HEALTH CARE SECTOR

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Healthcare sector is one of the widely appreciated sections of the economy across the whole world. It covers both the public and private sector of the society and comprise of mainly provision of services and prescription of drugs at a cost. It is therefore important that a comparison of the commercial aspects of the private and public healthcare provision is critically assessed. The private sector commercial practices involve different pricing policy from the public enterprises’ case (Kongstvedt, 2003). Consider the case of midwifery services which is one of the most sensitive services that determines the safe delivery for the mother and the newborn. The cost of accessing this service in private healthcare facilities are relatively different from public healthcare centers’ charges. The pricing policy of the private sector is based on marginal cost pricing in which any additional unit is equated to the amount of resources utilized. On the other hand, the government pricing is based on the social benefit principle. The private sector operates on a perfectly competitive market structure where the forces of demand and supply regulate the supply of services and the pricing. Midwifery is a high demand service since there is no option for expectant mothers and this has always been reflected from the high rate of birth related deaths in sub-Saharan Africa where women still lack such facilities (Wunderlich, National Research Council (U.S.) & National Academies Press (U.S.), 2010). In the private sector the demand curve can be explained using the diagram below

From the economic cost of production perspective, the price is equal to marginal cost which also represents the supply curve. It can be observed from research that increasing the charges is likely to reduce the number of people seeking medical care from the private sector as reflected by the slump in demand. It is also common to experience movement a long the demand curve as exhibited by market characteristics

A shift in the demand or supply curve in this sector and with particular focus to this kind of service can be explained by exploring many factors that surround healthcare sector. The greatest of all in this service is the increase in price. In the private sector, the marginal cost is equivalent to price and is always represented by a straight line. In that respect, an increase in cost of delivery will likely lock out many people and compel them to resort to public healthcare facilities which are relatively cheaper and this is what is reflected by the fall in number of expectant mothers (Botman, Porter & International Monetary Fund, 2008) .Another factor that will lead to a shift a long the demand curve is the quality of the delivery services. For instance, in private hospitals, the bed spaces and the post delivery nursing and free commuting to the clients homes. In the case of a fall in quality, people tend to divert to other places to seek medical care.

The public sector is relatively cheaper since the pricing policy is based on the social welfare of the society. Public goods are different from the private goods in many ways. The public goods including services are non- rival and non-excludable. For instance it is, public hospitals are open to any citizen at a relatively cheaper cost (Morris, Devlin & Parkin, 2007). On the other hand, people don’t need to compete for the public goods since every individual is entitled to the governments care. It has however been found out that the monopoly enjoyed by the public healthcare forces people to accept any charge albeit the relatively lower charges compared to private hospitals. The non-excludability of public healthcare providers has always lead to straining of the facilities like the bed spaces and other Medicare facilities.

In summary midwifery services are cheaper in the public sector than the private sector. The cost differential in the two sectors is as a result of submarket structures that surround health care sector.

References

Botman, D., Porter, N., & International Monetary Fund. (2008). The macroeconomic impact of healthcare financing alternatives: Reform options for Hong Kong SAR. Washington, D.C: International Monetary Fund.

Kongstvedt, P. R. (2003). Essentials of managed health care. Sudbury, Mass: Jones and Bartlett Publishers.

Morris, S., Devlin, N., & Parkin, D. (2007). Economic analysis in health care. Chichester [u.a.: Wiley. Wunderlich, G. S., National Research Council (U.S.)., & National Academies Press (U.S.). (2010). Improving health care cost projections for the Medicare population: Summary of a workshop. Washington, D.C: National Academies Press.