There are a number of reasons why healthcare administrators need a
solid understanding of concepts and applications associated with
healthcare economics. First, understanding economics gives managers
and leaders the ability to focus on key issues impacting their firm. As you
know, there are many issues that impact financial and operational processes and outcomes; far too
many to tackle at one time. Economics can assist management in prioritizing the issues that need to be
addressed. Second, it permits managers the opportunity to formulate tactical and even longer term
strategies to realize goals while effectively leveraging our scarce resources. Third, economics provides a
framework from which to more fully appreciate how costs influence management decision-making. A
cost that many organizations are required to incur is the availability of healthcare insurance for their
employees. For those firms and industries that rely on third-party payers as a significant portion of their
payer mix, it vital that managers and leader remain keenly aware of legislative actions, trends, problems
associated with the insurance and managed care industries. In business, we, as healthcare leaders and
managers, are constantly faced with uncertainty. This uncertainly can have a significant impact on the
decision-making process. We need to develop a comfort level when working with imprecise estimates,
exploring alternatives, and managing risk that is inherent in industry.
The American model, with its signature mix of public and private insurance and care can be contrasted
with the more egalitarian models popular in Europe and Asia. With the introduction of the Affordable
Care Act, the American model is undergoing substantial changes, but it is keeping its distance from both
the Beveridge and Bismarck models.
Unit Learning Outcomes
ULO #3: Compare and contrast various methods of healthcare cost constraint in sickness funds in
Bismarck health care system in Germany and in Medicaid program in the United Sates (CLO 4, 5)
ULO #4: Consider policy tools for subsidized coverage of the poor (CLO 3, 4)
11/22/21, 5:58 PM Unit 6: Application Assignment
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In order to support your understanding of economic concepts related to health policy, you will be
expected to complete the following end-of-chapter problems.