I want to thank everyone for joining me today to review the effects of microeconomics and macroeconomics in conjunction with the healthcare industry. We will start with a brief introduction of what we will review, and then briefly hit on the subject matter in a bit more detail. “The world’s largest and most diverse economy currently faces the most severe economic challenges in a generation or more”. The value of resources is an important aspect of economic status with both microeconomics and macroeconomics.
It is important to understand the differences and similarities between microeconomics and macroeconomics to fully understand the full aspect of how the economy as a whole is impacted by production, distribution and consumption. This will address the basic economic structures and give real life examples of situations in which micro and macroeconomics play a role in the economic conditions. Particular efforts will explain how microeconomics affects the medical healthcare industry in today’s economy.
We will review the scare resources surrounding medical care and how the economic price is established along with the opportunity cost. Keywords: microeconomics, macroeconomics, healthcare, resources, economics Introduction Economics is an ever changing aspect of every country and the number of factors that affect the economy is dependent upon what aspect of the economy being analyzed. A simple definition of economics is the study of making choices (Malek & Walsh, 2009); however this simple definition becomes much more complex when analyzing any economic condition.
It studies the scarcity of resources and its allocations, the wants and demands of the economy as a whole or the wants and demands from individual consumers or firms (Malek & Walsh, 2009). These studies help us determine the relationship between the supply and demand and analyze how we make choices that are goal oriented, yet may have some type of trade off to reach the wanted outcome (Malek & Walsh, 2009). One important concern within the healthcare industry and healthcare reform is the potential shortage of primary care providers.
As the healthcare industry and insurance requirements change, the demands of primary care providers are estimated to increase at an extremely rapid rate (Sherrod, 2010). So to make this easier to understand, Healthcare Reform is taking an initiative for the patients to propose a new healthcare model which will provide all citizens affordable health insurance. With the already known scarcity of primary care physicians, it is anticipated that the rate of new primary care physicians compared the influx of new patients, the ability to keep up with the increase we deem challenging.
There is a new initiative of the PPACA, which includes financial incentives to increase the supply of primary care physicians (Sherrod, 2010), however it is still estimated primary care physicians will still be a scare resource. On the other hand, if there are no insurance restructures, the consumers who cannot afford insurance, will continue to seek inconsistent medical treatment through emergency room department care, which increases medical care costs for the whole economy (Wu, 2001).
The higher income consumers will seek continual care, which normally reduces healthcare cost, yet they will have to pay higher premiums to compensate, due to the uninsured consumers care, which increases healthcare costs. The basic methodology of economic analysis is to develop a hypothesis about phenomena (that has little to no basic analytical data), obtain useful data that is dependent upon generalization that an enumeration of forces affecting demand in any problem and the forces affecting supply will show economic trends (Hausman, 2002).
Differences between microeconomics and macroeconomics Although microeconomics and macroeconomics are somewhat intertwined and rely on one to determine the other, they also have many differences. Macroeconomics is the study of aggregated supply and demand of all goods and services, as an economy as a whole including the economic effect of the whole economy (Gottheil & Wishart, 1997). Microeconomics is the study of supply and demand of individual consumers and firms of individual goods and services (Gottheil & Wishart, 1997). Microeconomics and macroeconomics phenomenon.
As we watch the major changes within the healthcare system and healthcare reform evolve, and unsure as to what the final outcome will be, the economy is sure to change for patients, physicians, vendors, bankers, impact on other countries and many more factors. The main phenomenon’s that are in question at this time are “why are healthcare costs overburdening the economy? ” and “what are the main factors that are impacting the situation? ” The end question is going to be “how do we resolve the problem”. An example of macroeconomics within the economic healthcare system this is the trend of the GDP of US healthcare costs.
An important factor in this trend is the trend of uninsured population (Samuelson, 2008). In this phenomenon, it is important that the microeconomics is analyzed as well. This will show how specific factors affect specific entities. An example of this is effect of the uninsured or even the insured with high patient responsibility of payment. As healthcare costs rise, the premiums to employers rise as well. To keep their cost down, they transfer the cost to the employee, who then owes the provider. Currently there are minimal efficient avenues to effectively determine what a patient will owe prior to the end of an office visit.
This put the burden of cost on the provider, having to carry accounts receivable for a longer period than historically, but is also an opportunity of cost and the effects of price control on multiple levels (Francis, 2010). A personal example of a microeconomic decision that I have dealt with within the company I work for, is the decision to close the office for an extended lunch hour. Currently employees are required to take a two hour lunch from 12 pm until 2 pm. This was a difficult decision, as it was a give and take on a variety of levels.
The factors that were analyzed to make this decision were provider availability, employee efficiency, costs, potential loss of income and potential loss of patients. The clinic is a sole physician office with 3 part time employee and 3 full time employees that is a bit higher than the average sole family physician. Due to an unexpected absence of a newly hired nurse practitioner, payroll was a key factor in the decision. To be able to cut expenses slightly, yet continue to increase revenue was the goal. Since the provider has been working more than normal due to the patients that had to be rescheduled, this extra time allows the provider to omplete charts, so that claims can be sent out timely, thus continuing normal flow of income. The cost of this decision, are the patients that become frustrated because they can’t get in at one, or possibly have to pick up children around the 2 pm hour and the two to three visits that will not take place. The cost of that choice is actually saving the clinic around $200 per day. Healthcare reform has impacted several business decisions in the macroeconomic phenomenon aspect. There are many insurance companies and government entities that are stressing the importance of healthcare cost reductions with monetary incentives.
These incentives to a solo family practice office could be extremely beneficial. In that aspect, it is our goal to ensure that we participate with the government incentives for financial reasons and to ensure that our office will not be penalized due to noncompliance. Our office has also decided to become a Patient Centered Medical Home. Getting this accreditation is important for the future. It will keep our clinic accountable, distinguish us as a top provider and could potentially deem financial gain. In the big picture, it is a way to monitor how physicians are doing their part to reduce healthcare cost.
Healthcare and the economy is a high concern right now for everyone. However, it is also a very complex issue. There are so many factors that have to be considered and weighed against the opposite. There are many opinions on what should be done, but no one has the true answer. It certainly starts with trying to curb unnecessary testing and/or medications, considering how to ensure that patients are seeking preventative care along with continuity of care. This will not be answered over night or even within a year or two, this will be an ongoing ever evolving issue.
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Microeconomics Versus Macroeconomics. (2020, Jun 02). Retrieved from https://studymoose.com/microeconomics-versus-macroeconomics-essay