Economics and Health.docx - Running Head ECONOMICS AND...

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Running Head: ECONOMICS AND HEALTH Economics and Health Institution Date
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ECONOMICS AND HEALTH Introduction The purpose of this research paper is to determine the correlation that exists between micro and macroeconomics and the administration of quality health care. It investigates how the various economic factors work to influence health care as well as they affect other industries involved with the production of goods and services. Health care can be likened to economic practices in the following manner. It relies on raw materials such as drugs and equipment that are only produced by industries. A change in economic state causes a shift in production to the industries hence also affecting healthcare. It also covers some common economic principals and theories such as that of output on health care. Economic Disparities As stated above, the state of the economy plays an integral role in healthcare management. Provision of healthcare is dependent on the availability of finances which in turn hinge on a stable economic structure. A healthy economy distributes finances evenly. The demand theory states increase in price results to a decrease in demand and vice versa. A good economic state serves to ensure demand is evenly distributed. Economic Theories & Principles The economic theories and principals that apply to healthcare include the production theory and the limited resource theory. The production theory serves to estimate the number of patients served or treated, i.e. a hospital produces healthcare as a service. The resource allocation theory is also applicable as hospitals thrive to get the most out of limited resources.
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ECONOMICS AND HEALTH Other than the resource allocation theory, the principal of maximizing output returns from a smaller amount of inputs is also important as doctors need to use the available resources sparingly. The sheer importance and significance of these principals are reasons as to why they are considered for decision making.
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