Introduction Managers of healthcare organizations have a lot to learn from the m

Question

Introduction Managers of healthcare organizations have a lot to learn from the management practices and breakthrough ideas from other industries. Your Final Project Report should identify three “big ideas” that represent great opportunities to improve the performance of healthcare organizations. Your Final Project should define the management practice or breakthrough idea, discuss the expected impact on improved patient outcomes, higher levels of customer satisfaction, lower costs, etc., and identify the critical success factors associated with implementing these programs in a health services organization. You should identify which of these management practices or breakthrough ideas has, in your judgment, the greatest, second greatest, and third greatest potential benefit for healthcare organizations. Clearly explain the rationale for your rankings. You are free to consider any management practices or breakthrough ideas so long as they originated outside the healthcare industry. Some examples you might consider include: Customer Relationship Management (CRM) Time-based Strategic Management Total Quality Management (TQM) Business Process Reengineering (BPR) Core Competency-Based Strategic Management Service Level Agreements Virtual Teaming Just in Time Manufacturing Systems Team-based Organizations and Performance Management Systems Competency-based Human Resource Systems Outsourcing The Internet Deliverable Your final report should not be fewer than eight pages in length or more than twelve pages. In terms of organization, your final report should contain the following sections: Executive Summary For each management practice or breakthrough idea: Definition and Discussion of the Management Practice or Breakthrough Idea Expected Benefits for a Healthcare Services Organization Implementation Challenges and Critical Success Factors. Rationale for the Recommended Ranking Be sure your Final Report is in MS Word, New Times Roman 12-pt font, with double spacing. The project must be written in APA format. A minimum of three scholarly references for each big idea in the paper is required for a total of nine scholarly references. The project is due Sunday MIDNIGHT CST of week 8.

Explanation / Answer

Economics is a study of scarcity and similarly we can understand Health Economics in the same way by applying the concepts of the Economics. Now given the complexities in applying the economic thinking over the health care, the use of the resources in health care facilities is a bit different. First of all, we must understand that the market of the health care and the way it delivers the quantity of goods in the market. The economic value of the resources utilized basically shows the determination of the market price and the quantity supplied. But the change here is that the allocation of the resources reflects the usage and hence the market value of these resources such as the instruments used by the health consultants and also the number of specialized doctors in the market for different fields. Hence, the information which has been broadly used by the hospitals and the epidemiologists are related to the development of the incentives by the government organizations and the other development such as the discovery of new antibiotic and other infection control medicines. The most important point here to understand it is that the health care is not a device or a thing which can be pulled off a shop and bought it by payment through a credit card. It involves the high level of uncertainty regarding the effectiveness and the availability of the medicines and other kinds of treatments. Now the key point here is that various economic analyses and other fundamental notion for economic applications can be applied in studying the behaviour of health care providers. The basic criteria would remain the same i.e. there are limited resources. Two noteworthy points are related to the issue of - 1) economics is about resource allocation, and 2) efficiency in resource use that is extracting the best output from minimum use of resources of the health care facilities. Therefore, there will be a production function which represents the health care services.

DEMAND SIDE

The first point and the economic variable to be discussed is the demand for the healthcare. The important and the special characteristics of the health care distinguish it from the other types of market goods. It should be noted that the heath care facility has certain features which leads to negative utility from more consumption. It means that there might be positive or the negative feeling of the person who has utilized the health care facility. However, when health care has been demanded to make the health of the individual better like regular check-ups and for the laser treatment, then there will beincrease in the usage of the health care facilities. Therefore, the importance of studying the health care economics is related to the derivation of the real consequences of the health professional utilization.

Now on the otherhand, there might be the case that the demand for health care facility is only to improve the health but not for the further treatment which might be pleasurable for the individuals. Hence, in such a case health care facility will act as a normal good whose more consumption will increase the utility of the person. Well-being of the people leads to the more utilization of the health care individuals. However, it does have more features for showing the value of the consumer surplus because it can be measured by the willingness to pay for the consumers. Also, the resources are scarce and the value of health care resources will also depend on the efficiency of the productive capacity of the individuals. The relationship between each unit of health care facility and the demand for it is negative because more facilities will be demanded at lower market price. Also, it has been affected by other factors such as the rate of substitution with other medical facility, elasticity of the medical facility provided, and the ease of availability of the good. The welfare aspects of such medical facilities are mostly related to the derivation of the marginal social benefit and the marginal social cost of the services provided. Hence, it is similar to that of the public good provision of the good. Hence, where there is addition of the welfare aspect of the good, there is rise in the affordability of the medical aid facilities. Health care facility is less tangible as compared to other goods and therefore there is trading of the goods or the facility in the similar way. (Principles of health economics)

As we discuss in case of the normal and the simple goods about the difference between a ‘want’ and a ‘desire’, similarly the willingness to pay for the health care facilities will decide the surplus extraction by the health care providers. (Eric Bailey - Project Manager, 2015)The higher the willingness to pay, the higher will be the consumer surplus generated. The effective demand of the heath care facility is related to the determinant of the resource allocation in the market. However, the difference between the other type of goods and the health care facility provision demand is that people ‘desire’ or they ‘want’ a good but on the other hand, availing a service of the health care is not due to somebody’s desire but because of the ‘need’ of the person. Hence, the willingness to pay will be very less in this case and hence the real effective demand will be much less. The Health economists basically take it as an issue of the capacity or the ability to pay by the individuals. This is because people will not be much happy to pay by spending money on health care expenditures. ‘Wants’ and ‘needs’ are treated differently in economics therefore the study of health economics is a bit different and complicated in this sense. . For example, a person may want nutrition supplements, even though these will not produce any health improvements for them; or they may not want a visit to the dentist even if it would improve their oral health.

