Czech University of Life Sciences in Prague
Faculty of Economics and Management
Empirical Research in Economics
Supply and Demand of Healthcare
When we compare demand for usual goods and demand for healthcare we can characterize the demand for healthcare as irregular and unpredictable. The intensity and elasticity of demand is affected by several facts. Degradation of health conditions (illnesses, wounds) is connected with huge losses and the cost itself. There are also costs for healthcare that have to be considered. People lose their money, have to change their lifestyle. Pain and discomfort are a serious intervention into ...view middle of the document...
By this decision is the need for healthcare determined.
Demand for healthcare is understood as a decision of an individual on what care is he/she going to use in order to make his health condition better.
There are several types of demand for healthcare that we can get in touch with. Common economic theory doesn’t really separates different types of demand, especially while using common models doesn’t include how the demand is realized. The main thing, that is used for telling the character of a demand are levels of elasticity. These factors show the connection to a value of goods in money. When we are considering healthcare there are specific things connected with its demand that are strongly reliable on the character of the inquirer. The relationship of a person with their own health is changing in time. That means we cannot really say that the character of a demand for healthcare would necessarily have to endure during the whole life of a patient.
When it comes to supply of healthcare, the health markets are different basically in the type of their enquiry, expected behavior of doctors, the insecurity of the final product and the conditions of the offer.
There are few things connected with the supply of healthcare. Firstly it’s its limited elasticity. If there is a perfect competition market, the offer is characterized with a free entry to a particular branch. This however doesn’t apply for health market. Here it’s typical that the performance of a doctor is connected and regulated to receiving a license, education of people working in health care is financially and according to content really challenging. This limits the elasticity of the supply.
Other thing is the limited competition. Limiting of the competition is different between single market segments. The ones that provide the services compete with themselves and also with other branches. This is a competition between patients, high quality working force, financial resources for the investments etc....