Healthcare Pricing
In my opinion, the main reason why economic theory is generally not applicable to hospitals and healthcare providers in general is due to the fact that, for any private entrepreneurship, the profit maximization is the primary goal, while in the healthcare industry, the primary goal is generally patient - related (offering the best care, treating as many patients as possible, providing the best medication and treatment etc.). Due to the fact that a healthcare organization will tend to maximize its services and offer, as mentioned, the best treatment, it will ignore the importance of cost control and run higher costs than a normal organization. Further more, as a healthcare organization, it is difficult, if not impossible, to deny treatment, even for people who cannot afford it. This is also a particularity to be taken into consideration. Finally, there are other entities that determine the existence and activity of a healthcare organization, such as insurance companies, and these also affect the demand/supply relationship and impact.
2. In my opinion, due to the specific characteristics of the industry, we can already talk about consumer-driven healthcare. On the other hand, the industry will most likely insist on the service quality segment rather than on the price transparency. A constant improvement of the services provided within the healthcare facility will not only produce the appropriate competition on the market, but it will also provide the incentives for the other healthcare organizations, thus rising overall quality levels in the market. This will rather change the way hospitals price their services rather than price transparency.
Nevertheless, price transparency will change ridiculous situations in which the client is charged $35,000 to change a battery in a pacemaker. It will drive such prices lower, encouraging price competition.
Bibliography
1. A Call for Transparency in Healthcare Cost and Quality. On the Internet at http://blogs.msdn.com/healthblog/archive/2006/05/16/599064.aspx.Last retrieved on June 30, 2007
2. Feld, Stanley. What Is Real Price Transparency? Medicine: Healthcare System. May 2007. On the Internet at http://stanleyfeldmdmace.typepad.com/repairing_the_healthcare_/2007/05/what_is_real_pr.html.Last retrieved on June 30, 2007
Call for Transparency in Healthcare Cost and Quality. On the Internet at http://blogs.msdn.com/healthblog/archive/2006/05/16/599064.aspx.Last retrieved on June 30, 2007
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