These days, the health care system is constantly changing in an attempt to meet the demands of an ever changing economy. Despite economic fluctuations, health care organizations must adjust its financing, organizational structure, and delivery of medical services to meet patient needs. Resources, however, are limited. As a result, it is vital that health care organizations understand their financial limitations all the while meeting patient demands. The following essay discusses the evolution of economics and how economics pertains to the health care system.
Economics can be defined as the science that is concerned with the production, distribution, and consumption of goods and services. In essence, it is the study of the material welfare of humankind (Apollo Group, 2010). Economics in health care is concerned not only with the financial aspects of the system, but how those financial elements impact patient care. Like general economics, economics in health care makes two general hypotheses: one, people are directed by their goals and will act in their own best interest; two, although resources are limited, human needs and the potential for meeting those needs is limitless. According to Scott, Solomon, and McGowan, “Two basic points are 1) economics is about resource allocation, and 2) efficiency in resource use (getting the most from available resources) in health care can be understood by identifying production functions representing health-care services” (CDC, 2001). Therefore, those in the health care field have needed to be concerned with ensuring that resources, including material and human, are appropriately allocated to meet the needs of patients. Given that needs are limitless, while resources are not, health care managers must be careful not to exhaust the goods and services that are available.