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The Concept of Economic Demand on Health Care

Updated on May 12, 2010
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Christopher F. Bueno is currently the Dean of the College of Education, University of Northern Philippines, Vigan City.

    The economic demand is derive from the human needs and wants based on the capacity to purchase certain goods and services in the societal market. In this sense, there are two conditions to meet the economic demand : (1) the willingness to buy the products; and (2) the capacity of paying the amount for that particularly products.

    The creation of economic demand through the willingness to buy the products may follow the needs and wants of the individual. The existence of human beings is condition to satisfy the physiological or survival needs in order to bring stable physical, social and mental state. This kind of need is best describes in the “Maslows Hierarchy of Needs.” Likewise, the common basic survival needs are food, clothing, shelter, and others. While, the economic wants are derive from need. However, they are the preference and choice of the consumer on particular product to satisfy the needs of the individual.

     The economic demand of the health sector primarily focuses the ability to cure and care the sick or ill patients in the hospitals, clinics and medical care. As a service-oriented business on health care is supported by the medical personnel such as physicians, nurses, attendants, caregivers and midwives. The demand on health care It is also presents the medical inputs in curing illness or disease of the patient such as medicines, laboratory facilities and equipment and other tangible medical products.

     If an individual decides to be confined in hospital he must consider his ability to pay for the medical bills in the hospital. The usual demand for the confinement for the individual with low income is always in government hospitals. Those with higher income bracket who has enough money to pay their medical bill they usually confine themselves with private hospital. The preference to stay in the private hospital even do it is very expensive they are assured of better health care service than the government hospital.

    In health economics, it follows the general rule of economics in the principle of demand that when the price of good or service is high the tendency is the demand is also low. There is a direct relation of the level of price and demand for the goods and services in the societal market. However, these are the factors that affect the demand curve for the demand of medical products and services:

1. The increasing average income of people tend to prefer the services of private medical hospital because of the better health services they offered in their air conditioned room, fully equip medical facilities and better medical services. Although, the private medical hospitals are quite expensive in their confinement they are willing to pay for such services because of higher income.

2. The increasing population of a locality may result to the increasing medical care services particularly in the urban areas. The increase of commercial activities may result to migration in the urban areas. The hospital is strategically located in the urban areas provided more opportunity to get patients in the urban areas.

3. The substitute products can be done from the lowering rates of hospital as be come more competitive and can get more patients to be confined in this hospital. The quality health services given in this hospital can substitute their affordable service for physician fee, medical services and other service they are providing to the patient. The complementary products are usually done in the promotional activities of the hospital. However, it is rarely done to attract the stakeholders the improvement of their services and better quality of care given to the patients.

4. The influence of the stakeholder confine themselves in the hospital is also reflected from the added medical service such as x-ray radiographic equipment, sterilizing equipment, operating room instrumentation, fetal monitors, infant incubators, ecg instruments, operating table lights, ct scans, other medical instruments, and operating room equipment. The competent physicians are the most important factor why stakeholders are attracted to be confined or for their medical check in the hospital.

    Given these factors of the demand curve for the hospital and clinic we can now summarize the reasons for the increase demand or through the confine of the hospital:

1. The affordable and low cost charges of medical services such as laboratory fees, private room rates, physician fees, medicine charges and other similar charge expenses upon confinement.

2. The modest income received by the stakeholders provides them to go for medical check and confinement with tertiary hospitals who are fully equip to give quality service to their patients.

3. The increasing population and mobility of labor to the urban areas where hospital is strategically located to give service to the stakeholders.

4. The presence of modern and technologically advanced gadgets to monitor patient’s health . Likewise , the presence of competent physicians to correctly diagnose the illness of the patient.

     These are the economic demand for health care market in relation to hospitalization, illness because of age and gender, self-medication, diagnosis of the doctor, and income of the patient.

1. In Illness , the hospitalization of individual is a health care market that needs to pay the services of the hospital such as physician fee, medical fee, drugs and medicine expenses, hospital room fees and other expenses in the process of healing the patient’s illness. The economic demand is the payment of hospitalization fee such physician fee, medical fee, drugs and medicine expenses, and hospital room fees.

2. In case of age, there are health conditions that may be present to the elderly people. The degree of demand is the treatment of certain diseases, which they are very prone to diabetes, stroke, heart attacks, cancer, tuberculosis, influenza and other diseases. The economic demand is the payment of medical fees for confinement and check up of elderly people on illnesses such as diabetes, stroke, heart attacks, cancer, tuberculosis, influenza and other diseases.

3. In self-medication, the personal treatment of illness has its own prescription based on previous diagnosis or consultation with their friends or relatives.. The individual may now prescribes drugs as part of self-medication which going to buy paracetamol, anti-biotic, pain reliever and other generic drugs that can be bought in the pharmaceutical or drugstores such as paracetamol, anti-biotic drugs, pain relieving medicine which they believe through consultation with their friends and relatives will cure the illness of the individual. The economic demand is the individual buys paracetamol, anti-biotic drugs, and pain relieving medicine in pharmaceutical or drugstores.

4. The diagnosis of the physician may follow the ultimate economic demand of the patient. We always follow the advice of the healthcare provider as the result the medical diagnosis in the hospital, clinic and medical centers.

5. The ultimate decisions to take the medicine is dependent to you whether you want self-medication or simply follow the order of you physician.The demand herewhen individual is willing to buy medicine as prescribe by the doctor such as case of life threatening illness such as dengue, typhoid fever, influenza, pneumonia and other related diseases.

6. The income of the patient is the main measure of demand. The high income patient has the tendency to be confine in the more expensive hospital. The private hospitals have high fees in the use of hospital private room, physician fees, laboratory fees, medicine expenses and other hospital fees.The poor patients prefer to be confined in district or provincial government hospitals because it’s less expensive than private hospital.


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    • profile image

      dr abdullahi 

      3 years ago

      More research needed


    • Chrisagbe profile image


      7 years ago

      Savior, I see useful application of Economic theory in your hub. Thanks for the great job done educate us


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