Application of economic principles of trade, choice, opportunity costs, and scarcity to the healthcare industry

Apply the economic principles of trade, choice, opportunity costs, and scarcity to the healthcare industry


Explain the impact of demand theory on the healthcare industry
Assess the role economic principles play in a healthcare organization’s planning and policy decision making


Evaluate the role of market concentration and choice in healthcare decision making


Assess the impact of legislation on competition within the healthcare industry


Reading and Resources
Textbook: Health Economics and Policy, Chapters 1, 2, and 3 (not the appendices)

Video: Khan Academy: Introduction to Economics (9:58)
This video covers an introduction to key economic concepts and offers an explanation of the distinction between micro- and macroeconomics.
This resource will help you grasp the key foundational principles that you will apply to healthcare in this module’s discussion topic, and the entire course.

Video: Khan Academy: Economics: Supply and Demand (cc) (11:48)
This video will help expand your understanding of the core principle of supply and demand. This overview explores the price shifts that occur related to increased or decreased demand and increased or decreased supply and concurrent shifts when there is simultaneous change in both factors.
This resource will help create a good foundational understanding of these key economic principles that you will apply to the healthcare industry throughout the course.

Video: Khan Academy: Law of Demand (cc) (8:15)
This video explores the law of demand, a key microeconomic principle.
The resource will expand on the other resources for the module and help create a good foundational understanding of these key economic principles that you will apply to the healthcare industry throughout the course.

PDF: Concentration in Health Care Markets: Chronic Problems and Better Solutions
This article is an assessment of the market concentration of healthcare and provides an example of the analysis of the impact of economic principles and healthcare policies on the healthcare industry. The article specifically looks at the issue of competition in the healthcare industry and the role of insurance.
Several of the key terms and issues we will address in the course are evident and you will find this article helpful in writing this module’s short paper.

PDF: Hospitals, Market Share, and Consolidation
This article examines the issue of consolidation of healthcare organizations, in this case hospitals. The article assesses the positive and negative impacts of consolidation on market concentration and considers the potential for price increases through market power.
You will find this resource useful in writing your short paper this module. It also offers a good example of economics applied to healthcare.

Library Article: Evaluating Market Power Using Competitive Benchmark Prices Rather Than the HHI
This article utilizes a case study to explore the use of competitive benchmark prices to measure market power in an industry as an alternative to the traditional HHI tool.
This will be a helpful resource for completing this module’s short paper.

Library Article: The relationship of hospital market concentration, costs, and quality for major surgical procedures
This article includes content on the Herfindahl-Hirschman Index (HHI), which will provide you with information about the measurement used for market concentration to determine market competitiveness. This index can be used for strategic planning purposes. This article also provides a relevant real-world scenario and will help you apply this concept to the healthcare industry and demonstrate its usefulness in decision making.

Library Article: A Generalized Measure of Competition
This article explores the use Hirschman-Herfindahl Index to measure completion and marker concentration in an industry. The article demonstrates the complexity of these types of economic tools.
This will be a helpful resource for completing this module’s short paper.

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