Question

How is the “product” of health care and the “business” of health care different from other commodities? Do consumers follow the same principles for health care as they do for other purchases? Do normal market forces apply to health care?

Answer 1

Health care is different from other goods and services:

The demand for health care is derived from an individual’s wish to regain good health. Health is not a marketable product, that is, it cannot be exchanged between consumers.

The health care product is the outcome of care is uncertain, large segments of the industry are dominated by nonprofit providers, and payments are made by third parties such as the government and private insurers. Therefore the “product” of health care and the “business” of health care different from other commodities.

2) consumers do not follow the same principles for health care as they do for other purchases.

In healthcare, every consumer is structurally, chemically, and emotionally different. What works for one person may not necessarily work for another. Healthcare also differs in terms of choosing consumers. Payment usually comes from government or insurance companies. These factors make healthcare unique when compared with other services.

3) Standard market forces do not apply to health care. As poor quality hospitals do not feel pressure from the patient to enhance their services but the high quality hospitals ensure better quality practices.