Subject: Health economic Topic: Health care demand BPH 3rd year

1. Health Care Demand
Health economic
Ankita Kunwar
Bph 3rd year

2. Health care demand
•Consumer as a health producer
•Health as a consumption good as well as
investment good
•Role of education , income and other factors
in health care demand .

3. What is medical care?
• Mc is composed of myriad goods and services that maintain
improve or restore a person’s physical or mental well-being. For
example, a young adult might have surgery to repair a torn rotator
cuff so that he can return to work an elderly woman may have hip
replacement surgery so that she can walk without pain, and a
parent may bring the child to the dentist for annual cleaning to
prevent future medical problems.
• Prescriptions, drugs, wheel chairs are example of medicals goods,
while surgeries, annual physical exams and visit to a physical
therapists are example of medical services.
• Because of heterogeneous nature of medical care, units of medical
care are very difficult to measure precisely.
• Units of MC are also hard to quantity because most represent
services rather than tangible products.

4. Characteristics of medical services:
1) Intangibility: means a medical service is incapable of being
assessed by five senses. Unlike a new car, a steak dinner or a new
CD, the consumer cannot see, smell, taste, and feel a medical
service).
2) Inseparability: The production and consumption of a medical
service take place simultaneously. For example when you visit a
dentist for a checkup, you are consuming dental services and at the
exact time the dentist producing them. In addition, a patient often
acts as both producer consumers. Without the patient’s active
participation, the medical product is likely to be poorly produced.
Educational services, like medical services, require then
consumer’s active participation; that is education is likely to be
poorly provided when the student plays a passive role in the
process.

5. • Inventory: is directly related to inseparability. Since the
production and consumption of a medical service occurs
simultaneously, health care providers are unable to stock pile
or maintain an inventory of services for example a dentist
cannot maintain an inventory of dental checkups to meet
demand during peak periods.
• Inconsistency: means the composition and quality of medical
services consumed vary widely across medical events.
Although everyone visits his her physicians at some time or
another, not every visits to a physicians is for the same
reasons .
• One person may go for a routine physical , while another
may go because she or he need heart pass surgery . The
composition of medical care provided or the intensity at
which it is consumed can differ greatly among individuals.

6. The quality of medical services may also be inconsistent. Quality
differences are reflected in the structure, process and /or
outcome of a medical care provider.
Structural quality is reflected in the physical and human resources of the medical
care provider, such as the facilities (level of amenities) medical equipment
(type and age), personnel (training and experience) and administration
(organization structure).
Process quality reflects the specific actions health care providers take on behalf
patients in delivering and following through with care. Process quality might
include access ( waiting time) data collection ( background history and
testing) communication with the patient, and diagnosis and treatment ( type
and appropriateness ) .
Outcome quality refers to the impact of care on the patient’s health and
welfare as measured by patient’s health and welfare as measured by patient
satisfaction, work time lost to disability or post care mortality rate. Since it is
extremely difficult to keep all three aspects of quality constant for every
medical event, then quality of medical services, unlike that of physical goods,
is likely to be inconsistent.

7. Supplier induced demand
• Doctors monopoly , medicalization of health ,
information as asymmetry , moral hazards .
• Condition cash transfer and performance based
payment

8. Asymmetry and information and agency
• Basic microeconomic theory usually includes an assumption
that the market being analyzed exhibits perfect information.
Under perfect information, all decision makers, meaning of
consumers and producers have complete information on all
prices as well as quality of good and service available in the
market. However, information is never perfect in the world.
• Levels of information will differ among varies among
participants in many transactions such as nurses/physicians
and patients. Therefore service providers should always
check prior patient’s knowledge about health. Similarly,
Doctors and nurse checked their knowledge every few years
before their licenses are renewed.

9. • It is very difficult to quantify the medical services. In most
instance, researchers measure medical care in terms of either
availability or use. If medical care is measured on an
availability basis, measures such as the number of physicians
or hospital beds available per 1,000 people are used. If medical
care is measured in terms of use, the analyst employed data
indicating how often medical care is delivered.