The study of Health Economics encompasses the application of several tools of microeconomics like demand, and the theory of cost regarding health issues (Santerre & Neun, 2009). However, the main objective of studying health economics is to encourage proper understanding of the various economic aspects of health care issues. Therefore, the analysis of microeconomic knowledge is important while conducting a thorough economic healthcare study. Consequently, the management of the hospital should not worry if they lack some macroeconomic backgrounds regarding the provision of healthcare facilities. The paper assists Sunnydale in applying some theories of microeconomic concerning health economic issues; hence, they will start thinking in line with health economists.
Some individuals in any society have unlimited needs concerning nonmedical and medical products and services despite the scarce resources (Santerre & Neun, 2009). Therefore, quick decisions have to be made concerning the appropriate mix of both medical and nonmedical services and this process of decision making should involve trade-off- making. For instance, if several people are trained as either doctors or nurses in Sunnydale, the few people will be left to produce basic nonmedical products such as food, shelter, and clothing. Therefore, there will be more medical products as compared to nonmedical goods given a fixed quantity of resources, and the reverse will be the same.
The consumption decision should encompass a proper mix of medical products and services to be produced in the health economy. It also involves trade-offs because when more health care properties such as medical equipment and nurses are allocated to maternity care services, fewer resources will be available for the production of nursing homes to take care of aged people. Therefore, the efficient allocation of health resources in the economy can be attained by choosing the best mix of products in the underlying preference of the society.
The specific health care to be used relies on the production efficiency since production inputs are combined to generate particular goods and services in several but different ways. For instance, Sunnydale can produce its services through capital and labor intensive approach. Similarly, medical tools that are relative to the total number of patients in the hospital indicates a capital intensive approach to providing hospital services. On the other hand, the ratio of the nurse to patients represents labor-intensive approach. Therefore, the implication of efficient production indicates that the society is receiving maximum output from the limited resources of the hospital since an appropriate mix of the inputs has been chosen for the production of every product.
According to figure 1.1, let's assume that the initial operation of the health economy is at point (C) with Mc- representing maternity care service units and Nc- representing nursing home service units (Santerre & Neun, 2009). If the decision makers in healthcare sectors decide that the society will be better at point D representing an additional unit of home services, ND- Nc. Therefore, the movement from C to D indicates that the units of maternity care (Mc-MD) are provided to get additional nursing home units. Since all medical resources have been utilized fully at point C, a movement to D means that all medical inputs have to be reallocated to the market of nursing home services from the market of maternity care services. Consequently, if a unit of the nursing home services is produced, there will be a decline in the quantity of maternity care services. As a result, the forgone units of the maternity services (Mc-MD) represents the opportunity cost of creating additional units of nursing home services.
Individuals who should get the medical products will rely on the equitable distribution medical services because good and services are distributed only to people who are able and willing to buy them in the market. In Sunnydale, the medical funds are coming directly from the consumers, government, and private insurers. It is direct because all capitals are originating from the consumers inform premiums, taxes, and out of pocket payments. The category of private insurers includes both Medicare and Medicaid that provide medical cover to aged people.
Like other resources, medical resources are also scarce at a specific point in time. Therefore, the opportunity cost is associated with each medical resources due to scarcity. Hence, costs of medical care represent the overall opportunity costs of using different resources of the society such as labor and capital to generate medical care than other goods and services.
Recommendations and socioeconomic status
If the health economy does not work in a more efficient, socially and equitable manner, then Sunnydale should propose for solutions and policies that can change the undesirable performance. Health economics is determined to allocate health resources and distribution of medical services in the society (Trusko, Pexton, Harrington & Gupta, 2007). Since the available resources are limited, the society has to determine the exact amount of medical services to produce to serve the adults, aged and children. Similarly, they should identify the type of medical services to produce, the applicable mix of health care resources, and people who should get the output of health care services. Therefore, tradeoffs are needed while handling the above socioeconomic status.
References
Santerre, R., & Neun, S. (2009). Health Economics: Theories, Insights, and Industry Studies (5th ed.). South Western, United States of America: Cengage Learning.
Trusko, B., Pexton, C., Harrington, J., & Gupta, P. (2007). Improving Healthcare Quality with Six Sigma. United States: FT Press.
