Question

Hospitals have always competed for patients. Contrast the effects of such competition (in the terms of cost per admission, length of stay, services offered , and the introduction of new technology) in the period of cost-based payment and after the introduction of managed care.

Answer 1

Healthcare sector, on a global scale has seen many develooments over the years. In the current era, the economics behind provision of healthcare has become more relevant. Hospitals, along with providing proper patient care have become more competent today with adavncement of medical technology and accessibility to them. The introduction of cost based payment systems have been instrumental in aggravating the competitive practices. Cost based payment refers to an innovative payment mechanism where payments to doctors and medical professionals are being made based on the quality of patient service rendered. With introduction of various services like Medicare, managed care given to the patients have increased and competition among various hospitals have also seen an increase. The Medicare system of US gives personal managed medicare to those people starting from the age of 65 based on the insurance policies owned by them.  

According to the recent statistics, USA spends almost 18% of their GDP on healthcare costs which are manged on a major scale by private participants. Unlike countries like India, where limited competitions are allowed in the healthcare sector, it has a system of healthcare which is dominated by the private players. With increased private participation, hospitals are now competent in providing various healthcare services like managed care and medical benefits. The economics of helthcare is becoming seemingly important to the global economy today. The following analysis could be made as the effects of such competition on healthcare sector.

• According to healthcare studies, the average outpatient costs are about $500 and the average inpatient health costs are about $ 23, 000.
• The average stay in hospitals have been drastically reduces as the result of competition and it has now reached almost 4.5 days.
• Healthcare technology has been improved drastically. The healthcare records are now stored in a digital fashion and patient care is done through mechanisms like Telemedicine.
• Patient care have been improved over times with more spending in the healthcare studies and with introduction of technologies that have improved the managed care.

With many advancements that have been made in health care research and development, competition among various hewlthcare institutions have imcreased which, from the above analysis have resulted in bettering the healthcare services. With cost based payment mechanism the focus on personal managed healthcare have also improved over times. Thus, we can conclude that competition in healthcare sector is always advantageous to the patients unless it breaks the ethics of healthcare aystem.