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In Week 3, in the chapter “The Profit Motive in Healthcare” of your course textbook, you will investigate supply as it relates to the microeconomic model, or the free-market model, and also investigate the profit motive that leads to the production of goods and services in the most efficient manner. In the chapter “The Healthcare Workforce,” you will look at the important component of labor as it relates to the healthcare workforce.

In microeconomic terms, supply is the amount of goods or services that a firm wishes to sell at certain prices in the marketplace. Supply normally serves a passive role in traditional microeconomic theory as supplies react to demand and price rather than lead. In the traditional model, we assume that supply is strictly profit oriented, which, clearly, is not the case every time in healthcare. A simple example would be a nonprofit organization that does not have a profit motive.

Concerning the workforce in healthcare, which is typically physicians and nurses, the traditional shortage or maldistribution is corrected by wage and salary increases or other up-employment incentives. It does not appear to be either possible or predictable as it would be in a free market.

In the chapter “How Competitive Is the Supply of Healthcare?” of your course textbook, you will examine supply as it relates to a competitive market from the healthcare perspective and examine supplier-induced demand, monopoly behavior, cost shifting, and increased economy of scale. The chapter “The Profit Motive in Healthcare” of your course textbook will explore behaviors and outcomes in hospitals and nursing homes and pharmacies as they relate to the profit motive in healthcare. The chapter “The Healthcare Workforce” of your course textbook will discuss the healthcare workforce again, focusing on physicians and nurses and the inherent issues that healthcare creates as opposed to the competitive marketplace.

Your Learning Objectives for the Week:

  • Evaluate economic issues relevant to the health care policy debate.
  • Interpret the factors that affect the supply and demand for and health services in order to predict responses price, quality, and other factors commonly influenced by health policies.
  • Analyze current-day delivery of healthcare health policy related to concepts involving efficiency and equality.