Health_Organizations

Economic Terms and Health Care History Christina Mahner HCS/440 - ECONOMICS: THE FINANCING OF HEALTH CARE Humberto Munoz June 6, 2011 In the health care field the economics is rapidly changing over the course of the history in the United States. The major contributing factor of the changes to health care economics is due to advances in technology and medical care even though some of the changes are because of evolutionary reasons. Many things within a health care system change including the payment ways, organizational policies and procedures, management structures and most important the rules and regulations the state wants the facility. The changes are often referred to as Managed Care because the concern is driven by a cost of the health care but in the end it affects many other areas. It is important to remember the driving force behind health care economics is money, which plays a major part in whether or not the facility is successful or not. In order for the facility to functions optimally the facility needs to understand the structural and economic history of health care. By understanding the history of health care economics financial managers are able to be more prepared for future changes. Economics refers to the science that deals with the production, consumption and distribution of services or goods given to a person. Economics in the health care field could refer to every area of the facility. When looking at the economics of a facility one must look at supply and demand to determine the price of services rendered. The facility needs to look at how much the supplies cost and what the demand is to decide what to charge individuals for the services. The facility needs to also look at the relationship between the price and cost of supplies to make sure the proper payments are received, this is known as Microeconomics. On the other hand, Macroeconomics will look at the relationship between the income and the investments as a whole. As the economy changes the supply and demand of the facility will change as well. Some other terms used in economics in the health care field are elasticity and inelasticity. Elasticity is the ratio of the percentage of change in one specific variable to the percentage of change of another variable. In other words, it is a way to measure the responsiveness to a change that is made such as an increase in demand as a result of a decrease in price. On the other hand, inelasticity describes a variable that does not change much in response to other changes. So inelasticity is unresponsive to changes within the facility. Then the total market value of all the goods and services produced within a certain period of time is known as the Gross Domestic Product. These terms are ways to describe the way a facility is managed financially. Many areas of a health care facility depend on the economic history of the facility. Timeline In the 1900’s, the American Medical Association (AMA) was created and by 1901 the AMA becomes a national organization with the beginning of organized medicine. In 1910, American hospitals are required to value antiseptics and cleanliness and use medications for the relief of pain. Another organization is created known as the American Association for Labor Legislation (AALL), which organizes the first conference on social insurance. In 1920, the discovery of Penicillin is made but it will not be used to treat infections for many years. In 1930, the depression happens and changes the priorities of the facility with emphasis on unemployment benefits. By the 1940s Penicillin is now being used to treat illnesses and during this time the World War II happened. During the war wages and price controls were placed on American employers and employers began offering health benefits to their employers. In the 1960’s, the cost of hospital care doubles making it difficult for many individuals to afford to seek medical attention. President Lyndon Johnson signed to make Medicare and Medicaid into a law. By the 1990’s the cost of health care doubles due to inflation. In 2000 the health care costs are still rising and Medicare is viewed by some individuals as unsustainable and is to be reviewed. Over the years there have been many changes to the health care field, but technology is still rising too and scientists are finding cures for illnesses and diseases. Conclusion In the yearly years of health care economics the emphasis was one of the foundations of medical practice, but now economics is looked at in a scholarly, rigorous and reasonably comprehensive fashion. Every year the government allots an amount of money to be spent on health care. Excellent medical care is available in the United States, the health care economics and services present many issues for the consumers. Despite the challenges facing the use of economic in health care, when making decisions about technology and procedures, it does have a critical role to play in health care. Without economics in the health care field the link between quality and cost would be difficult to evaluate. Economics is a necessity in the health care field in every department to create a successful facility. References Cox, M., Pacala, J. T., & Vercellotti, G.M. (2004). Health care economics, financing, Organization and delivery. Family Medicine, 36(section II), S20-S30. Retrieved from http://www.familymedicine.com Tunis, S.R. (2004). Economic Analysis in Healthcare Decisions. The American Journal of Managed Care, 10( 5), 301-305. Michael A. Morrisey. "Health Care." The Concise Encyclopedia of Economics. 2008. Library of Economics and Liberty. Retrieved June 7, 2011 from the World Wide Web: http://www.econlib.org/library/Enc/HealthCare.html