Report on Policy Research and Organizational Analysis
22TW1 IHP-620-Q1591 Economic Principles- Healthcare
Introduction
This report focuses on economic principles and how they apply to healthcare. Healthcare facilities must make economic decisions because they require funds to operate. They require economic consultants to assist them in making strategic economic decisions that will direct healthcare facilities where and how to spend their money (Hicks, 2020). This ensures that they are prudent in their endeavors. This report focuses on Jackson Memorial Hospital, which has over 1500 licensed beds. Besides providing healthcare, the facility also serves as a research center. This implies that significant financial investments are required. In such cases, economic decisions must be made to ensure appropriate investments. The report investigates how economic principles apply to institutions such as Jackson Memorial Hospital.
The report’s focus narrows to the healthcare industry. This is an important industry because it impacts people’s lives. The paper focuses on specific economic principles and how they impact healthcare. For example, demand and supply theory is emphasized. It assists healthcare facilities in determining which services are most in demand and how to meet those demands. Because it focuses on one healthcare facility rather than the industry, the emphasis is on a microeconomic level.
The report’s overarching theme is the application of economic principles in healthcare. It should be noted that economic principles are applied to almost all sectors. However, this report focuses on healthcare. It examines economic principles, theories, and policies and how they affect operations and decision-making in healthcare organizations. Economic decisions must be made carefully whether a facility is for profit or not (Bender, 2020).
The accredited, non-profit Jackson Memorial Hospital serves as the primary teaching facility for the Leonard M. Miller School of Medicine at the University of Miami. Jackson Memorial Hospital has over 1,550 licensed beds, serves as a referral facility, attracts researchers, and is home to the Ryder Trauma Hospital, Miami-Dade County’s only adult and pediatric Level 1 trauma center. The accredited, non-profit Jackson Memorial Hospital serves as the primary teaching facility for the Leonard M. Miller School of Medicine at the University of Miami (Jackson et al., 2002). Jackson Memorial Hospital has over 1,550 licensed beds, serves as a referral facility, attracts researchers, and is home to the Ryder Trauma Hospital, Miami-Dade County’s only adult and pediatric Level 1 trauma center.
Patients face significant financial hardship as a result of lower insurance payments. Furthermore, COVID-19 pandemic victims and their families are forced to pay more for even the most basic and commonplace services due to job loss or layoffs. According to Jackson Hospital’s vice president of revenue cycle, the patient is now the third-largest payer after Medicare and Medicaid; thus, the financial risk these developments posed to Jackson Hospital had to be addressed.
The management intended to use modern methods to involve patients early in discussions about financial obligations, payment options, and agreements (Jackson et al.,2002). Jackson Hospital looked for effective ways to communicate patient balances and payment options for services provided to improve patient collections. Among the goals were lower collection costs and increased patient satisfaction. Jackson Hospital, a $1.2 billion not-for-profit, independently run acute care hospital, is located in a working-class neighborhood with blue-collar residents (Tookes et al., 2015). Their patient population is 56% Medicare, 11% Medicaid, and 6% self-pay, with an average credit score of less than 600. According to the financial statements available, this organization has experienced no significant increase in revenue due to increased injuries and accidents caused by ice during the winter season.
Economic Principles and Theories
A. Economic Inequalities
The provision of healthcare necessitates the expenditure of financial resources. A healthcare organization must be financially stable to provide the necessary healthcare services to its patients (Hicks, 2020). Despite being a non-profit organization, Jackson Memorial Hospital is financially stable, so the facility can afford to provide the highest quality healthcare services and research opportunities. When the facility is financially healthy, there is a demand for the excess funds to be invested in new healthcare services so that patients can access more and better services. According to demand theory, increased disposable income increases the demand for more goods and services. In other words, an organization’s financial health influences its service demand.
Economic Theories B.
The theory of demand and supply is one of the most beneficial economic theories in the healthcare industry. According to this economic theory, if a product’s price rises, demand will fall (Bender, 2020). When prices are high, the supply of a product increases; when prices fall, the supply decreases. This theory applies in the healthcare field, particularly in chronic illnesses. For example, if the medicine supply for a specific disease declines but demand remains high, the medicine price will rise. According to proponents of this theory, the level of demand and supply affects commodity prices in the market until the point of economic equilibrium is reached. This is especially true in the healthcare industry, where there may be a shortage of certain drugs or services while demand is high. As a result, they are expensive and out of reach for many patients who require the services.
