Health Care as a Business Review


Health care, or healthcare, relates to the cure and management of ill health and the safeguarding of health of the community by means of services provided by the medical, nursing, pharmaceutical, clinical laboratory knowledge (in vitro investigations), dental, and other similar health vocations. Health care consists of all the products and services created for advancement of health factors, including precautionary, curative and analgesic interventions, where target of impact may be individuals or the community as a whole. Before going into details of the discussion relating to business aspect of health care it is necessary to understand some basic concepts and terminology used in health care. Thus the paper first describes some basic terms used in the fields of health care. (Wall and Owen 2002)

Health Care Basics

A health care provider is an institution that offers health related amenities and health care experts to provide high-quality health care in an organized manner to any person who requires medical attention and related health care services. A health care provider may be a public administrative unit, the health care industry, a health care apparatus firm, an establishment such as a hospital, infirmary or a laboratory with medical facilities. Professionals specialized in providing health care services may include surgeons, physicians, dental practitioner, health administrative staff, nurses, therapists, psychologists, chemists, chiropractors, and oculists.

Emergency medicine is an area of expertise in the field of medicine that concentrates on the analysis and treatment of severe ailments and injuries that are in need of urgent medical attention. It generally does not provide for long-standing or continuing medical care. Emergency medicine specialists make a diagnosis of a wide range of pathology and carry out finely tuned interventions to alleviate the extreme uncomfortable situation of a patient. These experts function in emergency departments of medical establishments, in the pre-hospital situation by means of mobile emergency medical service and other settings where preliminary medical treatment of ailments has effect. While clinicians work by propinquity regulations under large emergency systems, professional equipped to handle emergency situations endeavour to analyze emergent state of affairs in the patient’s health and provide initial treatment to steady the patient for further definitive treatments. (Baggott 2004)

Chronic care management comprises of the supervision and edification activities carried out by qualified experts to assist individual suffering from chronic ailments such as multiple sclerosis, high blood pressure, lupus, diabetes and sleep apnea. Professionals functioning in the field of chronic care management help affected individuals to how to find out and to be aware of their health condition and continue to live prolifically with it. This expression is the same as health and disease management for chronic conditions. The job entails encouraging patients to persevere in essential therapies and interventions and serving them to realize a continuing, realistic quality of life. (Trisolini 2008)

Patient safety is a comparatively new-fangled healthcare field of study that lays emphasis on the proper reporting, adequate investigation and successful deterrence of medical inaccuracies that time and again bring about undesirable healthcare events. The rate of recurrence and enormity of preventable adverse health events was not completely recognized till the 1990s, when several nations testified overwhelming numbers of individuals under treatment or care who were debilitated and lost their lives on account of medical errors. Acknowledging the fact that errors made in health care issues proves harmful or even fatal for one in every 10 patients across the globe, the World Health Organization (WHO) deems patient safety to be a widespread and significant concern. Without a doubt, patient safety has come into view as a distinctive healthcare division backed by an unripe yet on the rise scientific scaffold. There is a noteworthy trans-disciplinary organization of academic and research writing that provides for the knowledge of patient safety. The consequential patient safety science continually promotes enhancement efforts like: implementing ideas inspired by the field of business and industry, adopting pioneering technologies, enlightening service providers as well as the receivers of the service, improving error reporting mechanisms, and creating new economic encouragements. This patient safety discipline offers an evidence-based and contemporary-reviewed environment to gain knowledge about present-day common errors and adverse event handling skills. (Marshall 2008)

The Health Care Industry

The health care industry is regarded as an industry which incorporates peoples’ implementation of their expertise or opinion or the offering of a service in relation to the safeguarding or enhancement of the health of the community as a whole or the healing and care of people who are injured, unwell, disabled, or in some form of poor health The provision of contemporary health care relies on a developing group of qualified professionals joining together as an interdisciplinary squad.

