There are numerous issues that should be taken into consideration when analyzing the efficiency of economic strategies in healthcare. Given the complex nature of the services, applying the traditional tools may not provide the complete picture. Therefore, it is crucial to realize all the significant differences concerning the demand and the pricing strategies in healthcare. Evaluating elasticity has proven to be one of the most efficient tools that ensure proper analysis of the numerous factors that underlie demand for healthcare services.
Healthcare has always been considered a sphere where general economic principles are hard to implement in a due manner. For instance, Gerfin (2019) claims that individuals tend to demand too much healthcare when insured, generating a welfare loss to society. Therefore, the inverse relationship between price and demand can be significantly altered. Nevertheless, it is crucial for planers to check elasticity whenever a significant change in insurance terms occurs.
Individuals tend to perceive health as a capital good, which leads to substantial shifts in the market once new healthcare policies are announced. What is more, recent phenomena, including the pandemic, have proven to drastically influence the demand for healthcare services. Therefore, hospital planners should utilize that experience under future extraordinary circumstances, keeping in mind that large-scale health issues lead to nationwide economic repercussions, which does not leave much room for maneuver in terms of pricing.
Multiple factors can substantially alter the business environment and lead to unpredicted surges in demand for healthcare services. Hospitals should be prepared for such rapid changes and maintain the quality of care they provide. Thus, given the uniqueness of the services, their economic strategies should be centered around the significant number of medical workers, superior quality, and, consequently, high price levels. People’s health and wellbeing cannot be undermined under any circumstances. Therefore, hospitals should utilize elasticity as a viable tool that helps determine the appropriate prices, taking into consideration the effects that insurance and epidemics may have on the entire healthcare system.
Reference
Gerfin, M. (2019). Health insurance and the demand for healthcare. In Oxford Research Encyclopedia of Economics and Finance.