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The Economics of Healthcare Delivery

Although healthcare economics may seem like a topic for managers, leaders, or administrators, nurse educators need a solid knowledge base to understand the impact on policies, healthcare delivery, resources, and patient care outcomes. Nurse educators must comprehend the political, economic, and social elements that affect health and health services, whether supporting students inside or outside the classroom, providing leadership or clinical expertise, or communicating with patients.

What Are the Economics of Healthcare Delivery?

Healthcare economics refers to the various factors influencing the healthcare industry’s cost and spending and examining healthcare equity and affordability. A simple way to define health economics is the allocation of tangible and intangible health resources. For example, the government continues to offer free COVID vaccines. However, while vaccines are available, not everyone has equal access. For example, some lacked the technological literacy to schedule appointments or transportation. In addition, some employers, such as the federal government, allowed paid time off for employees to get vaccinated or arranged for work site vaccine administration. Yet, this financial benefit was not equal for all. For instance, if a person was a day laborer, they may have suffered hardship to take off work to get a vaccine.

Why Are the Economics of Healthcare Important to Nurses?

As the most trusted and largest group of healthcare professionals, it is critical that all nurses understand the effect of the changing economic environment on healthcare, especially nurse educators shaping nursing. “Understanding health economics helps the nurse make sense of the often convoluted, paradoxical, and invisible yet pervasive ways economics shapes the organization, financing, and delivery of health care. Moreover, many of the policy decisions at institutional, state, and federal levels relate to economic incentives and how the money flows through the system,” according to the Health Care Finance, Economics, and Policy for Nurses foundational guide.

According to Healthy People 2030, health equity aims to allow all individuals to obtain the highest level of health. Yet as a nation, there are limited resources to achieve this goal. Sometimes, these hard choices create ethical issues or dilemmas. For example, in ethics courses, nurses learn about scenarios such as a lifeboat for five people, yet six individuals need rescuing. Health economic dilemmas may be similar:

  • How is there a dollar value for health?
  • What influences healthcare resource supply and demand?
  • Besides healthcare, what factors affect health, such as socioeconomic determinants?
  • How can there be an improvement in healthcare planning, budgeting, allocating, or monitoring?

What Are Two Examples of the Clinical Impact of Healthcare Economics?

Organizational, state, or federal policy decisions can impact healthcare. For example, outside the United States, many nations with socialized medicine closely evaluate healthcare spending, prioritizing prenatal or infant care over transplant patients. As a result, they determine the most significant impact on population health for their healthcare dollars. Below are just two examples of the clinical impact of healthcare economics.

  1. COVID-19 resource allocation. Recently, nurses witnessed the reality of limited resources during the coronavirus pandemic. Quickly, facilities diverted elective procedures to accommodate patients with COVID-19 or emergencies. Large multi-site organizations had daily administrator meetings from their coronavirus command centers on bed, staff, and supply availability. In addition, some rural hospitals and safety net facilities had to determine which patients would have the best outcomes for ventilator supply or limiting admissions. Once the vaccine became available, discourse arose between non-vaccinated patients consuming resources and their healthcare team.
  2. Insurance financial incentive. Third-party payers realize that smoking costs them money. According to the Centers for Disease Control, smoking causes a higher incidence of cancer, heart disease, stroke, lung disease, and diabetes. In addition, smoking increases the risk of certain eye diseases and problems with the immune system, including rheumatoid arthritis. Therefore, in most states, an insurer can charge a “tobacco surcharge” of up to 50% more for people who use tobacco.

Healthcare leaders, including nurse educators, need to understand the economic and resource impact on holistic care. In addition, they must understand the balance of dealing with “poignant and complex issues and topics in healthcare with a system and approach that is inclusive of human, societal, and financial considerations.”

Worcester State University’s online Master of Science in Nursing (MSN)–Nurse Educator program emphasizes the importance of healthcare economics in its Social Policy & the Economics of the Health Care Delivery System course. This course provides students with the knowledge to comprehend the regulatory, political, economic, and social elements that affect health, health services, and nursing care delivery.

Learn more about Worcester State University’s online MSN – Nurse Educator program.

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