The healthcare industry takes account of the offering of health services by a health care provider. More often than not, these services are sponsored by the patient himself or by his insurance company. However, these services can also be financed by the public administrative institutions through national health care schemes (such as the National Health Service in the United Kingdom) or may be provided for by NGO’s, charities or self-volunteers, predominantly in the poorer and third-world nations. The framework of healthcare charges can as well diverge radically among various countries. For example, contrasting the UK status quo, Chinese medical charges have a propensity of 50% for medicines, an added major proportion for apparatus and a little fraction for healthcare personnel fees (Dawson 2009). There are numerous techniques of offering healthcare services in the contemporary world. The most widespread means is the face-to-face delivery mechanism, where the care giver and patient meet each other in the physical sense. This is what takes place in most cases in general medicine across the majority of countries. Nevertheless, healthcare is not at all times face-to-face. With the advent and advancement of state of the art telecommunications technology, in absentia health care is increasingly gaining popularity. This delivery mechanism takes place when the medical practitioner and patient are in touch over the phone, e-mail, the internet, video conferencing, text messages, or through some other form of electronic media or non-face-to-face contact.

Consuming approximately 10 percent of the gross domestic product or GDP of the majority of first-world countries, health care can be considered to play an enormous role in a nation’s economy (Smith 2008). In the year 2003, health care outlay paid to medical facilities, professionals, hospitals or nursing homes, diagnostic laboratories, drugstores, medical apparatus producers and other elements of the health care framework, accounted for 16.3 percent of the GDP of the UK, which was the largest as compared to any other country across the world. In the United States, the health care fraction of the gross domestic product (GDP) held steady till 2006 before carrying on its dramatically uphill trend, and is expected to reach a massive 19.5 percent of the GDP by the year 2016 (Trisolini 2008). For the year 2001, the OECD countries demonstrated an average of 8.4 percent of the GDP spending for health care with the UK leading with 13.9% and the other two of the top three nations -Switzerland, Germany stood at 10.9% and 10.7% respectively (Dawson 2009).

China has put into practice a long-standing makeover of its healthcare industry, starting from the 1980’s. In the course of the initial twenty-five years of this alteration, the public sector assistance to healthcare outflows has plunged from 36% to 15% (Trisolini 2008), with most of the weight of dealing with this reduction falling mainly on patients. In addition, during this phase, ownership of a minute section of public sector medical facilities has also changed hands with the stakes sold off by the government to private organizations. As an inducement to privatization, foreign investment in medical facilities— up to 70% possessions — has been promoted as well (Marshall 2008).

Another important aspect of the health care industry has been the Medical tourism. Global healthcare has been significantly contributing to the health care business. It refers to the increasingly popular practice of travelling to other countries in order to avail health care services. These services in general consist of elective measures in addition to intricate particularized surgeries for instance joint replacement (knee/hip), cardiac operations, dental procedures and cosmetic surgeries. Nevertheless, practically all forms of health care, counting psychiatry, alternative healings, restorative care and as a matter of fact even burial services are made available to customers. As a realistic issue, service providers and their clients usually make use of unofficial modes of communication-connection-contract, and in those events this likely to signify less regulatory or legal supervision to pledge quality and less prescribed alternative to reimbursement or remedies if required. (Baggott 2007)

More than 50 nations have recognized medical tourism or global healthcare as a national means of commerce. Nevertheless, official approval and other evaluates of the quality aspect differ extensively across the world, and there are many risks and principled issues involved which make this process of availing medical care contentious.

Health Economics

There is no doubt that health care is regarded as a significant business in the contemporary world. In fact it has give rise to an entirely new domain in economics termed as health economics. This branch of economics addresses questions like what is health, what is its value and what are the factors that have an impact on community health. It analyzes the demand and supply issues pertaining to health care. It studies the factors such as micro-economic assessment at treatment level, market equilibrium, valuation at whole system level and other facets such as designing, budgeting and scrutinizing mechanisms. (Trisolini 2008) The demand issues related to health care can be treated as a derived demand from the demand for proper health. Health care is stipulated as an approach for consumers to attain a superior stock of “health capital.” The health care business differs from conventional business in terms of demand as demand for health is nothing like the majority of various other goods for the reason that individuals assign resources so as to both consume as well as produce health.

