Essay

c. Use of Economic Principles

Economic principles are widely used in designing long- and short-term organizational plans in the health care sector. The modern patterns of increasing competition across different health firms and the growing effects of globalization collectively contribute to firms’ use of economic principles to seek new, more efficacious instruments for economic systems management. Such principles can guide long- and short- term planning if the economic systems successfully function (Kutran, 2017). This can result in understanding environmental conditions that are necessary for managerial decision-making and timely development that is aimed at their adaptation to environmental changes. Mangers utilize economic principles to undertake market assessment, analyzing trends, and improving systems, and participating in effective organizational and economic arrangements of such systems management. Through such principles, organizational leaders determine ways of introducing structural, technical, administrative, and cultural changes to improve performance.

2. For- profit and Non-Profit

a. Financial Differentiation

There are various financial differences between for-profit and not-for-profit health care organizations. For instance, not-for-profit organizations do not exist with profit optimization goals while for-profit health care firms are driven by the desire to maximize sales and revenue. As such, non-profit organizations do not have a single indicator of financial performance compared to business enterprises’ net income or bottom-lime (Bragg, 2010). In fact, the most efficacious indicators of the performance of a non-profit health care firm are generally not measurable in financial metrics such as dollars but rather in the readers’ qualitative judgment about the effectiveness of the organizations in realizing their overall mission, goal, or objectives. However, the dollars are often the commonly mentioned language of financial reporting in business organization.

Information that is required to support the process of assessing performance is often provided in financial statements through reporting revenues and expenses gross as opposed to net, as well as categorizing expenses on the basis of mission-related programs and supporting activities that they sustain. On the other hand-for-profit organizations assess success and goals using financial metrics such as revenue change, salaries, utilities, depreciation, and change in market share. Unlike business organizations, the bottom-line of a non-profit organization’s statement of activities is not always performance measures (Bragg, 2010). Rather, it can be assessed through changes in net assets for the reporting periods. As such, there is no need for not-profit organization to distinguish he components of comprehensive income as business enterprises often do. To the contrary, all the revenues, gains, expenses, and losses are often reported in a single statement that is ambiguous rather than being subdivided into specific financial records and documents such as income statements, balance sheets, as well as profit and loss accounts.

b. Economic Differentiation

For-profit and non-profit organizations in the health care sector often differ significantly with respect to the economic dynamics. Economic forces such as changes in macroeconomic conditions may affect the overall performance of for-profit organizations (Bragg, 2010). For instance, periods of economic recessions may result in the overall reduction in demand for health care products a and services, which in the long-run affects the performance of business enterprises. On the other hand, non-profit organizations may not be affected by changes in economic forces because their main sources of finance are donors and well-wishers. Even in periods of economic downturn, they may deliver their specific goals, which are not often measured financially.

Non-profit organizations often receive money through contributions, a form of transaction that is often without counterpart in business enterprises. These contributions are always subject to donor-imposed restrictions and standards that can affect the types and levels of services that a non-profit organization offers (Bowman, 2011). Due to prevalence of donor-imposed restrictions, recurring, and in some situations, permanent, financial reporting by non-profit health institutions must reflect the nature and extent of donor-imposed restrictions and changes in them that take place during the reporting periods. On the other hand, for-profit organizations often operate under the control of shareholders and corporate leaders (Bowman, 2011). Their sources of funding also differ because they can generate revenue and profits to support their business endeavors. Unlike for-profit organizations, non-profit firms generate income from sources other than selling goods and services.

3. Policy Changes and Disparity

a. Economic Policy and Disparity

The economic policies of a nation significantly influence health care disparities. Ssypuk et al. (2015) observe that while social and economic policies are not often regarded as part of health services infrastructure, they influence health and disease by altering social determinants of health. Majority of social policies such as housing and economic empowerment programs often target low-income populations. However, they rarely consider health as their initial missions and outcomes. Socioeconomic policies that expand education, increase minimum wage, and employment opportunities reduce disparities in health care access (Politzer, Shmueli & Avni, 2019). Therefore, policymakers should incorporate health care access into their programs.

b. Policy Changes

Recent legislative changes have significantly impacted health care access. For instance, policies that increase minimum wage and employment opportunities have increased the rates of seeking insurance cover among low-income neighborhoods. Additionally, the Patient Protection and Affordable Care Act (ACA) increased access to health by increasing insurance cover for low-income neighborhoods.

c. Disparity Planning

The purpose of health care planning is to increase access and availability of health across all populations and groups. Additionally, many public health problems emerge from the existing disparities that stem from social and racial challenges. African-Americans, for instance, have low access to health than their white counterparts. Therefore, health care professionals and policymakers must take into account disparities to implement proper planning.

References

Bowman, W. (2011). Finance fundamentals for nonprofits: Building capacity and

sustainability (Vol. 2). John Wiley & Sons.

Bragg, S. M. (2010). Wiley GAAP: Interpretation and application of generally accepted

accounting principles 2011. John Wiley & Sons.

Dufour, F. (2019). Protecting the US Population’s Health Against Potential Economic

Recessions and High Unemployment and the Endemic Inflation of Health Care

Costs. Available at SSRN 3504249.

Osypuk, T. L., Joshi, P., Geronimo, K., & Acevedo-Garcia, D. (2015). Do social and economic

policies influence health? A review. Current epidemiology reports, 1(3), 149-164.

Politzer, E., Shmueli, A., & Avni, S. (2019). The economic burden of health disparities related to

socioeconomic status in Israel. Israel journal of health policy research, 8(1), 46.