Final Milestone

MILESTONE TWO 2

Milestone two assignment

Deanna Buchanan

SNHU

IHP-620

Dr. Karem Myers

Milestone two assignment

Economic Theories and Principles

Economic Principles:

In healthcare, economic disparities can manifest as differences in access to healthcare services, quality of care, and health outcomes based on an individual's socioeconomic status or location (Donkin et al., 2018). Due to financial barriers, communities with lower economic well-being may face challenges in accessing adequate healthcare services. For example, low-income communities may have limited access to primary care physicians, specialists, or hospitals in their vicinity. The availability of healthcare resources may also be influenced by the local economy, with economically disadvantaged areas having fewer healthcare facilities and providers (Donkin et al., 2018).

Economic Theories:

One economic theory applicable to the healthcare industry is the theory of supply and demand. Healthcare services, like any other goods or services, are subject to the forces of supply and demand (Tzenios, 2019). When demand for healthcare services increases, there is a need for a corresponding increase in the supply of healthcare providers and facilities. This theory helps explain the importance of healthcare workforce planning to ensure enough healthcare professionals meet the population's needs. For instance, the demand for healthcare services may increase with an aging population, requiring more doctors, nurses, and other healthcare professionals (Tzenios, 2019).

Another economic theory relevant to healthcare is the concept of opportunity cost. This theory suggests that there are alternative choices and associated costs in healthcare decision-making (Henderson, 2022). For example, investing in a new state-of-the-art medical facility would involve significant financial resources, and that investment may mean forgoing other potential uses of those resources, such as funding community health programs or medical research (Donkin et al., 2018).

Use of Economic Principles:

Hospitals use strategic planning to set both short-term and long-term goals. In the short term, they might improve patient satisfaction or reduce wait times for certain services. In the long term, they might aim to expand their healthcare services to meet the community's growing needs or invest in new technologies to improve patient outcomes (Henderson, 2022).

The process of strategic planning involves:

1. Environmental Analysis: Assessing the current healthcare landscape, economic trends, and regulatory changes that might impact the hospital's operations (Herring et al., 2018).

2. Goal Setting: Defining specific and measurable objectives aligned with the hospital's mission and vision.

3. Resource Allocation: Allocating financial and human resources to achieve the set goals (Herring et al., 2018).

4. Implementation: Executing the plans, which may include initiatives to enhance patient care, improve operational efficiency, or expand services.

5. Monitoring and Evaluation: Continuously evaluating progress towards the goals and making adjustments as necessary (Tzenios, 2019).

For-Profit and Nonprofit:

Financial Differentiation:

For-profit and nonprofit healthcare organizations differ significantly in their financial structures and objectives.

For-profit organizations are driven by the goal of making a profit for their shareholders or owners. They aim to generate revenue that exceeds their expenses. This profit-seeking motive can lead them to focus on high-margin services and markets (Henderson, 2022). They may invest more in marketing and expanding services in areas with higher demand, potentially neglecting underserved communities if they are not financially lucrative.

Nonprofit organizations, on the other hand, reinvest any surplus back into the organization to fulfill their mission and provide better healthcare services (Herring et al., 2018). Their primary objective is to serve the community's needs, regardless of profitability. Nonprofits may be more inclined to offer services to low-income populations, prioritizing social welfare over financial gain.

Economic Differentiation:

The reaction of nonprofit and for-profit healthcare organizations to economic policies can differ based on their financial structures and objectives.

For example, consider the newest CHIP legislation. A nonprofit facility might view this legislation positively as it aligns with its mission to improve the health of children from low-income families (Donkin et al., 2018). The legislation might provide additional funding and resources to support their services, which can positively impact their ability to provide care to more underserved children.

In contrast, a for-profit facility might have mixed reactions to the CHIP legislation. While they may recognize the importance of providing healthcare to children, the potential financial burden of compliance and increased regulation might concern them (Tzenios, 2019). They may need to allocate resources for implementing the required changes, and the reimbursement rates for CHIP patients might be lower than what they usually receive for privately insured patients.

Policy, Changes, and Disparities:

Economic Policy and Disparities in Care:

Healthcare economic policies can significantly impact healthcare disparities. For example, reimbursement rates set by government payers (such as Medicare and Medicaid) can affect the financial viability of healthcare providers in underserved areas (Tzenios, 2019). If reimbursement rates are low, providers may be reluctant to serve patients relying on these programs, leading to disparities in access to care.

Moreover, economic policies that address social determinants of health, such as housing, education, and employment, can influence healthcare disparities. Improving these social factors can lead to better overall health outcomes and reduce the burden on healthcare facilities (Herring et al., 2018).

Policy Changes:

The Anti-Human Trafficking Law aims to combat human trafficking and protect victims. While the primary goal of this legislation is not directly related to healthcare, it can have implications for the healthcare industry (Henderson, 2022).

Healthcare providers may be required to participate in identifying and reporting potential victims of human trafficking. This could increase their administrative burden and necessitate staff training on recognizing signs of trafficking. Additionally, the law may have financial implications for healthcare organizations, especially if it requires additional staff or resources to comply with reporting requirements (Donkin et al., 2018).

Disparities Planning:

Disparities of care are a crucial consideration in healthcare strategic planning. Hospitals must assess the healthcare needs of their community, identify underserved populations, and develop strategies to address disparities in access and quality of care (Donkin et al., 2018).

Strategic planning for disparities may involve:

1. Community Needs Assessment: Identifying vulnerable populations and their specific healthcare needs.

2. Resource Allocation: Allocating funds and resources to improve services in underserved areas (Tzenios, 2019).

3. Partnerships and Outreach: Collaborating with community organizations to reach out to underserved populations and improve health education.

4. Cultural Competency Training: Providing training to healthcare staff to ensure they can effectively address the needs of diverse patient populations (Henderson, 2022).

5. Outcome Monitoring: Regularly measuring and evaluating the impact of implemented strategies on reducing disparities and improving healthcare access and outcomes (Tzenios, 2019).

In conclusion, economic theories and principles play a vital role in shaping the healthcare industry's behavior and decision-making. Healthcare organizations, both for-profit and nonprofit, must consider economic factors when planning their short- and long-term goals. Economic policies can impact healthcare disparities, and strategic planning should take into account disparities in care to improve overall community health (Tzenios, 2019). Understanding these economic aspects is crucial for healthcare organizations to deliver effective and equitable care to their communities.

References

Donkin, A., Goldblatt, P., Allen, J., Nathanson, V., & Marmot, M. (2018). Global action on the social determinants of health.  BMJ global health,  3(Suppl 1), e000603.

Henderson, J. W. (2022).  Health economics and policy. Cengage Learning.

Herring, B., Gaskin, D., Zare, H., & Anderson, G. (2018). Comparing the value of nonprofit hospitals’ tax exemption to their community benefits.  INQUIRY: The Journal of Health Care Organization, Provision, and Financing,  55, 0046958017751970.

Tzenios, N. (2019). The Determinants of Access to Healthcare: A Review of Individual, Structural, and Systemic Factors.  Journal of Humanities and Applied Science Research,  2(1), 1-14.