Differences and Similarities Between Health care Economics and Other Forms of Economics

Differences

Health economics deals with six significant issues;  the impact of risk and insurance, the role of the patient, spending growth, the provider's responsibilities, benefits design, and payment reform. Health care economics deals with the spending and cost of health care. In contrast, in other forms of economics such as capitalism, the focus is placed on the spending and cost of production factors such as land, capital, entrepreneur, and labor.   According to Stobierski (2021), the treatment that health care providers choose to offer and the cost of those healthcare services directly influence patients' demands. Patients and health care providers, therefore, control the demand and supply in the health care industry.

In contrast, in other forms of economics, such as the mix and capitalism economic systems, demand and supply are controlled by market forces and other factors such as weather, tax rates, availability of raw materials, and technology.  In the socialist economy, the government determines the demand and supply of goods and services. Patients also influence spending in the health care industry by choosing the type of prescription and treatment to use (Stobierski,2021).  Spending in other economics is affected by inflation, tax rate, wages, and salaries. Pay rates in the health care industry are episode or population-based and monthly- based, while in the communist economic systems, the wages and salaries are uniform for all people who participate in the community work

Similarities

There exist several similarities between healthcare economics and other forms of economics. For instance, the government and private organizations play a vital role in driving capitalism and health care economics. The U.S healthcare industry comprises;  a variety of for-profit and non-profit institutions,  independent regulators, and Government agencies that come together to influence people's health and well-being (Stobierski, 2021).  The market forces control demand and supply, such as the costs, availability, and prices of health care services, goods, and other services in capitalism and healthcare economics. In all forms of economics, health care, capitalism, mix, and socialism economics, the government regulates activities through well-established professional bodies.

Massachusetts General Hospital, Boston

The only original and largest general and teaching hospital for Harvard Medical School is the Massachusetts Hospital, established in 1811. The health care institution is located in Boston and operates 24hrs. The institution has been headed by David Torchiana since 2003 and has a total of about 1000 beds. However, the institution experiences scarcity in terms of staff, resources, and other equipment. Scarcity refers to the shortage or inadequate supply. The Massachusetts hospital experienced a scarcity of staff, especially during the Covid-19 pandemic. Notably, the facility faces three significant challenges; workforce burnout, shortage of workers, and the challenge of managing close to 500 daily boarding patients who come for behavioral health services (Norton 2021). In addition, the facility experiences a scarcity of blood for patients who require a blood transfusion.

The increasing health care spending is becoming a concern for many state governments. In 2012, the Massachusetts hospital came up with a Health Policy Commission, HPC, to make health care affordable. The responsibilities of HCP comprise; coming up with data-driven recommendations and providing analysis on what and who drives health care spending. The commission is aware that some facilities in America charge patients a lot of money that does not meet the service's standards. Therefore, the Massachusetts Hospital decided to undergo an opportunity cost of gaining abnormal profits but ensure that patients get better treatment at affordable prices.

The Massachusetts Hospital makes some of its decisions based on marginal analysis. The marginal analysis evaluates the extra benefits of an activity carried out by health care providers at Massachusetts Hospital compared to the additional costs incurred by the same activity at the institution. Many institutions use marginal analysis as a tool that helps in decision-making to increase their profits. According to the Center for Health Information and Analysis, CHIA, (2018), Massachusetts hospital is doing quite well in profitability. Through the Marginal analysis process, the Massachusetts healthcare facility decided to invest in two types of activities; one that will increase profitability and one that will be affordable to the residents.  The facility, therefore, invests in several activities where some result in higher profits than others. Supply and demand at the Massachusetts Hospital depend on the patient influx and the available workforce to serve patients. As indicated, the hospital experience higher demand compared to the supply of services since the facility faces a shortage of employees, resources, and equipment while receiving an increased number of patients (Norton 2021). The increase in the number of patients indicates that the demand for health care is high while available health care workers and resources determine the supply of health care.

It is crucial to note that the hospital faces competition from other healthcare organizations. Competition at Massachusetts General Hospital refers to the external pressure offered by other health care facilities that serve more patients and record higher profits than Massachusetts general hospital. Some of its competitors comprise; Medical City Healthcare, Texas Health Resources, Life Point Health, Common Spirit Health, and Trinity Health. For instance, in 2017, Trinity Health recorded a profit of about $1.3Billion, (CHIA, 2018). Competition in most cases is always influenced by efficiency, cost of services, and the availability of staff and resources. However, despite facing a lot of competition from other well-established health care organizations, the Massachusetts hospital still makes a profit from its activities due to its efficiency in service delivery and management of the institution led by David Torchiana. Therefore, through sound leadership, one can ascertain that Massachusetts General Hospital has yet to experience market failure activities since the organizations still command a larger market in the United States. Market failure refers to a situation where the services provided by a health care facility are not efficient enough hence leading to losses. Through the help of marginal analysis, the hospital has been able to maintain efficiency, thus evading a situation related to market failure.