Financial and Economic Issues in Healthcare.
The healthcare industry is one of the most complex industries in the world. However, the noble industry is facing drastic changes as it tries to balance the current system with the global technological transformations that have taken shape. The healthcare industry faces hurdles in the management of investments in the wake of financial constraints. There are frequent changes in the legal structures manning the industries coupled with constrained capital access, which contrasts with the increasing patient demand (White, 2016). The facilities require more funds and access to more resources to keep up with the growing demands. The increased pressure from the regulators to cut costs places the facilities in a dilemma on how to balance the resources and yet improve the patient’s health. It comes at a time when the industry is facing technological transformation and digitizing its operations. Inadequate funds disadvantage the industry a great deal as they cannot benefit from technological innovations owing to their outdated IT structures (White, 2016). The financial restraints and the economic dilemma in the utilization of resources restrict health providers with mechanisms on how to exploit new medical devices, e-health systems, and other related innovations.
One of the major economic trends facing health care is the payment system revolution which has shifted from the patients to insurance providers. According to Lin (2016), there is increased enrollment in high-deductible health plans, which has increased the patient’s responsibility by 255% since 2006. This fact alone has made the consumers of the healthcare industry the most important stakeholders, which challenges the conventional way of doing business.
The law of demand and supply, which states that the two are inversely proportional such that an increase in one leads to a decrease in the other when all variables remain constants, may apply in health care as stated. Under health care insurance, the actual Price is relatively lower per household owing to the fact that the marginal private per household is less than the marginal social cost of the care provision (Cooper & John, 2012). However, health care services demand is relatively inelastic considering that a sick person will seek the medical services price notwithstanding. The ability to purchase solely depends on the patient and what they can afford based on their income. Price is, therefore, not a fixed determinant for demand. Supply, on the other hand, depends on the service providers, including the health personnel. Unlike the other industries that maximize profits, the healthcare industry is not profit-oriented and is guided by the Hippocratic Oath (Cooper & John, 2012). The volume of work handled by the providers is staggering, and without dedication, the facilities may not acquire the right persons. Lack of enough funds in the sector turns it into a ‘calling’ and may thus fail to attract competent professionals. The services provided call for more hours than the normal working hours, especially in emergency situations.
Healthcare costs are increasing and are attributable to a variety of reasons extending from economic conditions to technological advancements. Costs have increased based on the risen inflation rates, which are higher in recent times than it was a decade ago. Another factor is in the technological advances which Clemens (2017) asserted that they contribute up to 40-50% of the annual increments. The projects requiring improvisation in healthcare are costly, but their benefits cannot be overlooked.
The 2016 Cures Act is a great legislation piece that is affecting the healthcare industry and will continue to affect it until its full implementation (Marshall, 2018). The provisions it has like Information Technology (IT) and its interoperability, as it prohibits data blocking. The legislation is still in its toddler stages, and its clarification will be made soon. There are other regulations like TEFCA, HIN, QHIN, and an ONC whose operations will have great impacts on the healthcare industry. Although the Cures Act increases biomedical research funds and resources, the Act will reimburse home infusion drugs. Such reimbursement will ultimately reduce the number of patients who can access home inotropic infusions and consequently decrease the admissions to hospitals and the length of hospital stay (Gilstrap et al., 2017). While this might be seen as an advantage, the financial structure of the health facilities will suffer from the financial loss aspect. The patients, who are the major stakeholders, will no longer provide or pay for the beds in hospitals. Although the Act is expected to be enforced in 2021, the financial shortfalls are then expected to be covered and diversified within the three years remaining. It is still a short period, and questions have been raised on the ability of hospitals to diversify into other activities to raise more funds. I think that the enforcement of the Act will be advantageous to the public but will have adverse effects on the hospital setting as they have not devised means to cover the shortfall in finances. Allowing them more time will give them enough time to adjust for capital investments.
References
White, J. (2016). Top financial challenges in healthcare. Health care business & technology. Retrieved from http://www.healthcarebusinesstech.com/financial-challenges/
Lin, J. (2016). Trends in Healthcare Payments and Billing. Advance healthcare network: Health System Management. Retrieved from http://health-system- management.advanceweb.com/latest-trends-in-healthcare-payments-and-billing/
Clemens, M. (2017). Technology and Rising Health Care Costs. Forbes. https://www.forbes.com/sites/forbestechcouncil/2017/10/26/technology-and-rising- health-care-costs/#57206234766b
Cooper, R. & John, A. (2012). Theory and Applications of Economics. Retrieved from https://2012books.lardbucket.org/pdfs/theory-and-applications-of-economics.pdf
Marshall, M. (2018). How Health Care’s Regulatory Landscape is Shifting in 2018. Cerner. Retrieved from https://www.cerner.com/blog/how-health-cares-regulatory-landscape-is- shifting-in-2018
Gilstrap, L. G., DeFilippis, E. M., and Stevenson, L. W. (2017). An Unintended Consequence of the 21st Century Cures Act for Heart Failure Patients. US National Library of Medicine: National Institutes of Health. Retrieved from HTTPS://www.ncbi.nlm.nih.gov/pmc/articles/PMC5512586/
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