Opportunity Cost Theory In Health Care

Every healthcare organization in our country relies on financial and economic gains. In other words, without these two important factors, no healthcare facility would ever survive. For example, healthcare facilities rely on these supplies, staff and the proper financial knowledge to be available. The price and amount of healthcare supplies are rising, which in turn can increase the cost of healthcare (Kabene et al.). In fact, in non-profit hospitals like Yale New Haven, it is important to have an adequate balance of supplies in order to allow the healthcare providers to practice efficiently. For instance, there needs to be enough supplies in order for the doctors to keep up with the high demand of incoming patients. For instance, when there …show more content…
The first main theory is opportunity cost. Opportunity cost is when an organization starts with a benefit or profit, but then in time, they give up this profit in order to pursue another financial path believing that it could be more beneficial in the end. For example, opportunity of cost in healthcare can relate to an organization investing money in some new product that could potentially save lives. The medial staff has to then measure the benefits of this product in terms of the lives it could save or the years it could add to a patient’s life. The staff has to determine if this product would be a financial gain to their organization and their patients or if there is a better alternative (Palmer & Raftery, 2009). The same goes for medication. For example, if the hospital has a choice between two drugs for treating the same illness, the medical staff has to take into consideration the cost and how many years it would add to their patients’ lives. The drug that is less expensive and can also increase the years on someone’s life would be a better choice. Therefore, as one can see, opportunity cost is extremely important in healthcare because it is all about investing in medication that can add years to patients’ lives, but it also gives financial gains to an …show more content…
Efficiency in healthcare refers to an organization that wants to reduce the amount of waste and increase the amount of available resources within the facility in order to have an efficient delivery of care to all patients. In terms of efficiency for the patients (consumers), they want to have the best quality of care for the lowest price. Therefore, the efficiency is important within any healthcare facility because these organizations want to refine their overall quality of care and limit the cost, in order to make their facility more proficient (Health Service Research, 2008). Next there is equity in healthcare. Equity measures the differences of available resources to all populations. In other words, healthcare facilities need to make sure the available resources are disturbed equally among all cultural groups within a given community. Therefore, it is important for the medical staff to be aware of healthcare disparities and how important it is to distribute medical needs to all cultural groups (Health Knowledge). If a healthcare facility has equity, they are providing all their patients with an equal amount of care, which will increase their patient quality and allow them to gain financial