Market Theories in Health and Healthcare Flashcards
What are markets
- are a flora for hte interaction of soverign individuals and producers; where sellers and consumers exchange goods and services without the need of government intervention
What does a market consist of
- demand side
- supply side
How do markets adjust
- they adjust using quantity and price signals
What is a market equilibrium
- this is a situation where the price (equalibrium price) in a given market is such that the quantitiy demanded is equal to the quantity supplied
What is a perfectly competitive market
- this is the market in which there is no intervention or regulation by the state
What do free markets automatically lead to
- free markets will automatically lead to equilibrium, a situation where the quantity supply matches the quantity demadned
what is the invesible hand theory
- according to the invisibile hand theory each of us acting on our own self-interests generates a demand for goods and services that compels others to deliver those goods and services in the most efficient manner
What 4 assumptions does a market being completely free and liberal work under
- Effectiveness
- efficiency
- allocative efficiency
- operational efficiency
what is effectiveness
- Does not necessarily imply efficiency, it simply means that production or consumption of goods or services will yield satisfaction or utility
What is efficiency
- this is concerned with maximinsing social benefits with the resources available and minimisng costs for a given level of benefit
Name two types of efficiency
- allocative efficiency
- operational efficiency
What are allocative efficiency
- judges whether an activity is worthwhile doing
- describes a situation where resources are allocated and commodities distributed in a way that maximises social welfare
What is operational efficiency
- judges for worth doing activities, what is the best way of providing them
- describes a situation where producers produce a given level of output at minimum average cost
What is a perfect compeition market
- It is both allocatively and productively efficient
What are the assumptions of the perfect compeition market
- price taking behaviour
- profit maximising behaviour
- market constestability
- product homogeneity
- consumer sovereignity
What is price taking behaviour
- No one supplier has enough control over the market to influence prices; sellers accept the price given by the market
What is profit maximizing behaviour
- all producers seek to maximize their profits, producers can undercut competitors only by reducing their own costs of production
What is market contestability
- even if there are few sellers in the market they have to make pricing and output decisions based on the threat of competition
What is product homogeneity
- in a market goods and services must be standardized and indistinguishable from one seller to the next
What is consumer sovereignty
- consumers are rational and knowledgeable; they will only purchase those goods and services where benefits exceed costs
what are the imperfections with the health care market
- For some areas of healthcare there may be many suppliers (like in primary care) but not for others ( like specialist services)
- there are barriers to entry into the healthcare system
- many health care products (syringes or over the counter medicine) are homogenous, most health care services are by nature heterogenous
- patient sovereignty is limited
What are the barriers to entry into the healthcare system
- restrictions in the number and size of medical schools
- requirement for licenses to permit doctors and other healthcare professionals to practice
- high fixed costs to make the initial investment and enter the market (hospital care and diagnostic services)
- high sunk costs; investments in specific assests such as hospitals cannot be moved from one market to another
- many healthcare products are homogenous but most healthcare serivces are heterogenous
How is patient sovereignty limited
- consumption of some items of health care cannot be planned such as emergency visits
- in some chronic conditions patients are not aware of their health status
- some patients are incapable of making decisions
- other patients become too anxious when having to make a decision
- information of new developments in treatment may get through to health care providers long before it does to consumers
- patients often rely on health care professionals to help them make decisions
- patients find it very difficult to judge the beneftis of health care
- patients also face difficulties in evaluating and comparing the quality of health care received
Who decides how much the NHS receives
the government
Who is in charge of the department of health
The secretary of health
Where does the department of health send most of its money
NHS england
What is NHS england responsible for
- overseeing the commisioning - planning and buying of NHS services
- Sets a lot of NHS strategy
Who does NHS enlgand pass most of the money
- to clinical commissioning groups (CCGs) across england
What do CCGs do
- identify local health needs and buy and plan for that area
where do CCGs buy stuff from
- GPs, hospitals, community services, charities, other private organisations
What does NHS improvement do
oversees NHS trusts and managing money
What does the care quality comission do
- insepcts quality of care provided
What are STPs
Sustainability and transformation partnerships
- create a way of working together in partnership
What are ACSs
accountable care systems
- organisations work together under a set budget to improve health and healthcare in an area
Why should health systems exist
- to avoid medical bankruptcy
- to avoid catastrophic medical expenditure which can lead to bankruptcy
What is market failure
- a situation where perfect competition does not arise and as a result market is unable to allocate resources in an efficient way
What is liberalisation
- dont have any barriers to anything
- make things more free
What is social conditionality
- usually are the what you have in society that will determine or signpost the allocation of resources