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C. Application of Economic Principles
Economic principles are essential to organizations because they help them make informed financial decisions. An organization must invest in various areas where it intends to provide goods and services to its clients in order to function. In such cases, economic principles must be applied to determine the potential investment’s cost-benefit analysis. This helps to determine whether or not a project will provide a reasonable return on investment for the organization. If there is reason to believe that the investment will be successful, resources should be allocated to the project. In other words, economic principles play a critical role in informing an organization about its proposed actions’ likelihood of success or failure. Various economic principles, such as cost-benefit analysis and SWOT analysis, should be used to achieve the best results. Even if an organization is a non-profit, it must make sound financial decisions to stay in business.
Profit and non-profit organizations
A. Financial Distinction
As the names suggest, for-profit healthcare organizations are established to make financial gains in addition to providing healthcare services. Non-profit healthcare organizations, on the other hand, are primarily established for public and social benefit. They have no intention of making money for their owners. For-profit organizations sell their services at a price that allows them to profit. The proceeds fund the facility’s operations (Rice & Unruh, 2015). Non-profit healthcare organizations, on the other hand, typically provide free services or charge a subsidized fee. Donors and well-wishers fund their operations and services. While the two types of organizations may provide similar services, they were founded for different reasons.
B. Economic Distinction
As previously stated, for-profit and non-profit organizations are formed for different reasons, even if they operate in the same industry. In terms of economic differentiation, for-profit organizations employ economic principles that focus on purchasing goods at a lower cost or manufacturing them and then reselling them at a higher cost (Bender, 2020). For-profit organizations’ economic models are based on minimizing losses and maximizing profits. Non-profit organizations, on the other hand, only use economic models that focus on sustainability; as long as the organization can sustain itself, that is all that matters. Such organizations place a high value on employee accountability and responsibility to ensure everyone works responsibly to keep the organization running. Non-profit organizations prioritize best practices centered on client satisfaction over profit maximization.
Policies, Transitions, and Disparities
A. Economic Policies and Healthcare Disparities
Economic policies have a direct impact on healthcare and can lead to disparities. For example, health insurance is an economic policy that aims to make healthcare more affordable, particularly in emergencies that necessitate significant financial resources. The type of services that different patients receive is determined by how much they contribute to their coverage. Health insurance and other economic policies make healthcare more affordable. The distinction is that different patients receive different types of care based on their contributions (Rice & Unruh, 2015). As previously stated, economic policies cause disparities in healthcare.
B. Policy Modifications
The Temporary Marketplace Premium Tax Credit Enhancement is one of the most recent policy changes. This policy change expands coverage to allow more people to afford healthcare. The Biden administration is making an effort to make access to healthcare more affordable. More than 14 million Americans will receive affordable healthcare coverage if Congress passes this legislation. The impact of this policy on healthcare economic policy is that organizations will need to adjust their policies to accommodate the new development. Healthcare services will be in higher demand as they become more affordable to more people. To meet the newly increased demand, healthcare organizations must increase the supply of their products, services, and workforce. When the government makes policies, organizations in the affected industries must adjust their strategies to fit the new environment.
C. Planning for Disparities
Disparities must be considered in healthcare strategic planning because they impact the organization’s operations and productivity. It is critical to pay attention to such factors so that operations run smoothly and efficiently. Healthcare disparities are differences in healthcare components such as insurance coverage, disease types, types of healthcare required, and income disparity among patients. The greater the disparities, the more complex the situation. With such a significant disparity, an organization must have effective strategic planning to handle the situation (Hicks, 2020). For example, suppose a healthcare organization serves people who speak a language other than their native language. In that case, there should be a plan to have permanent language translators to facilitate communication between patients and caregivers.
QUESTION
Making a few general recommendations for your chosen organization to help it plan for and mitigate negative economic impacts and disparities was a vital component of the policy research and organizational analysis report you submitted in Module Nine.
Present your recommendations for your classmates in this final discussion topic. Describe your chosen organization to provide context and justify your recommendations.