Grossman’s model, model of health is one of the most significant models in the field health economics and has numerous distinctive components that make it prominent. In this model, ‘Health’ is considered to be a stock that degrades in due course of time with the lack of “investments” in health, so that health is seen as a form of capital. The model recognizes the fact that healthcare is both a consumable product that produces undeviating contentment and effectiveness, and an investment good, which provides satisfaction to the clients circuitously by means of enhanced productivity, less number of sick days, and superior wages. (Dawson 2009) Investing in health is expensive as clients have to substitute time and assets dedicated to health. These issues are used to establish the most advantageous level of proper health that a consumer demands. In addition, the model also formulates a forecast over the impacts of alteration in cost of health care and other related goods, labour market consequences such as employment and earnings and technological transformations. (Gray and Harrison 2004)

The health markets are characteristically identified as healthcare financing market, medical personnel services market, services market, input factors market, and specialized education market. Even though postulations of conventional models of economic markets translate plausibly well to health care markets as well, there are significant divergences that are also to be noted. Insurance markets depend considerably on risk pools, where comparatively healthy consumers subsidize the cost of care for the others. Insurers have to deal with the adverse selection issue which transpires when they are not capable of completely forecasting the medical outlay for enrolees. In this context it has to be noted that adverse selection has the potency of devastating the risk pool. Factors pertaining to insurance markets, in the likes of group purchases and prior subsisting clause exclusions are intended to manage adverse selection issues. Insured consumers are unsurprisingly less troubled with issues relating to health care costs as compared to the circumstance in which they would have to compensate the full price for medical care. The consequential moral hazard forces expenses to go up. Insurers use various methods to restrain the overheads of moral hazard, such as enforcing co-payments on clients and restrictive physician inducements to provide valuable care. Insurers frequently compete by their selection of service offerings, cost sharing necessities and precincts on physicians. (Klein 2001)

Clients in health care markets frequently experience a lack of sufficient information about what services they should to procure and which suppliers tender the finest value proposal. Health economists have acknowledged a predicament with supplier stimulated demand, in which the supplier’s treatment recommendations are rooted in economic motives, instead of medical requirement. Examiners have also identified considerable “practice variations”, by which the treatment an individual obtains relies as much on which medical professional he visits as it depends on his medial circumstances. Private insurers as well as government payers, equally use a range of controls on service accessibility to restraint in incentive and practice variations. Critics put up the issues relating to troubles with adverse selection, moral hazard, information discrepancies, supplier induced demands, and practice variations. Apprehensions exist in relation to the question that whether these issues can be addressed by privatized markets. Competition due to privatization has encouraged cost reductions. However, consolidation by suppliers and, to some extent, insurers, has aggravated this effect. While the superior nature of healthcare as a business is conserved in the input factors and specialized education markets, market letdowns taking place in the financing and service delivery markets should be taken note of. These failures occur due to primarily two reasons. Firstly correct and adequate information about various expenses is not a workable assumption and secondly a range of barriers of entrance continue to be present in the financing markets (i.e. dominative configurations in the insurance markets). (Dawson 2009)

Health Care Ethics

Ethics Our view of ethics stresses the role of emotions and particularly empathy for the humanity of others as the basis for ethical action”. (Gray and Harrison 2004 104) Thus, while contemplating about ethical perspectives in the field of health care it should be remembered that health care is inherently and characteristically a service. Health care establishments have always been compassionate and humanitarian in nature throughout the course of history. They were and continue to be primarily viewed as community service institutions. The fundamental purpose of health care establishments is to provide care to those who require medical attention and to foster the health of the community as a whole. However, it should be noted that “health care debates can involve complex ethical issues, which prick the conscience and raise the temperature”. (Baggott 2004 xi) Furthermore, “Doctors themselves agree that clinical decisions cannot be taken in a vacuum, detached from personal, moral, ethical, legal and economic constraints”. (Baggott 2004 42) Thus, ethical issues should be properly handled.

