Causes of Economic Failure in Health Organizations - Term Paper Example

Causes of economic failure in health organizations Name Institution Date Table of Contents Table of Contents 2 Introduction 3 Productivity in medical care 3 Medical Care divisions of inefficiency 4 Flat of the medicine curve 4 Recessions, utilization of health and Outcomes 6 Recommendations and conclusion 7 Reference 8 Causes of economic failure in health organizations Introduction Health care is portrayed by huge inefficiency. Expenses are sky rocketing and results worse compared to nearly every evaluation of the industry propose should occur. Within other industries that are illustrated by inefficiency, firms that are efficient grow to rule the market, or the latest firms penetrate the market to eliminate inefficiencies. In health care, however, this has not taken place. This paper will explore the causes of innovation failure in relation to health care economy. Furthermore, it will provide some of the recommendations of what need to be done in order to prevent economic failure in health organizations. Productivity in medical care A low productivity’s example is inefficient spending; there is too much spending than is required to accomplish the outcomes we obtain (or equally, there is production of less output than is expected given the employed inputs) (Ernst & Young, 2013). One way of gauging health care’s relative efficiency over time is hence to make a comparison of health care’s growth in productivity with other industries. In health care measuring productivity growth is notoriously tricky. Accurate assessment of productivity needs a good measure of output (Ernst & Young, 2013). Health is not easy to measure and it is even difficult to decompose in non-medical and medical factors. Consequently, official data are actually much reliable on productivity that is outside health care compared to when they are within health care. Revival of growth of productivity is attributed principally to greater information technology use (Ernst & Young, 2013). Industries that apply information technology more than average experience growth in productivity of nearly 1.5 percentage points greater than industries which did not. These industries are not similar to health care. There exist a number of industries that have high growth in productivity that are quite similar to medical care, however. For example, retail trade, was once like a cottage industry similar to health care (Folland et al, 2007). However, during the past decade, growth in productivity in retail trade became 4.3 % annually on average. Businesses and professional services had 1.2 % annual productivity growth, another sector that quite close to medical care in terms of production (Folland et al, 2007). Within the official data, health care’s productivity growth (along with social assistance and education) is approximated to be -0.2% every year (Folland et al, 2007). As indicated above, generally this is roughly certainly an underestimate. Medical Care divisions of inefficiency The health care production inefficiency can be comprehended in 3 dimensions: flat of the medicine curve; poor coordination; and production processes that are inefficient (Ho, 2008). Flat of the medicine curve Significant evidence indicates that a lot of people get more health care compared to what is suitable for their health condition, particularly within acute settings (Ho, 2008). For instance, with regards to management of prostate cancer that is localized, nearly every elderly man has prostate cancer. In several occasions, however, the growth of cancer is slow, and the individual eventually dies from something else prior to the fatality of cancer (McIntosh, 2010). In a number of cases, the cancer grows rapidly and ought to be treated. On the other hand, it is actually not always apparent if a client has cancer that is rapidly growing or not. There are various types of treatment for cancer of prostrate. There is radical prostatectomy, branchytherapy, radiation therapy by external beam, and radiation therapy by intensity-modulation. Expenses rise with the greatness of management (McIntosh, 2010). Invasive treatment’s rates still remain high. Preferences of the patients are actually not a principal element of the treatment variation. Sommers et al (2008) indicate that clients differ in the manner of their preferences for metastatis risks and side effects, although these preferences may not determine the remedy a patient gets. Instead, referrals of patients are done to specific kind of specialist, who then recommends a considerable therapy. Other nations seem to have care that is less overused compared to the US. Due to the restrictions that are tighter on general supply, the procedures’ number carried out is generally lower elsewhere. Comparing various areas of countries like the US, it was approximated that around 30% of utilization of health care within the population of Medicare is linked to care that does not contribute to improved care (Toussaint, 2009). Other investigations indicate the figure might be larger or smaller. The medicine flat curve model is certainly a component of the reason for medical spending that is high, although it is not likely to be the solitary significant factor (Palmer, 2005). 3.2 Poor coordination Poor coordination of health care is the other area of productivity that is low (Ho, 2008). For various medical conditions, individuals ought to see specialist or generalist physicians, get cyclic lab tests, adjust their lifestyle and take medication. This compound regime is somehow always left for patients to prepare and coordinate (Palmer, 2005). A lot of people are poor at this regime, however. To some extent as a consequence, individuals get too little preventive and chronic care. If cancer of the prostate is the placard child for care that is overused, care of diabetes is the correspondent for coordination. A chronic disease like diabetes needs habitual dietary and frequent pharmacological intervention, as well as testing for potential complications. 