Community health care resources

Community health care resources

Hospital is an important part of the overall economy in the United States. Health care and Hospital expenditure in the United States is the highest among the 30 high income countries in terms of per capita and percentage of gross domestic product. Within the last few years, the relative price of health care has been slightly increasing.

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It is worth specifying what has Economics to do with Hospital? As it is quite known about almost all industrial sectors of the economy, the resources to satisfy unlimited human wants are limited. From the economic point of view about Hospital and Health care, the resources are scarce, and the selection over various patterns of the available resources must be made with ideal decisions so as to minimize opportunity costs.

This piece of research work is an attempt to analyze the economic factors of Hospital Industry. This work presents ‘hospital’ industry and its economic activities as part of health care industry. This research paper includes detailed analysis of economic traits of hospital Industry, Porter’s five force analysis, the major economic and environmental change and the relative driving factors for the change.

Typical Los Angeles, California Hospital

There are a very large number of Hospitals of both Profit and not for profit, ranging from small health centers to highly sophisticated super specialty hospitals in Los Angeles, California. ‘Hospital’ is the organization whose principle purpose or function is to provide medical care to patients with many different types of ailments.

Health care district was authorized by the section 32121 of California Health and Safety. California’s district hospitals are considered to be public Hospitals and they are categorized under State’s other public hospitals. Public Hospitals can achieve funding from the federal government as is already done by District hospitals by using intergovernmental transfers to get additional funding (Association of California Healthcare Districts).

SIC/ NAIC codes and hospital industry reports

The North American Industry Classification (NAIC) was established for using as a standard for federal statistical agencies and for classifying the business organization so that statistical data related to a business and economy of US can be effectively collected, analyzed and published. The hospitals are included in Health Care and Social Assistances that are classified under the NAIC code of ’62’. Establishments in health care are presented with six digit NAIC code starting from ‘621111’ which is for offices of Physicians to ‘624410’ which is for child day care services (naics.com). General and specialty hospitals are classified under the NAIC codes starting from 622 (Hospitals) to 622310 (Specialty (except Psychiatric and Substance Abuse) Hospitals).

Establishments that provide health care, medical care and social assistance for individuals are included in NAIC codes of 62. The total number of Health care and subsectors are accounted to be 824,110 (naics.com). Industries in Hospitals and its subsectors provide a number of services including diagnostic, medical care and treatment services that comprise of physician, nursing and health services to the patients. Hospitals also provide outpatient services. The services offered by establishments in Health care industry are delivered by trained professionals and many of the industries are defined based on the educational degree that practitioners hold.

Hospital Industry and Dominant Economic Traits

Hospital industry is a significant part of Health care industry. According to the Bureau of Labor Statistics (2010), health care industry including hospital industry was one of the largest industries in 2008-2009. Health care sectors provided 12.3 million jobs for both wage and salary paid workers in the US in 2008. Out of the 20 fastest growing occupations, 10 are related to Hospitals and health care industries. Heath care is proposed to generate around 3 million new wage and salary job opportunities from 2010 to 2018 which accounts to be more than any other industry (BLS). A greater majority of the workers in the industry are highly qualified with graduation, post graduation and PhD levels and they are more trained and knowledgeable than other industries.

A very large number of hospitals and other healthcare establishments that are accounted to be 824,110 that makes up the total of health care industry in the US. According to Bureau of Labor Statistics, hospitals constitute just 1 percent of all healthcare establishments, but they employ 35 percent of all workforce. Hospitals employ more than 4.3 million workers. These establishments include a wide range of hospitals from small clinics to highly sophisticated multi specialty hospitals and other offices. Around 75 percent of health care establishments are comprised of physicians, dentists, surgeons, doctors and others including nurses.

According to the Bureau of Labor Statistics (2010), hospitals provide complete medical care including diagnostic services, surgery and continuous nursing services. Different hospitals are specialized in different areas like treatment for mentally sick people, treatment for cancer diseases, hospital for children etc (BLS, 2010). Hospital workers are qualified with higher education and professional training and they are provided of better opportunities than offered in nursing or other sectors of health care industry. It was estimated that around 20 percent of hospital jobs are in service occupation like nursing, psychiatric etc. Apart from the surgeons, doctors and other medical professionals, hospitals employ a large number of management and administrative staffs as well.

Cutler (2000) emphasized that hospital industries include a mix of three modes of production they are government, for profit and not for profit hospitals. As of 1995, 65 percent of acute care hospitals were in not for profit sector, 24 percent were public institutions and 11 were in for profit institutions (p. 1). But this has been changing for last few years. No matter how many they are, these three modes of hospitals provide same services in the health care market and they involve in competition.

With in recent years, the hospital industry has been facing the fluctuation that the pace of technological innovation and advanced and managed health care has caused in reduction in numbers of inpatient demand. Even when population was growing, it was accounted that the total number of ‘hospital days’ spent in the United States was reduced by 35% between 1980 and 1995 (Cutler, p. 1

The US hospital industry includes around 6500 hospitals that contribute annual revenue of more than $ 500 billion per year. Major companies work in the hospitals industries are Kaiser, HCA (Hospital Corporation America), Tenet Health care etc. Health Management Associates operates around 59 hospitals throughout rural areas and Community Health System operates around hundreds of hospitals in many states of the US. Community Health Services, LifePoint Hospitals, MedCath and Catholic Health Initiatives are some other major companies that involved in hospital industries in the US.

Demographics and advances in medical care and the technology used are the drivers for the demand for hospital. Even though different hospitals provide almost similar kind of services, the profitability depends on each one’s effectiveness in providing the services with the use of advanced technology and innovation. When large hospitals compete in the market with advanced services, multi specialty facilities and so on, small hospitals compete by providing specialized services in specialized areas.

The major revenue come from in-patient hospital care (it makes up of around55% of the industry) and out-patient services where in customers do not require to stay overnight, selling of prescription drug, surgeries, contributions and funding etc.

Economic Factors of Hospital Industry

The basic economic factors of any industry are demand, supply and the distribution. Similarly, the market for hospital and health care is contro……………..

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