However, healthcare management has been recognized as a significant discipline in the health care industry. The elementary of responsibilities of healthcare managers is to augment the quality of life, respectability and well-being of those requiring health care services on the whole. It is also their duty to build up a more even-handed, accessible, efficient and competent healthcare system. These managers need to realize that their priority should be to tend the ailing and serve the community and not the proprietors and financiers. (Marshall 2008)

The healthcare argument in the context of public policy is often learned by principle instead of well-grounded economic premises. Time and again, politicians pledge to an ethical order system or conviction about the role of governments in public life that directs predispositions towards grants of healthcare as well. The ideological gamut covers case-by-case savings accounts and calamitous coverage, tax credit or voucher initiatives pooled with group purchasing understandings, and development of state-owned health insurance. These measures are supported by health care traditionalists, moderates and liberals, correspondingly. The public administrations invest heavily in and subsidize health care expenses. In many countries, national treasuries are used to support those who are incapable of paying for health care services themselves.

The manner in which healthcare is disseminated and provided is issue concerning the adequate allocation of a public service. The product analogy of a straightforward product-resource exchange amongst private entities cannot be simply applied to the healthcare domain. Healthcare providers need to acknowledge the significance of realistic ethical principles and need to mull over the intrinsic nature of health care delivery. The primary objective of healthcare service delivery should be to enhance health conditions of individuals, assuage disability and to offer adequate health services to all those who require it not considering their capability of paying for them. Tending ailing individuals is a social responsibility that has goes beyond the trivial aspect of commercial gains. Even though ownership of health care providing establishment may be viewed as an significant issue from the commercial standpoint, care itself cannot be possessed and should be seen as a service that is provided and compensated by the healthcare professionals and is not simply put up for sale to individuals or the community. (Dawson 2009)

Health care from one viewpoint may be perceived as a business and correctly so. However, it must be remembered that the health care business is not just like any other business. Its is often suggested that education institutes providing health care knowledge should concentrate more specifically and strongly on business ethics to create more knowledgeable and better healthcare professionals. Although it is a step in the right direction it should be understood that mainstream business ethics is generally discussed in the competitive, for-profit oriented environment and barely touches the service oriented organizational settings. These discussions incorporate numerous issues relating to code of ethics for employees, efforts to inculcate a culture of integrity and methods to avoid fraudulent behaviour and address grievances. Undoubtedly, these issues are of immense significance in the corporate setting. However, they fail to entirely fit into the healthcare scenario. (Smith 2008)

The service oriented ethical considerations provided in this discussion seem to fit the not-for-profit healthcare providing organizations perfectly but doesn’t fit into the for-profit scheme of things. Thus the immense ethical challenges may be encountered in for-profit healthcare establishments and consequently heightens the role of business ethics in such organizations. To fit into the for-profit environment the management of the healthcare providing organizations has to be accountable to financers to justify the paybacks of the investments. However, this does not imply that the management cannot take into consideration other factors while deciding on various business choices. Profit orientation does not stringently mean that success hinges on the quantity of revenue generated. It is well documented that even hard lined profit oriented businesses have deliberately made choices expected to yield lower returns in order to save the community from harm which they perceived as a greater cause. Social responsibility is an important consideration for all profit generating organization and health care providing establishments are no exceptions. It should be remembered,”Service providers have been obliged to adopt the enterprise culture, including business-style management, commercial values and market mechanisms”. (Wall and Owen 2002 117)


Health care when viewed as business demonstrates both advantages as well as disadvantages. Profit generating organizations entering the health care industry has enabled the community to avail a range of benefits be it at the medical, technological or financial level. However, there are various issues which need to be contemplated seriously and pose a challenge to individuals as well as humanity as a whole. Profits making health care organizations must strike a balance between gains to be made and cost of realizing those gains. Social responsibility should be a significant consideration while making business decisions in the healthcare providing industry.


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