Question

Question 4: How is the medical care market different from other markets? Discuss your answer by giving 4 likely reasons.
Health care marketing:
Refers to the use of marketing strategies for the purposes of protecting and improving population health the strategies including:

Answer 1

The following reasons may clarify the difference between other markets and medical care market-

1. Information Asymmetry-

In a standard market situations, the buyers are assumed to have the complete knowledge of the products and services they are buying, however, in the medical care market the buyer(patient) hardly knows which is the best treatment option for her. She relies on sellers(hospital, doctors etc.) to know what she needs and is most likely to act on their advice. This impedes the free choice of the buyer(patient) due to information asymmetry.

2. Indirect Pricing Mechanism-

In normal market conditions the buyers and sellers arrive at a price after negotiations and forces of competition and demand and supply determining the price of the product or service, however, in medical care market the pricing is either regulated by the government through appropriate legislation or dominated by the reimbursement rates fixed by insurers. This impedes the functioning of the invisible hand to decide prices in medical care market.

3. Influence of Government -

Unlike other markets, the medical care market have heavy influence of the government. This is due to the accepted view across the world that healthcare is a public good and a welfare state cannot deny it to its citizens whether they have the resources to pay for it or not. Therefore, the medical care market world over is highly regulated by the government which impedes free functioning of the factors of demand and supply.

4. Externalities in the healthcare-

The medical care market has positive externalities which impede the market functioning. For instance, a vaccinated person against an infectious disease is less likely to contaminate the disease to others and hence prevent the demand for curative medical care by others also. This way curative care may not see much demand due to externalities.