, the FDA approved at least 53 novel treatments. As clients seek out premium products within their budgets, the market prices escalate. Thirdly, there is a rising demand for care. The aging American population requires more healthcare attention than it did in the past. In addition, the increasing incidences of mental health are also contributing to the high cost of care (Lewars, 2022).

Regulatory Issues That are Affecting or Will Affect the Health Care Industry

Regulations are expected to increase in the healthcare sector. Issues that affect healthcare regarding regulations include corruption, cybersecurity, fraud, patient safety, and counterfeit drugs. The involvement of insurance companies and healthcare professionals in fraud has drawn attention to these issues and led to intensified regulations. These issues affect services in the sector and make it difficult for patients to access care safely.

Strategy to Address the Issue

To ensure that demand is satisfied, the supply must be addressed. There are constant recruitments for nurses and other healthcare workers worldwide. The USA utilizes this strategy because its population is aging faster, which creates an urgent need to replace the staff members who are leaving the workforce. The process of hiring additional staff members is important in averting health crises in the future. Therefore, the government should seek to reduce out-of-pocket payments, especially for uninsured patients. As a result, this should increase their ability to access care without being hindered by financial factors.

If the recruitment of healthcare workers continues, the sector is expected to balance demand and supply. This should reduce the effect that high demand and low supply has on healthcare cost. Furthermore, it should increase access and quality of care as reducing the co-payments is important because it will increase access to care. Accordingly, patients who are not insured and have fewer financial resources will easily seek out care without concerns about being turned down. As a result, public health will improve significantly due to the improved access. These steps will address not only the demand but also the supply side (Kraines, 2018).

Furthermore, healthcare is an important element of a country’s economy. A country with inefficient healthcare services is likely to suffer economically because the citizens are not healthy enough to participate in revenue-generating activities. The ability to address conditions preventively instead of curatively will increase. This ability significantly reduces the cost of care, which is higher when one seeks curative instead of preventive care. The burden of disease is also expected to reduce significantly, and the population’s health will improve, reducing the need for care among the aged in the future (Lewars, 2022).

References

Bohmer, R. M., Pisano, G. P., & Sadun, R. (2020). How Hospitals Can Manage Supply Shortages as Demand Surges. Harvard Business Review.

Kraines, K. L. (2018). Filling Critical Gaps in Primary Healthcare: Advanced Practice Registered Nurses Meeting the Challenge. Retrieved from Yale School of Nursing: https://nursing.yale.edu/news/filling-critical-gaps-primary-healthcare-advanced-practice-registered-nurses-meeting-challenge

Lewars, M. (2022). Eight Reasons For Rising Healthcare Costs Globally.

Vogenberg, F. R., & Santili, J. (2019). Key Trends in Healthcare for 2020 and Beyond. Am Health Drug Benefits, 12(7), 348-350.

ORDER A PLAGIARISM-FREE PAPER HERE

We’ll write everything from scratch

Write a 700- to 1,050-word paper about the financial or economic issue you selected in which you:

Analyze the financial impact of this issue on the healthcare industry. Consider the following:

The Financial Impact of Increasing Cost of Care on the Health Care Industry

What are the economic trends of the healthcare payment system?
What are the supply and demand challenges for health care services?
Why are costs increasing in the healthcare system?
What regulatory issues are affecting, or will affect, the healthcare industry?
Recommend at least 1 strategy to address the issue.
Consider current strategies being used or presented for improving the issue.
Discuss what you believe would be the outcome of these recommendations if implemented.