History and Evolution of Health Care Economics
History and Evolution of Health Care Economics
University of Phoenix
History and Evolution of Health Care Economics
Health care economics have drastically changed over the course of history in the United States. While some can contribute these changes due to the evolutionary changes the US has undergone since her inception, the major contributing factors that influence the changes in health care economics are advances in technology and medical care. By understanding the history of health care economics, and identify the flow of funds system, financial managers are able to be more adequately prepared for the future. It is essential to remember that the driving force behind health care economics is money, and it plays an integral part to the success of the health care industry. “Who pays for what has changed dramatically in the past 60 years. Whereas in the past, the majority of individuals paid their medical bills with private funds, today insurance companies and other third parties cover the majority of payments, with individuals paying only a small fraction of the total flow of funds with private money” (Getzen & Moore, 2007, p. 3, para. 1). The flow of funds is a system in which financial managers are able to “follow” the money through the health care system, and as stated above the initial flow of funds have drastically changed from past years. History shows that many physicians would trade services for non-money items (such as grain, cotton, livestock, etc.) as forms of payment if the individual was unable to use money. Essentially, these physicians were tradesmen, with the patient paying one hundred percent of the cost for medical services rendered. As the US began to progress, with advances in technology and other historical factors (such as the Great Depression and World War I and II), a new system had to be put into place to aid the American population in purchasing medical services. According to Melcher (2010), health cooperatives
University of Phoenix
History and Evolution of Health Care Economics
Health care economics have drastically changed over the course of history in the United States. While some can contribute these changes due to the evolutionary changes the US has undergone since her inception, the major contributing factors that influence the changes in health care economics are advances in technology and medical care. By understanding the history of health care economics, and identify the flow of funds system, financial managers are able to be more adequately prepared for the future. It is essential to remember that the driving force behind health care economics is money, and it plays an integral part to the success of the health care industry. “Who pays for what has changed dramatically in the past 60 years. Whereas in the past, the majority of individuals paid their medical bills with private funds, today insurance companies and other third parties cover the majority of payments, with individuals paying only a small fraction of the total flow of funds with private money” (Getzen & Moore, 2007, p. 3, para. 1). The flow of funds is a system in which financial managers are able to “follow” the money through the health care system, and as stated above the initial flow of funds have drastically changed from past years. History shows that many physicians would trade services for non-money items (such as grain, cotton, livestock, etc.) as forms of payment if the individual was unable to use money. Essentially, these physicians were tradesmen, with the patient paying one hundred percent of the cost for medical services rendered. As the US began to progress, with advances in technology and other historical factors (such as the Great Depression and World War I and II), a new system had to be put into place to aid the American population in purchasing medical services. According to Melcher (2010), health cooperatives
References: elasticity. (2010). In Merriam-Webster Online Dictionary. Retrieved July 4, 2010, from http://www.merriam-webster.com/dictionary/elasticity Getzen, T. E., & Moore, J. (2007). Health care economics: Principles and tools for the health care industry. Retrieved from University of Phoenix eBook Collection database. Melcher, J. (2010). A look at history of health cooperatives in the US. Miller-McCune online. Retrieved from http://www.miller-mccune.com/business-economics/history-and- health-cooperatives-9007/