| Capella University MBA 6008; Global Economics LYNETTE E. DZWIELEWSKI
[aLLIED HEALTHCARE PRODUCTS, INC.]
Health economics is a subdivision of economics central to issues correlated with the effectiveness, significance and performance in the structure, production and utilization of the healthcare industry—and the evaluation of numerous categories of calculated financial information including: measured value, consumer costs and industry expenditures. In general terms, health economists analyze the health effects of behaviors—the finances, efficacy and operations of health care systems —and the competitive symmetry in the five health markets. The five health markets generally studied are: * Health care financing market
* Physician and nurses services market
* Institutional services market
* Input factors market
* Professional education market
While the current quality or condition to change in healthcare as a private benefit is preserved, in the last three markets, market failures result in the financing and delivery markets because accurate information about product price is not a pragmatic conjecture—and various limits of access exist in the financing markets; such as the monopolistic structure of the health insurance industry. Medical technology is generally classified as an Institutional Services Market and encompasses of all aspects involved in the treatment of disease—which includes the utilization of medical devices, and surgical and pharmaceutical interventions—and is of vital importance in relation to individual health and, as a result, for general wellbeing. Progress and advanced developments in medical technology transmit a vista of both enhanced public health and increased universal welfare. However, due to extensive governmental regulations concerning the healthcare goods and services markets; the developments, improvements and utility of medical technologies essentially differs from non-medical technological progress and improvements. (Grossman, Lindgren, & Bolin, 2011) Developments in the medical device industry are remarkably different from advancements which take place in the pharmaceutical industry. There are differentiations in who manages and conducts the research and development (R&D), the essential nature of the research and development, and the consequences of federal and municipal policies that directly impact it. The medical technology market requires higher start up costs and is difficult to enter—but in comparing the medical device industry to the pharmaceutical industry, we can easily distinguish the advancement of smaller companies. The medical device industry (an oligopoly), consists of fewer suppliers of a products or devices, where the suppliers’ activities can have a substantial impact on costs and, inevitably, on its competitors. Because there are a limited number of suppliers and dealers, the medical device industry is more apt to be aware of the activities and innovations of its competitors—and is better able to strategically plan the responses of other medical device industry participants. Also, healthcare device manufacturers have more flexible and adaptable innovation methods and more lenient regulations and enforcement than those imposed on the pharmaceutical industry. (Gelijns, 1991)
This analytical paper concerns itself with Allied Healthcare Products, Inc. (AHPI) which is a component of the medical device industry and subdivision of Health Economics. The company dates back to a small St. Louis company named Stilecraft which was established by the Sciuto brothers during the Great Depression. Stilecraft, a producer of wooden window coverings, diversified over the following years—eventually specializing in the manufacturing of medical equipment. Allied Healthcare Products, Inc. (a unit of Harbour Group Investments, LP), maintains its headquarters at 1720 Sublette Avenue, St. Louis, Missouri 63110, and...
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