Health_Care_Market_Paper

Running Head: Health Care Market Paper Health Care Market Paper Sal Cusumano University of Phoenix Abstract The nursing care facilities market is affected by many variables that influence the market. Knowing the market and how these variables will affect it are key to the success of a nursing home. Whether people like to admit it, or not, nursing care facilities play a large role in the life of elderly patients. Aging is a fact of life; there is no way around it. As baby boomers start to retire the potential for success for a nursing home owner is there for the taking. A nursing home owner needs to use their market knowledge to help their business succeed. Health Care Market Paper The baby boom generation, named after the 79 million Americans born post World War II between 1946 and 1964, is getting close to retirement (Martinek, 2008). In 2011 the first born of this group turn 65 years of age, which will drastically increase the amount of elderly needing to be placed in nursing homes. The success, or failure, of many nursing homes depends on their ability to get these elderly patients into their nursing homes. The economic flow of the country will play a role in whether or not these baby boomers move to nursing homes or stay in their current environment. In 2008 the average cost for a private room in a nursing facility was $212 a day (McKnights Long-Term Care News and Assisted Living, 2008). It is a given that a patients insurance plays a large role in covering the cost of a patient’s stay but the economy also plays a role. Currently, unemployment is as high as it has been in years. Many employees close to retiring have to face the reality of not being able to retire. Employees forced to retire, because of their age, now realize they might not have enough money to retire in a matter they are accustomed to. When economy is in a downturn many seniors will stay with their children, or perhaps move into a smaller house, or a retirement community rather than a nursing home. Supply and demand is the cornerstone of economics, and also plays a role in the success of a nursing care facility as well. The amount of nursing homes available in the city where someone is looking is one of the main factors that affect equilibrium price and quantity. If there are too many nursing homes in relation to the number of patients, the price of a stay will be considerably lower than a city with a smaller amount of nursing homes, and a large amount of patients. A nursing home owner needs to take into account the amount of nursing homes in their city to see if there are enough patients available to support the nursing home if opened. Scarcity of resources also influences the nursing market. Employers need to have enough staff on hand to handle the needs of their patients. For example, in California, it is a state law that nursing home facilities maintain a minimum of 3.2 hours per patient per day (Elias, 2010). As populations in nursing homes start to grow ownership also needs to be sure enough staff is available to be compliant with state, and federal, laws. Nursing home owners cannot use scarcity of resources as an excuse for inadequate care of the elderly. Recently, owners of Skilled Healthcare Group Incorporated lost a $677 million dollar lawsuit because of not meeting nurse to patient ratios, and having an inadequate amount of employees to cover patient needs (Elias, 2010). The pricing decisions of nursing care facilities are inelastic. Many times the main reason a patient enters a nursing home is due to not having any other choice. It could be because of a surgery, not having a caregiver available, or perhaps the patient is suffering from Alzheimer’s and needs 24 hour care. If all things are equal price does play a role in a patient’s decision, but it is often a patient’s health that makes the choice an easy one to make. Conclusion Unless a nursing home owner is aware of his marketplace his business will not succeed. Today’s economy leaves very little room for error. Especially today, the economy is under constant change. How changes in supply and demand will affect business and the pricing decisions of the marketplace are key to an owner’s success. References Martinek, C.J. (2008, March 1). Baby Boomer Retirement. Economic Information Newsletter. Retrieved from http://liber8.stlouisfed.org/newsletter/2008/200803.pdf McKnights Long-Term Care News and Assisted Living. (2008). Survey: Average cost of private nursing room drops in 2008. Retrieved from http://www.mcknights.com/survey-average-cost-of-private-nursing-home-room-drops-in-2008/article/120072/ Elias, P. (2010). Huge verdict shakes Calif. Nursing homes. Fresno Bee. Retrieved from http://www.fresnobee.com/2010/08/28/2057712/huge-verdict-shakes-calif-nursing.html#storylink=mirelated