Appreciating Supply and Demand Analysis

This is due on or before Thursday, December 07, 2017 at 4:00 p.m. CST.

Prior to engaging in this discussion, please review Chapters 6 and 9, read Chapter 10 in the text, and review any relevant Instructor Guidance.  It is suggested that you review a few of the recommended articles to glean any helpful information. Supply and demand analysis aids health care leaders in ascertaining the effects of changes in policy on service lines that impact a community’s health (e.g., whether to expand existing services or perhaps close services).  Identify and evaluate publicly available tools that provide data and assist in formulating the basic shapes of demand and supply curves.  Communicate and elaborate on the relevance of these economic indicators in terms of pricing.  Evaluate and comment on the social-cultural implications of value-based care.

Recommended articles: 
  
Articles

Block, D. (2013). Disruptive innovation: Contributing to a value-based health care system. Physician Executive, 39(5), 46-52. Retrieved from the EBSCOhost database.

The article discusses how hospitals can use disruptive innovation to improve health care quality, safety and outcomes by reducing the costs of healthcare delivery. The author says health care delivery in the United States is at least 20 years behind the development of other industries in the country.

Ellis, R. P., & McGuire, T. G. (1993). Supply-side and demand-side cost sharing in health care. Journal of Economic Perspectives, 7(4), 135-151. Retrieved from the EBSCOhost database.
This article focuses on the supply side and demand side of cost sharing in health care.  Ellis & McQuire (1993, p.137) states that ”economists and others concerned with health care policy have debated the meaning of “demand” in health care. After all, as Arrow (1963) emphasized early on, the relationship between patients and their physicians (and other health care providers) involves agency, information, trust, and professionalism. A key unresolved issue in health policy is the magnitude of this provider-induced demand, and how it is determined.”

Heroman, W. M., Davis, C. B., & Farmer, J. L. (2012). Demand forecasting and capacity management in primary care. Physician Executive, 38(1), 30-34. Retrieved from the EBSCOhost database.
The article examines how a practical approach to demand forecasting and capacity management helps primary care clinics run smoothly and efficiently. The authors state that a demand forecast determines the gap relative to the capacity of the practice to provide health care which can affect all the patient-centered medical home (PCMH) principles.

Lillrank, P., Groop, P., & Malmström, T. J. (2010). Demand and supply-based operating modes: A framework for analyzing health care service production. Milbank Quarterly, 88(4), 595-615. doi:10.1111/j.1468-0009.2010.00613.x

“The structure of health organizations that provide services should reflect the possibilities of and constraints on production that arise from the market segments they serve. Organizational segmentation in health care is based on urgency and severity as well as disease type, bodily function, principal method, or population subgroup. The result is conflicting priorities, goals, and performance metrics. A managerial perspective is needed to identify activities with similar requirements for integration, coordination, and control” (Lillrank, Groop, & Malrnstrom, 2010).

Yu, T., & Hong Yih, C. (2007). Is health care really a luxury? A demand and supply approach. Applied Economics, 39(9), 1127-1131. doi:10.1080/00036840500461857

Yu & Hong (2007) suggest that many studies have found strong and positive relationship between per capita income and health care expenditure. These studies usually adopt the assumptions that (1) the relationships among the variables are constant; and/or (2) the supply-side market for health care could be treated by using standard demand functions models. To take into account of the supply side of health care, we use the demand and supply approach with the co-integration model to re-examine this issue.