Economic Tools Concepts to Evaluate a Current Essay

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economic tools concepts to evaluate a current issue situation which exist today in the U.S. health care industry

Health Industry:

There are two sets of health issues and many players in the health industry. One set of paradigm deals with the public and private health care issues, and another the emerging trend of market oriented changes in the health care industry. Hitherto health care was a public service but has now transformed itself into a competitive industry. In other words it has become a part of the national economy and economic analysis is not only important to care givers and institutions, but is also important to doctors and medical workers because the health industry is highly competitive. The debate on public health issues changed in the past with more scientific developments and insight into community care and medicine. (Fox; Ludden, 1998)

Some of the modern developments of the end of the 20th century caused major public sector reforms leading to changed views on community health questions and public health services, hospitals and other providers. Consequently the private sector was encouraged to step into the field. During the 1980s, budget deficits were a huge motive for public sector reforms in lot of parts of the world with emphasis more on privatization that could improve the services rather than taking a look at the scenario of the services as they were. From then on the health-care markets like all others have been influenced by supply and demand, and the more competitive environment which has created purchasers like insurers and investors in the industry have now become beneficiaries of the market forces and the cost of health-care is now a great percentage of the gross national product -- GNP as a result of the interplay of demand and supply changes.

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(Fox; Ludden, 1998)

Here the supply and demand in the health industry is taken by the public and private sector, and this has paved way for the growth of medical science. Thus the heath care sector had to adapt to the changes and commercialization and use management techniques and analysis of corporate companies. This also applied to care givers, hospitals and insurance companies and other service providers.

Economic Tools Adapted for U.S. Health Care Industry

No doubt that the concepts in analysis have been borrowed from the markets and the industries that are highly competitive and are a factor in the national economy. The same tools that are good for business analysis have been found to be useful for analysis in the health care industry. Doctors and medical workers were not 'commercial' initially. There have been economic changes in the U.S. economy from the period 1960-1980 that have shaped and affected the current trends and the present scenario of the health care. It began with extreme instability for political, economic, and broader social relations in the United States and then the transformation at the beginning of the Millennium. (Heirich, 1998) The face of the industry has changed and so has the requirements. Value creation to day is mostly done by pharmacy benefit managers -- PBMs and health maintenance organizations -- HMOs. The new healthcare players are thus in need of these tools to improve the medical cost management skills, and creating a competitive organizational culture. (Goh; Pritula, 1996) Thus these tools have gained importance.

Some Tools Considered:

There are many tools that economists use for various purposes. One of the most effective tools is the CBA or cost-benefit analysis. This tool….....

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