Value and Consumer Preference
Prior to engaging in this discussion, read Chapters 1 and 2 in the text and review any relevant Instructor Guidance. It is suggested that you also review the recommended articles to glean any helpful information. The idea that value depends on consumers’ preferences is often considered radical. In your initial post, analyze the economic theories that are germane to the provision of health services, and comment on how one or two specific model(s) might explain the framework or context of patient/consumer preference with regard to the health care services they have experienced. Compare and contrast economic challenges and incentives within health care’s organizational models that might influence patient preference. How would value (both in quality and impact of care) differ where you have increase in access and decrease in reimbursement rates set by most insurance companies?
1WHY HEALTH ECONOMICS? Learning Objectives
After reading this chapter, students will be able to
• describe the value of economics for managers, • identify major challenges for healthcare managers, • find current information about healthcare outcomes, and • distinguish between positive and normative economics.
• Economics helps managers focus on key issues. • Economics helps managers understand goal-oriented decision making. • Economics helps managers understand strategic decision making. • Economics gives managers a framework for understanding costs. • Economics gives managers a framework for understanding market
demand. • Economics gives managers a framework for assessing profitability. • Healthcare managers must deal effectively with risk and uncertainty. • Healthcare managers must contend with the management problems
that insurance presents. • Information asymmetries create a number of problems for healthcare
managers. • Not-for-profit organizations create unique problems for managers. • Rapid change in the healthcare system forces managers to lead their
organizations into unfamiliar territory on a routine basis.
1.1 Why Health Economics?
Why should working healthcare managers study economics? This simple ques- tion is really two questions. Why is economics valuable for managers? What spe- cial challenges do healthcare managers face? These questions motivate this book.
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11/08/2018 – RS0000000000000000000001603913 (Malodree Johnson) – Economics for Healthcare Managers
Economics for Healthcare Managers2
Why is economics valuable for managers? There are six reasons. We will briefly touch on each of them to highlight the themes we will develop in later chapters.
1. Economics helps managers focus on key issues. Economics helps managers wade through the deluge of information they confront and identify the data they need.
2. Economics outlines strategies for realizing goals given the available resources. One of the primary tasks of economics is to explore carefully the implications of rational decision making.
3. Economics gives managers ground rules for strategic decision making. When rivals are not only competing against them but watching what they do, managers must be prepared to think strategically (i.e., be prepared to use the insights of game theory).
4. Economics gives managers a framework for making sense of costs. Managers need to understand costs because good decisions are unlikely without this understanding.
5. Economics gives managers a framework for thinking about value. The benefits of the goods and services successful organizations provide to customers exceed the costs of producing those goods and services. Good management decisions require an understanding of how customers perceive value.
6. Most important, economics sensitizes managers to fundamental ideas that affect the operations of every organization. Effective management begins with the recognition that consumers are sensitive to price differences, that organizations compete to advance the interests of their stakeholders, and that success comes from providing value to customers.