An example would be a cat scan that is 10,000 per person; maybe 20 people require a scan. Let us say only ten patients can pay the amount the hospital still has to cover the other ten people. Because it is illegal to not treat a sick individual, now hospitals can send the person to a county hospital. If the cost of their treatment is too expensive for the hospital. An organization has to consider overhead when taking patients who cannot pay.
In the year of 2016 was an example of this trend for the Cleveland Clinic. While profits were up 13%, expenses grew by 18% at the same time. This was due to low payments from Medicare, which pays what they want to hospitals. Coutre (2016) said one of the big challenges in healthcare today is providers …show more content…
Employee receive a small merit raise each year for their service. This is starting to increase each year for the company as a whole. If trend continues, the company will have to freeze raises until the profits increase. Which is unknown to the Cleveland Clinic to when this will happen. Another issue effecting elasticity of demand is a lack of qualified nurses and doctors.
The reason this is an issue is the pay structure of Cleveland Clinic, the other hospitals can pay more. By the other healthcare systems paying more to their doctors. Another issue is the price of drugs as far as the employee benefits are concerned. A major issue for the clinic is the new President and his stand on healthcare. If the payments get any lower, the Clinic will be forced to lay off staff.
So again, it will have a high elasticity of demand; however, this would be an issue for the hospital.