Medical care is so special that normal economic forces do not apply and normal economic tools are not always used, explain the above statement.
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Medical care is so special that normal economic forces do not apply and normal economic tools are not always used. In view of what you studied, explain the above statement.
Medical care is so special that normal economic forces do not apply and normal economic tools are not always used. In view of what you studied, explain the above statement.
Suppose hospital (A) has 500patients/day and average cost of operation is $1500/day. Hospital (B) has 300 patients/day and average cost of $600/day. Hospital (C) has 100 patients/day and average cost of $600/day. What can you say about the most efficient size of hospital
Critically discussion the statement, “Medial care is so special that normal economic forces do not apply.”
The statement "Medical care is so special that normal economic forces do not apply and normal economic tools are not always used" suggests that the healthcare industry operates differently than other sectors of the economy in terms of economic principles and tools.
There are several reasons why healthcare is often considered unique when it comes to economic analysis:
1. Lack of perfect competition: In a perfectly competitive market, there are many buyers and sellers, information is freely available, and no individual entity has significant market power. However, in healthcare, there are barriers to entry for providers, limited consumer information, and a relatively small number of insurance companies, leading to market distortions and less effective competition.
2. Asymmetry of information: Healthcare is characterized by a significant imbalance in information between providers and patients. Medical knowledge and expertise are specialized and complex, making it difficult for patients to fully understand or evaluate medical services and their associated costs.
3. Uncertainty and risk: Healthcare involves inherent uncertainties and risks. People often seek medical care during times of illness or injury when the stakes are high, leading to a higher willingness to pay for necessary treatments. Additionally, healthcare costs can be unpredictable, especially in cases of emergencies or chronic conditions, making it challenging for traditional economic models to accurately estimate the value of healthcare services.
4. Ethical considerations: Unlike most goods and services, healthcare carries inherent ethical considerations. The principle of preserving life and providing care to those in need often takes precedence over cost considerations. This creates a tension between the goal of providing optimal care and the efficient allocation of limited resources.
Due to these unique characteristics, normal economic forces, such as supply and demand, competition, and price elasticity, may not operate as straightforwardly in healthcare. Economic tools, such as market pricing mechanisms, may not always be suitable or applicable in determining the value and cost of medical care.
However, it is important to note that healthcare economics is a complex field of study, and various economic principles and tools are still used to analyze certain aspects of the healthcare system, such as cost-effectiveness analysis, resource allocation, and health policy evaluation.