Health_Care_Market

Health Care Market Introduction Healthcare suffers critical shortages worldwide in licensed professional staffing, such as nurses, radiology technicians and pharmacists. This scarcity is expected to intensify in the coming years as baby boomers age, the demand for services increases, the workforce is aging and also because there are more options for women. Concerns are raised that the public mission is threatened; a shortage of nurses could endanger quality of care and place patients at risk for increased illness and death. Almost everything comes with a price tag including quality nursing care. Like in every market, when there is a demand, wages escalate. Rising wages, specifically nursing wages, could take its toll on hospital budgets. Influencing the market. The market is driving nursing salaries and hospitals have to stay competitive. This market follows the law of supply and demand, which holds true for any profession; when there is a demand, wages escalate. Stakeholders will have to use innovative strategies to increase the number of new nurses entering the workforce and later retaining them. ▪ Focusing on those under represented in the current workforce. ▪ Making these careers attractive to 18 to 25-year-olds. ▪ Providing better recruitment and career information to prospective candidates. ▪ Upgrading the image of their work. ▪ Integrating workforce recruitment and retention strategies. ▪ Creating public understanding of the worker shortage and the will for action.1 Additional recommendations from a broad range of stakeholder organizations include: increasing supply through educational capacity; increasing the visibility of nursing contributions to the quality of patient outcomes; increasing compensation, expanding career options and strengthening nursing leadership at every level. Nurses themselves made the following suggestions for addressing the shortage. They can be grouped into the following four broad categories: ▪ Workload and work environment ▪ Financial compensation ▪ Respect and support ▪ Education and professional development Kimball and O’Neil have recently described four stages of responses to the nursing shortage (Fig 1.)2 Continuum of responses to the nursing shortage. [pic] In the Scramble stage, activities focus on nurse recruitment and monetary incentives. The Improve stage is characterized by activities that focus on understanding and meeting nurses needs and wants. In the Reinvent stage, activities focus on professional development and refining nursing practice. In the Start Over stage, nurses practice at the upper limits of their professional licenses and certifications and are viewed as leaders creating entirely new models of care defined by consumer needs. Each stage represents a step toward nursing’s movement from a work force commodity to a vital strategic asset. Economic flows are related to customers (patients) who will seek cheaper insurance premiums and lower out-of-the-pocket payments but also to providers (nurses) who will look for higher salaries. The later has led also to the migration of nurses across national borders in search of better pay but also career advancements, better working conditions and quality of life. For some developing countries, the loss of highly skilled nurses to developed countries is threatening the capacity of their country of origin to achieve adequate health care. Causes of changes in supply and demand. Changes in supply. Women have nowadays more attractive alternatives to the nursing profession than before resulting in less of them embracing the nursing profession. Workforce is aging and replacement is not at par with new recruitment. Changes in demand. As said earlier, baby boomers age and the number of older patients in hospital increases as well as the demand for services. New technologies are often more time-consuming and demanding. The law of supply and demand applies to this market and nurses, as a “commodity”, will be more expensive to recruit and employ. Increasing wages will attract more candidates but this will probably not be sufficient, as nurses want also to advance professionally, gain autonomy and participate in decision-making. The US Department of Health and Human Services' Health Resources and Services Administration (HRSA), predicts a drastic shortage. The HRSA study projects that the shortage of registered nurses will increase from an estimated 110,800 in 2000, roughly the year in which the shortage began, to 1,016,900 in 20203. The baseline projections of the HRSA model are shown below. |Year |Quantity Supplied |Quantity Demanded |QS - QD | |2000 |1,890,700 |2,001,500 |-110,800 | |2005 |1,942,500 |2,161,300 |-218,800 | |2010 |1,941,200 |2,347,000 |-405,800 | |2015 |1,886,100 |2,569,800 |-683,700 | |2020 |1,808,000 |2,824,900 |-1,016,900 | There is unfortunately a flaw in these projections: the HRSA model assumes that the relative wages of nurses will not change between 2000 and 2020. The model projects that the demand for nurses will grow faster than the supply but assumes nursing wages will remain the same, a rather strange assertion. In fact, if the price mechanism is working and the demand for nurses is growing faster than supply, then the relative compensation of nurses should be increasing, and this increasing compensation should be drawing more nurses into the market. According to Bureau of Labor Statistics occupational wage data, between 2002 and May 2006, the average hourly wage rate of all workers rose from $17.10 to $18.84, an increase of 10 percent. Over the same time, the average hourly wage rate of registered nurses rose from $23.96 to $28.71, an increase of 20 percent. Most studies, including the HRSA study, argue that the supply of nurses is inelastic for two reasons: (1) it takes time to educate and train a nurse, and (2) nursing schools are already operating at full capacity and simply cannot accept larger numbers of students. Are those statements correct' The same Bureau of Labor Statistics indicates that between 2002 and May 2006, overall employment rose from 127.5 million to 132.6 million, an increase of 4 percent. Over the same period, employment of registered nurses rose from 2.2 million to 2.4 million, an increase of 9 percent. At the same time, the AACN reports that between 2000 and 2007 the number of colleges offering baccalaureate degrees in nursing rose from 518 to 631, a 22 percent increase4. In conclusion, the increasing demand for nurses is driving nursing compensation up, which in turn is bringing more nurses into the market. In fact, market prices drive the allocation of scarce resources rather well and in reality, supply of nurses is not as inelastic as previously stated. As such stakeholders will have to continue to adapt to the market and increase wages and benefits. Quality of life, work environment, education and professional development must also be taken into consideration. References. 1. Kimball, B. (2004). Health Care's Human Crisis - Rx for an Evolving Profession: Summary of the Report Findings. Online J Issues Nurs. 2004; 9(2). Retrieved December 11, 2009 from http://www.medscape.com/viewarticle/490771_2 2. Kimball, B., O'Neil, E. (2001). The Evolution of a Crisis: Nursing in America. Policy, Politics, & Nursing Practice, Vol. 2, No. 3, 180-186 3. US Department of Health and Human Services, Health Resources and Services Administration. (2002) Projected Supply, Demand, and Shortages of Registered Nurses: 2000–2020. Retrieved December 11, 2009 from http://mises.org/story/2941 4. Mathews, D., & Dunaeva, A. (2008). Is the Nursing Market Malfunctioning' Mises Daily. Retrieved December 12, 2009 from http://mises.org/story/2941