Technological Solutions
Health economics questions
What are the two basic tools of economics? Give an example of each with respect to health, medical services, and hospitals.
The two basic tools of economics are marginal analysis and optimization techniques and supply and demand analysis. Marginal analysis and optimization techniques underline the fact that economics is the science of studying scarce resources. Only though setting specific criteria when deciding how to use scarce resources can costs be minimized and outputs be maximized. In the field of healthcare such analysis is particularly critical, given that hospitals must often make decisions about what types of technology to spend money on and which types of specialists to hire, based upon the needs of the population. Health insurance agencies are famously criticized for refusing to cover specific procedures because they deem less costly measures to be equally effective, even if the patient or his or her doctor feels otherwise. Finally, one problem which may arise is that an organization may ineffectually use data when making decisions about resources, such as using data from the organization's past which fails to take into consideration new technology.
The second tool is that of supply and demand analysis. Organizations try to predict whether supply or demand will increase when making decisions about pricing and offered services. For example, new technology can create more demand for treatment of formerly untreatable conditions at a hospital. A decrease in the supply of nurses can force the organization to reallocate its resources and try to attract more new nurses. Deciding how much flu vaccine will be needed requires the organization to specifically anticipate a level of supply. And even health insurance organizations must anticipate demand of their neediest policyholders, which will hopefully be offset by less of a need for care from customers who are healthy.
Q2. What are the various purposes that prices serve? Can you provide an example of how...
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