The peculiarity with which health care economics has been studied depends upon the allocation of the resources which makes the market more effective.People would like to treat health care facilities in different way as compared to the normal goods because the characteristics are quite different in different markets. The allocation of the resources for health based commodities and other related services cannot hold the market but it directly affects the market of the health consultants and their fees. The conclusion from this is that the demand for health care can be analysed as if it were any good or service, but it has peculiarities that may mean that the usual assumptions about the resource allocation effects of markets do not hold. Moreover, it may well be that people wish resource allocation to be based on the demand for health or the need for health care, neither of which can be provided in a conventional market.

Studying the marginal change in terms of health care facility, we will have a look at the definition of the economic marginal change. It means the change in the total value of the good due to a very small or additional change in the provision of the other variable. For instance, the extra cost incurred due to the increase in the additional labour. Similarly, the marginal concept is same in that of the health care provision. For example, when then there has been the cost analysing of the surgical units, then there will be increase in the cost of using the same surgical unit for additional operation. In reality, the cost will jump to a high level with additional cost of the surgical operations.

Studying the elasticity of the drugs and the health care facilities, we can analyse the important points or the factors which directly affect the rate of substitution of the different health care facilities. For instance, there will be less substitution of the facilities as they are specific to the speciality. Patients hardly have any choice of purchasing different medicine as prescribed by the doctor. They cannot buy the cheaper medicine on their own; they have to purchase the medicine as prescribed by the doctor. Hence, the elasticity of the good in health care facilities are much low. (Product selection legislation gives the patient some choices in certain cases, but the above description is accurate for drugs protected by patents. This, of course, is altered to some degree by the adoption of formularies and therapeutic selection.)

When there has been attempt by the government for lowering the price of the health care facilities so that it can be reached to the poor people as well, then the medical facility does not follow the marginal cost rule. But they alternative to reduce the marginal costs as well by changing the way they use their instruments. For example, when there has been earlier discharge of the patient, then there will be rise in the provision of the medical facilities. Also, there can be reduction in the average cost of the health care facilities provision because of the calculation of the per bed cost on daily basis. This is because the cost per head of the inpatient can never be constant and hence the final average variable cost will vary on daily basis. Therefore, the best way out is to reduce the dependency rate and hence people will save more by using it than already expected. Marginal costs calculated with respect to an increase or decrease in the number of days would give a correct estimate of the likely savings.

But rise in the provision of the good than the efficient level is due to the existence of the externality where the social cost is more than the private cost of the good production. For instance, if there is provision of a newly discovery antibiotic, then its use will be highly affected by the quality and the result of the efficacy for other consumers. Therefore, the actual allocation of these resources will be dependent on the provision of the medical aid.

In order to design a clear mechanism for the allocation of the resources, there is an incentive to provide the feedback of the resources which has been utilized in the manufacturing of the particular medicine. Hence, there will be imposition of the government measures for such provision like taxes, subsidies and other such regulations. It will finally necessitate the resistance and the trade-offs for the treatment decisions for making the individual

The production function presented here is a simple relationship involving a single variable input. However, most production processes involve many variables, and determining the shape of a multidimensional production function can be a complicated statistical problem. However, understanding the technical relationship between health-care inputs (e.g., provider time, resources actually used for infection control) and outputs (i.e., patient health outcomes), and learning where resources are being over-employed (with no real gains in output) are crucial in determining efficiency and therefore savings in production costs. Hospital infection control is an input to all the productive services a hospital provides (e.g., paediatric care, general surgery, trauma, cancer). Changes in infection control may influence health outcomes throughout the hospital, in ways that may not be obvious.

CONCLUSION

Efficiency in resource use (getting the most out of limited resources) is a goal that every health-care organization can accept, regardless of one’s perspective (e.g., that of society, insurers, hospital administrators, or patients). Economic analysis is fundamentally about resource use and can serve an important role in health-care decision-making. Applying economic thinking to health care presents challenges to researchers and will require new approaches to analysis. Measuring the productive process in hospital care is complicated by the fact that the patient is both an input and an output in the process (i.e., the patient’s health is a function of factors determined outside the hospital, such as lifestyle and genetics). Precise and accurate information from hospital epidemiology is critical to understanding the resources needed, and thus the economic impact, of caring for hospitalized patients.

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