Final Project : Policy Research and Organizational Analysis Report
Southern New Hampshire University
IHP-620-Q1591 Economic Principles- healthcare 22TW1
October 20, 2022
The purpose of this report is to focus on economic principles and how they apply to the field of healthcare. Healthcare facilities need to make economic decisions because they need financial resources to run. They need economic consultants that will help in making strategic economic decisions that will guide healthcare facilities on where and how to spend their money (Hicks, 2020). This ensures that they are wise in their undertakings. This report focuses on Jackson Memorial Hospital, a facility that has more than 1,500 licensed beds. Despite providing healthcare services, the facility is also a research center. This implies that huge financial investments need to be made. In such cases, economic decisions need to be made to ensure the right investments are made. The report looks at how economic principles apply to facilities such as the Jackson Memorial Hospital.
The scope of the report narrows down to the healthcare sector. This is a sector that plays a vital role because it affects the lives of people. The paper focuses on particular areas of economic principles and how they affect healthcare. For instance, the theory of demand and supply is focused on. It helps healthcare facilities to determine the services that are demanded the most and how they can be met. The focus is on a microeconomic level because it does not look at the industry in general but one healthcare facility.
The overall subject of the report is the application of economic principles in healthcare. It is noted that economic principles are applied virtually to all sectors. However, this report narrows down to healthcare. It looks at principles, theories, and policies of the economy and how they affect operations and decision-making in healthcare organizations. Regardless of whether a facility is for-profit or non-profit, economic decisions must be made wisely (Bender, 2020).
The primary teaching facility for the Leonard M. Miller School of Medicine at the University of Miami is the accredited, non-profit Jackson Memorial Hospital. Jackson Memorial Hospital, which has more than 1,550 licensed beds, serves as a referral facility, attracts researchers, and is the location of the Ryder Trauma Hospital, the only adult and pediatric Level 1 trauma center in Miami-Dade County. The primary teaching facility for the Leonard M. Miller School of Medicine at the University of Miami is the accredited, non-profit Jackson Memorial Hospital (Jackson et al., 2002). Jackson Memorial Hospital, which has more than 1,550 licensed beds, serves as a referral facility, attracts researchers, and is the location of the Ryder Trauma Hospital, the only adult and pediatric Level 1 trauma center in Miami-Dade County.
Patients bear a significant financial burden due to lower insurance payments. In addition, COVID-19 pandemic victims and their families are being compelled to pay extra for even simple and commonplace services due to job loss or layoffs. The patient is now the third-largest payer, after Medicare and Medicaid, according to Jackson Hospital’s vice president of revenue cycle; therefore, the financial risk these developments posed to Jackson Hospital had to be addressed.
The management aimed to implement contemporary methods to involve patients early in discussions about financial obligations, payment alternatives, and agreements (Jackson et al.,2002). To improve patient collections, Jackson Hospital looked for effective ways to convey patient balances and payment choices for services provided. Among the objectives were lowering collection expenses and raising patient satisfaction. A $1.2 billion, not-for-profit, independently run acute care hospital, Jackson Hospital is located in a working-class neighborhood with blue-collar residents (Tookes et al., 2015). Their population’s payer mix is 56% Medicare, 11% Medicaid, and 6% self-pay, and their patients’ average credit scores are under 600. From the financial statements available, this organization has no notable spike in revenue attributable to increased injuries and accidents related to the ice during the winter season.
Economic Theories and Principles
A. Economic Disparities
The provision of healthcare requires financial resources. A healthcare organization needs to be financially stable for it to offer the needed healthcare services to its patients (Hicks, 2020). Jackson Memorial Hospital, despite being a non-profit organization, is financially stable and this implies that the facility can afford to offer the best quality healthcare services as well as research opportunities. When the facility is financially healthy, there is a demand of investing the excess money into new healthcare services so that patients can access more and better services. According to the demand theory, when there is more disposable income, there is an increased demand for more goods and services. In other words, the financial well-being of an organization affects its demand for services.
B. Economic Theories
One of the most useful economic theories in the healthcare industry is the theory of demand and supply. According to this economic theory, the demand for a product will decline if the price goes up (Bender, 2020). Conversely, when the prices are high, the supply of a product is boostedbut when prices drop, the supply is diminished. This theory is relevant to the field of healthcare, especially in chronic illnesses. For instance, if the supply of medicine for a particular disease decreases but the demand persists, then the price of the medicine will go up. The proponents of this theory argue that the level of demand and supply affect the prices of commodities in the market until the point of economic equilibrium is reached. This is true in the healthcare industry because there are situations where there is a shortage of particular drugs or services while the demand is high. Thismakes them expensive and inaccessible to many patients who require the services.
C. Use of Economic Principles
Economic principles are important to organizations because they help in making informed decisions especially financially. For an organization to operate, it needs to invest in various areas where it intends to provide goods and services to its clients. In such cases, economic principles must be applied to determine the cost-benefit analysis of the potential investment. This helps to tell whether or not there will be a reasonable return on investment in whichever project an organization takes. If there is an indication that investment will be successful, resources should be provided for the project. In other words, economic principles play a key role in informing an organization about the chances of success or failure of what they want to do. For the best results to be achieved, a variety of economic principles such as the cost-benefit analysis and the SWOT analysis should be utilized.Even if an organization is a non-profit, it needs to make the correct economic decisions for it to survive in the industry.
For Profit and Non-Profit