Health Care Pricing

Module 4 Discussion

Julie Youngquist

Healthcare is a business at heart, but finances have not been an integral part of medical training. Rather, just the opposite — there is a considerable amount of tension between finance and medicine. Physicians are not trained to consider how much it costs to take care of a patient. This is an oddity compared to other industries, in which finances and operations are explicitly linked. Providers of goods and services are aware of the prices, or at least the price range, for their product, services or labor (Arora, Moriates, Shah, 2015). It is harder to find the right price for health care because there is no dollar value on health.  The health of one person is not worth more or less than the next person.  With that, health care does cost money but putting a dollar amount of it is difficult.  There is currently a national movement to make charges easily available to patients—an idea often referred to as “price transparency.” This movement has been made possible in recent years by a variety of new websites and tools that provide information directly to patients about the charges that they could face (Arora, Moriates, Shah, 2015).

In many respects, marketing a health care organization or practice is not substantially different from marketing a small business in other industries. Most owners of health care businesses typically have little (if any) business training, education or experience prior to owning their first private healthcare company. In fact, most health care business owners – and their employees – prefer to view their establishment as a calling, a career, a profession, anything but a business (Morrisey, 2018). Basic business marketing principles that apply in other industries – including market and competitive research, strategic planning, budgeting, positioning, branding, marketing strategies, tactics, media options, public relations opportunities, implementation processes, tracking processes – also apply in the hospital, health care organization and private practice segment. Health care is different from other goods and services: the health care product is ill-defined, the outcome of care is uncertain, large segments of the industry are dominated by nonprofit providers, and payments are made by third parties such as the government and private insurers (Morrisey, 2018). Many of these factors are present in other industries as well, but in no other industry are they all present. It is the interaction of these factors that tends to make health care unique.

Price and Cost are the terms that are frequently used and mentioned in the context of revenue i.e. sales. They are used interchangeably in our day to day normal conversation, but when it comes to economics or business each term takes on a separate meaning and must not be perplexed with one another. A price can be termed as the actual amount of money, that a consumer or client must waive to acquire certain service or product (Carlson, Huppertz & Neidermeyer, 2008). It also involves the future acquisition of the service or product if the client or consumer pays the said amount of money. A cost can be called as the amount which is paid to produce a service or product before it is sold or marketed to its intended clients or consumers (Carlson, Huppertz & Neidermeyer, 2008). The term could also be referred to the amount of money needed to maintain service or product. Price and Cost refer to the element of the money. In price, money will be used to gain something. Whereas, the cost will be referred to the money in the production or manufacturing process like wages, labor, materials, capital, bills, and other transaction costs. Price is generally demanded by the client or the consumer. Cost on another hand is demanded by the seller. The price is a future income for the seller. On contrary to that, cost represents all the past expenses.

 

References:

Arora, V., Moriates, C., & Shah, N. (2015).  The Challenge of Understanding Health Care Costs and Charges.  AMA J Ethics, 17(11), 1046-1052.

Carlson, J., Huppertz, J., & Neidermeyer, P. (2008).  Price and Consumer Cost Responsibility Effects on Quality Perceptions and Price Negotiation Likelihood for Healthcare Services. Health Marketing Quarterly, 25(4), 303-328.

Morrisey, M. (2018).  Is Health Care Different?  Retrieved April 16, 2019 from  https://www.econlib.org/library/Enc/HealthCare .

monopoly

Aaron Timmons

For the first question I think it isn’t so simple. Each country has a different way republic and social programs and capitalism is involved. With the United States it’s the politicians and policies that are driving up the cost. In the market place when there is less government involvement, a products price is determined more on the demand of it and supply of. Its simple economics. However, in healthcare, doctors receive kickbacks for using certain products and prescribing medications. Politicians receive money from lobbyist and money towards their campaigns to pass laws that are terrible like the ACA which makes everyone have everything on there insurance. If one looks at these companies’ stocks, including healthcare insurances and compared them with most other stocks, one would see that there’s are 100 times more per day valuable. Strategies in the real world is to push medications and force people to buy medications and services at a higher price as compared to other countries. Furthermore, there is no negations of services. There isn’t a way for people to shop around for lower prices as one would do in other industries. If a person could see the prices of surgeries and daily services, one would be more incline to save the money.  Americans are all being forced to buy the top of the line BMW care when most of America can only afford the ford focus without the power windows. Furthermore, the insurance won’t let you shop around and make you go to who they say and only buy the medication they allow, despite the doctors wanting to give you something better. The cost of healthcare is further increased by the cost to train medical professionals and the never-ending lawsuits that go, with healthcare mistakes. Healthcare isn’t like buying a car. With cars their variety and companies compete. Healthcare doesn’t have to competes and hide their rue cost raking in millions of dollars over people who desperately need it. Healthcare is more like a monopoly that have taken Americans money and lowered the quality.

Mike Holly (2017) How Government Regulations Made Healthcare So Expensive Retrieved from https://mises.org/wire/how-government-regulations-made-healthcare-so-expensive

Mod 4 - Post 1

Matthew Mangum

Good evening all,

                I believe setting the right price in the health care arena is more difficult than other industries due to a multitude of factors. Quoting a price up front leaves the medical facility open to losing money when complications arise or when unforeseen factors require more personnel, time, or supplies to accomplish the procedures. Additionally, insurance companies have negotiated rates with hospitals to pay different amounts for the same procedures (Elliott, 2015). Due to the many different payers that could possibly be involved, having a set fee might lead to reduced payments. By having floating prices, a hospital is able to make more money off of some patients to help offset the cost of lower prices charged to another patient. If hospitals don’t accept the negotiated payment rates for some insurers, they run the risk of losing a portion of their patient population.

                When buying a vehicle, the consumer is first presented with a sticker price. Hospitals also have a form of a “sticker price” but refer to them as “charges” (Burling, 2008). Just as with vehicles, hospital prices are negotiable. When paying for healthcare, the hospitals accept payments from insurers based upon agreed prices with the insurers. When paying for a vehicle or other products, most other industries require the purchaser to do the negotiating instead of getting involved with a middle man.

                In explaining the relationship between cost and price, it is important to first establish what each means. The price for healthcare is the amount that appears on the bill, or the amount charged by the hospital for the service provided (Arora, Moriates, & Shah, 2015). The cost of healthcare depends on the users’ perspective. Cost for a provider refers to how much expense it took to deliver care to the patient, while cost to the payer refers to how much they paid to providers for the patient’s healthcare (Arora, Moriates, & Shah, 2015).  This is similar to the patient’s perspective, but to them the cost is how much they paid out of pocket. The only real relationship between the two is that the price will almost always exceed the cost so that the medical facility is able to cover the bills and make money in the process. The price is set higher than what the hospital expects to be paid due to having to negotiate rates with different insurers or payers.

v/r,

Matthew Mangum

References:

Arora, V., Moriates, C., & Shah, N. (2015, Nov). The challenge of understanding health care costs and

charges. AMA Journal of Ethics. Retrieved from https://journalofethics.ama-

assn.org/article/challenge-understanding-health-care-costs-and-charges/2015-11

Burling, S. (2008, Jun 8). The cost of hospital care is difficult to pin down. The Inquirer. Retrieved from

https://www.philly.com/philly/business/20080608_The_cost_of_hospital_care_is_difficult_to_p

in_down.html

Elliott, M. (2015, Mar 30). Why it’s so hard to figure out the real cost of health care. The CheatSheet.

Retrieved from https://www.cheatsheet.com/money-career/why-its-so-hard-to-figure-out-the-

real-cost-of-health-care.html/