3.3 Inefficient production Excessive cost of provision of services is another aspect of productivity that is low (Ho, 2008). Like the issue of coordination that is poor, excessive input expenses are productive efficiency problem. Every medical care analysis that has been carried out highlights the considerable resources’ waste in provision of care. The Medicine Institute approximates that, medical errors that are preventable result in between 44,000-98,000 deaths every year, making errors like these among the leading death’s causes (Organisation for Economic Co-operation and Development, 2009). Medical errors are costly and there are various models that can reduce medical errors. Interactions of adverse drug can be practically eliminated through entry systems that are computerized, which cost approximately $8 million per every one (Morris et al, 2007). Nevertheless, only four percent of hospitals are thought to have completely implemented such systems. Complications due to surgery are able to be reduced via organizational innovations like surgical checklists (Kaplan & Sarah, 2008); using checklists is comparatively low, however. Recessions, utilization of health and Outcomes Lower income, unemployment, or losing coverage of insurance in economic downtowns are able to lead to decreased health services’ access (Morris et al, 2007). Uncertainty of economic itself affects the behavior of people, including the way their money is spent on medical care as well as other activities or commodities that can influence their health as well as their health outcomes (Getzen & Allen, 2007). Several reports indicate that the recent recession leads some people to do without not only preventive screening and elective surgery, but basic care chronic and acute conditions as well (Getzen & Allen, 2007). Available evidence concerning the longer versus immediate-term implications of economic downturns as well as recovery on populace health is to some extend vague, however (National Research Council, 2012). For instance, there is a couple of evidence that pressure on the economy might influence more females to seek services of production, and, specifically, contraception that is long-term, and abortions. Simultaneously, there exist a few evidence indicating that in the past recessions, reduced use or access to services of prenatal has been linked to a greater occurrence of pregnancy outcomes that are adverse like infants with birth weight that is low and anemia in a couple of populations that have low-income (National Research Council, 2012). More currently, researchers have actually centered attention on a clear relationship between recessions, decreased industrial pollution, and reduced rates of mortality in infants (Gruber & Newquist, 2011). Recommendations and conclusion Clearly, the soaring and rapidly increasing health care cost in many countries remains a serious matter (Kaplan & Sarah, 2008). Medical care is renowned for imperfections within the market (Daschle et al, 2008). For some reasons, health care markets have not been working well (Mason et al, 2007). In the medical care problems’ plethora, though, there is an issue that sticks out: the mismatch involving the health care that individuals should receive, and the management that they do receive (Toussaint, 2009). Almost 1/3 of health spending is actually not linked to improved outcomes considerably reducing the health system’s efficiency and resulting in enormous unwanted effects (Mason et al, 2007). To decrease this depletion, organizational innovation shall be needed (National Research Council, 2012). Until now, however, innovation like this has been so rare within health care. This paper has argued that poor incentives as well as absence of information are the leading barriers to latest organizational models, and for that reason that civic actions to deal with these problems are required (Daschle et al, 2008). Current reform legislation makes changes in every of these parts (Summers et al, 2009). Whether these issues are addressed by the legislation adequately is something that can be told only with time (Summers et al, 2009). Reference Toussaint, J. (2009). Writing The New Playbook For U.S. Health Care: Lessons From Wisconsin, Health Affairs, 28(5), 1343-1350. Sommers, et al., (2008). Predictors of patient preferences and treatment choices for localized prostate cancer. Cancer, 113(8), 2058-2067. Kaplan, G. H. & Sarah, H. P. (2008). Seeking Perfection in Health Care. Healthcare Executive, 23(3), 17-21. Ho, K. (2008). Barriers to Entry of a Vertically Integrated Health Insurer: An Analysis of Welfare and Entry Costs. Columbia: Columbia University mimeo. National Research Council. (2012). Best Care at Lower Cost: The Path to Continuously Learning Health Care in America. Washington, DC: The National Academies Press. Ernst & Young. (2013). Monitor Contingency Planning Team Mid-Staffordshire NSH Foundation Trust Assessment of Sustainability. Palmer, K. (2005). How Should we deal with Hospital Failure London: The King’s Fund. Summers, K., Sorkin, A. L., & Farquhar, I. (2009). Investing in health: The social and economic benefits of health care innovation. Bingley: Emerald Group Publishing Limited. Folland, S., Goodman, A. C., & Stano, M. (2007). The economics of health and health care. Upper Saddle River, NJ: Pearson Prentice Hall. Mason, D. J., Leavitt, J. K., & Chaffee, M. W. (2007). Policy & politics in nursing and health care. St. Louis, MO: Saunders/Elsevier. Daschle, T., Greenberger, S. S., & Lambrew, J. M. (2008). Critical: What we can do about the health-care crisis. New York: Thomas Dunne Books. McIntosh, E. (2010). Applied methods of cost-benefit analysis in health care. Oxford: Oxford University Press. Organisation for Economic Co-operation and Development. (2009). Achieving better value for money in health care. Paris: OECD. Morris, S., Devlin, N. J., & Parkin, D. (2007). Economic analysis in health care. Chichester: J. Wiley & Sons. Getzen, T. E., & Allen, B. H. (2007). Health care economics. Hoboken, NJ: John Wiley & Sons. Gruber, J. & Newquist, H. P. (2011). Health care reform: what it is, why it’s necessary, how it works. New York: Hill and wang. Read More