Describe the benefits of being able to control the cost and the supply of healthcare services.
Details: Supply and Demand
One of the key ideas of economics is supply and demand. If a resource is scarce, such as services rendered by a specialist, and demand is high, the average consumer would pay a substantial sum to meet their needs. On the flip side, if supply is high and demand is low, we would expect that the price would be on the low side. Sometimes, unexpected external forces may skew this arrangement either to the detriment or to the benefit of the producer/manufacture of either services or products. Two examples will clarify the impact that such forces can have on the cost of a service or product.
In the first example, imagine a retail store that sells snow removal equipment. The last few winters have been mild and the store begins to thin out its stock. Forecasts are for another mild winter; however, Mother Nature throws a curveball and the snow piles up. Demand is outpacing supply and the retail store raises prices 400 – 500%. A competitor quickly increases their supply and the store must lower their prices back to a more realistic price.
In the second example, a particular town hosts three events per year and there are only two hotels in the area. The two hotel managers get together and agree to set their prices at equal rates. They both realize that because they control the supply, they can also control the cost.
Specific questions or items to address: In this debate-style assignment, present both sides to the idea of collusion amongst healthcare providers. In one page, describe the benefits of being able to control the cost and the supply of healthcare services. In a second page, highlight the consequences of controlling costs and supply. The consequences may include but might not be limited to; ethics, law, poor health of the populace, a provider going rogue and lowering prices, etc.
Note: In some industries, collusion is illegal, while in others it is unethical. Be sure to address this in your assignment as it relates specifically to the provision of health services. Use the GU library to find examples to cite in your response.
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