Research Paper on Supply and Demand in Public Health

Introduction

To provide an example of supply and demand for public health goods and services, it is essential to define what the terms supply and demand mean. It has been established that there is an upward sloping relationship between quantity supplied and price (Forgang & Einolf, 2015). This implies that there is a positive relationship between price and quantity supplied (Bohi & Montgomery, 2015). That is, the higher the price of a particular thing, goods and services, the more they will be brought to the market. An example of supply in public health services is the relationship between the number of nurses willing to work overtime and the amount of wage. There is a high likelihood that increasing the nurses' overtime wage will lead to increased supply of the nurses into the workforce (Rudasingwa & Uwizeye, 2017).

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One of the factors that can shift the supply curve, left or right, is changes in technology (Baker, Filbeck, & Harris, 2018). For instance, future nursing involves the use of robots in patient care. If there is a high uptake of such technologies in hospitals, there will be a decreased supply of nurses into the workforce or market. This is because the robots would have taken their roles. Consequently, some of the nursing workforces may lose their jobs if the new technology effectively serves the same purpose at a low or reduced cost.

Demand is another economic concept that applies to public health. As an economic concept, demand refers to the consumer's desire to pay the price for services or goods or purchase something (Collins, 2017). When all factors are kept constant, the increased cost of a particular service or a good will result in decreased demand (Mulhearn & Vane, 2015). On the other hand, the reduced price of a service or a good will lead to an increase in demand (Hirschey, 2016). The demand for healthcare is steadily rising. The demand is affected by the patients' quality and relevance of the services provided, social norms and traditions, education, cost of care, and income (Wellay et al., 2018). In developed countries, the demand for health care services is extremely high or infinite because of the presence of insurance, which has led to the provision of the services at zero or very low cost. Conversely, in developing countries, the demand for health care services is low because of the high cost of treatment, transport cost, and poor quality of services.

An example of the impact of cost on demand for health care services in developing countries can be seen in cancer care. For instance, the demand for cancer care in Africa is low because the cost of chemotherapy services is very high (Stefan, 2015). More specifically, it has been reported that in Tanzania, the cost of cancer therapy drugs when bought privately is equivalent to a patient's 1-7 months' salary. Because most of the patients in developing countries are not insured, only a few of them can pay. Consequently, the demand for cancer therapy services is low.

Factors That Might Influence Price Elasticity of Demand for Public Health Goods or Services

Price elasticity of demand refers to a measure of the magnitude by which consumers change the quantity of a particular product or a service that they buy in response to change in the price of that service or good (Boyes & Melvin, 2015). There are many factors that affect the price elasticity of demand. One of these factors is the consumers' socioeconomic status (Scheffler, 2016). People of low socioeconomic status are likely to show declined demand for health care services (e.g. chemotherapy services) when the cost of such services skyrocket. The second factor that may affect the price elasticity of demand is the availability of substitutes. For example, in the case of cancer care, increased price of chemotherapy services may make the patients go for alternatives such as radiotherapy.

How and Why Price Elasticity Might Influence the Quantity of Goods and Services Demanded

Consumers' socioeconomic status is an essential factor affecting the demand for health care services (e.g. chemotherapy services). This is because when the price or the cost of chemotherapy services rises by a specific value, say 50%; it is highly likely that the demand for the same services will also decrease by almost the same or a higher proportion. Consequently, the total revenue that would have been derived from sales will also reduce. Secondly, the presence of substitutes is an essential factor. This is because when the price of one of the cancer alternative treatments increases (e.g., increased cost of chemotherapy), the patients will opt to go for another substitute, e.g., radiotherapy services. The cancer patients' choice of such a substitute is linked to its lower cost or price despite providing almost the same or similar treatment outcomes. Consequently, the presence of cheaper alternative goods and services are key in shifting the demand from more expensive goods and services to less expensive ones.

References

Bohi, D. R., & Montgomery, W. D. (2015). Oil prices, energy security, and import policy. Routledge.

Boyes, W., & Melvin, M. (2015). Microeconomics. Boston, MA: Cengage Learning.

Collins, J. (2017). The wealth of nations. Boca Raton, FL: CRC Press.

Forgang, W. G., & Einolf, K. W. (2015). Management Economics: An Accelerated Approach: An Accelerated Approach. Abingdon, UK: Routledge.

Hirschey, M. (2016). Managerial economics. Boston, MA: Cengage Learning.

Mulhearn, C., & Vane, H. (2015). Economics for business. London, UK: Macmillan International Higher Education.

Rudasingwa, M., & Uwizeye, M. R. (2017). Physicians' and nurses' attitudes towards performance-based financial incentives in Burundi: a qualitative study in the province of Gitega. Global Health Action, 10(1). https://doi.org/10.1080/16549716.2017.1270813

Scheffler, R. M. (Ed.). (2016). World Scientific handbook of global health economics and public policy. New Jersey, NJ: World Scientific.

Stefan, D. C. (2015). Cancer care in Africa: an overview of resources. Journal of Global Oncology, 1(1), 30-36. https://doi.org/10.1200/JGO.2015.000406

Wellay, T., Gebreslassie, M., Mesele, M., Gebretinsae, H., Ayele, B., Tewelde, A., & Zewedie, Y. (2018). Demand for health care service and associated factors among patients in the community of Tsegedie District, Northern Ethiopia. BMC Health Services Research, 18. https://doi.org/10.1186/s12913-018-3490-2