Question

what is the effect of demand in the growth of the Health Care service industry?

Answer 1

(*)Demand by definition is an economic concept that describes consumer's desire to pay a price for goods or services. If all other factors are constant, a rise in the price of a good or service will reduce demand and a decrease in the price of a good or service will increase demand . Healthcare demand is gradually rising.

Some important concepts or factor that influence demand in healthcare have to be well defined in order to understand the concept of demand in health care. These are:

1. Prices: This is the amount of money expected in payment for something.

2. Consumer: For the sake of this paper, a consumer is defined as a buyer or a patient.

3. Income: This is money earned especially through investment or work. Income can influence demand for healthcare. If a consumer is a low-income earner, the consumer may not seek healthcare for common sickness. Likewise, a consumer who earns more may be more willing to spend on healthcare.

4. Governmental influence: Policies such as subsidy can increase demand for healthcare as patients are charged a lower price.

5. Supply: Is a fundamental concept in economics that describes the total number of a specific good or service available to consumers. Supply can be determined by price, competing goods, and demand

In most industries, the product or service can be standardized to improve efficiency and quality. 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. In other services, there is a choice in selecting which person or industry business can be conducted with. It is not so in healthcare as treatment has to be provided to patients in places like the emergency room regardless of patients’ ability to pay or not . Furthermore, healthcare professionals are rarely paid directly by their patients like in other industries. Payment usually comes from government or insurance companies. These factors make healthcare unique when compared with other services.

Also, healthcare providers are usually more knowledgeable about illness and treatments than their patients [3]. Patients depend on their provider to act in the best interest, but there is a conflict of interest because the providers are selling the services to the patient. In this case, demand and supply are interwoven and jointly determined by the individual at the same time, and this can lead to market failure. For example, if a provider’s motivation is driven by profit or increased income, the provider may order more services and tests than required. Hence, the consumer pays more for unnecessary services without having knowledge of it. Furthermore, with other services or goods such as purchasing an automobile, the buyer does not have to have years of education before understanding the best vehicle for his or needs.