HEALTH CARE MANAGEMENT Health Care Management

Health Care Management

The concept of Health Care Management has got lot of importance. Due to increasing number of patients these days in many parts of the world, this topic has gained lot of significance in recent years. Hospitals are investing lot of money in this regard for the betterment of patients. Although, it demands high costs but they are necessary. If any hospital needs to maintain a proper management of healthcare services, then a certain level of financing would be required. This is the reason why high fees are charged from the patients due to their high level of services. However, patients even expect high quality of health service in return which is quite understood. So, in this whole literature, the importance of Health Care Management would be highlighted. (Arrow, 1963)

Medical care also differs from most other expenditures, even those that people think of as human capital investments, because much of it occurs as a result of negative shocks to health that is largely unanticipated. It is the combination of the degree of uncertainty about one's future health state and the high cost of medical care (relative to household budgets) that makes the transferring of risk to a third-party payer through insurance such an important phenomenon in the market for health care. For this reason, the role of health insurance will be discussed before the analysis of markets for other health care services. It is important to clearly distinguish between health and health care. Health can be considered a form of human capital (like education), and medical care and other components of health care are inputs into the production of health. Spending on health is more appropriately treated as an investment in a stock of health (capital) rather than an item of current consumption. Things that augment the value of healthy days will increase the demand for health. Thus, an increase in the wage rate will shift the demand function. (Currie, 1996)

Education has also been found to be positively associated with the demand for health, although it is still under investigation. Education may shift the demand for health because of a taste or preference change, and/or may increase the productivity of the inputs into health. This model can easily be accommodated to incorporate risk or uncertainty. The role of uncertainty in the demand for health and health care is very important. Uncertainty about one's future state of health, uncertainty about what kind of treatment to pursue, and uncertainty about the cost of treatment all contributes to the importance of insurance, or “third-party payment” in the market for health care services. Uncertainty has implications not only for the role of insurance but also for the relationship between patients and their health care providers, particularly their physicians. Patients consult physicians in large part because of the latter's expertise. Asymmetry of information thus introduces the classic principal/agent set of problems that will be discussed later. Insurance is a mechanism for assigning risk to a third ...