Health Care Market Analysis

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The Health Care Market The US health care sector is large and growing – health care spending in 2011 amounted to $2.7 trillion and 18% of GDP (Gaynor, Ho, & Town, 2014). In fact, approximately half of health care output is allocated via markets. Although most Americans like to think that the U.S. has the best health care system in the world, the fact is that Americans pay far more for health care than any other country (NCHQA). Processes generated within health care systems can be evaluated in two ways: 1) by examining factors that influence health; and 2) measuring what medical care is ideally supposed to produce (Hicks, 2014). Some of these ways will be visited in this paper. This paper will discuss several aspects of the health care market, …show more content…

Rose Hoban notes that according to Kevin Schulman, director of health sector management at the Fuqua School of Business, there little evidence that mergers result in substantial changes on the ground in terms of service provisions (2013). She also notes that David Dranove of the Walter McNerney Professor of Health Industry Management at Northwestern University’s Kellogg School of Management share a similar perspective. Dranove suggests that the result is that the people end up with organizations that have accumulated market power but haven’t really changed the way health care is …show more content…

There are several benefits of being a part of an HMO, especially for the providers. For instance, under some managed care organizations (typically IPAs or PPOs), providers are provided a straight salary (Hicks, 2014). Under salary compensation, a physician’s income is not affected by treatment choices made. Also, under another alternative, capitation, a physician receives a certain sum per patient, irrespective of what services are provided to the patient (2014). The disadvantage with that is that an extreme form of capitation would pay a primary care physician receives a certain sum per patient and makes him or her financially responsible for all care (2014). Hicks posits that this provides a very strong incentive to limit the care provided and puts the physician at great risk if a patient should need treatment for a catastrophic illness

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