Economics Question - Free Paper Sample

Introduction

Many procurements that people do at the retail stages get generated in markets that do not represent competitive, monopolistically competitive, nor monopolies. They signify oligopolies. An oligopoly occurs when few multinational companies have the entire or almost complete sales in a business. If oligopolies compete fiercely, they may represent perfect opponents, reducing costs and generating zero profits or losses (Ganapati, 2018). If oligopolies conspire, they may successfully perform as a monopoly and effectively increase prices and generate huge revenue.

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Oligopolies denote interdependence where different decisions like price, promotion, output, and other aspects rely on the resolutions of other companies (Ganapati, 2018). Evaluating the decisions of oligopolistic organizations regarding quantity produced and pricing entails deliberating the advantages and disadvantages of cooperation versus the competition at a certain period. The purpose of this paper involves answering questions on the economics of healthcare facilities revolving around oligopoly against monopoly.

The Impact of Competition in the Health Care Sector

The competition in the healthcare sector offers clients a variety of advantages. Patients have several health facilities to choose from due to competition, providing them with an opportunity to obtain services that meet their precise needs (Khan & Vaheesan, 2017). Moreover, they have an opportunity to get services at competitive prices. Competition in the healthcare sector leads to reduced costs, out-of-pocket overheads, lower premiums, efficient resource usage, and higher quality healthcare services than in non-competitive environments (Khan & Vaheesan, 2017). From the viewpoint of consumers, the contemporary in the healthcare industry has both negative and positive impacts. Customary competition in the healthcare industry includes one or several components, such as quality, price, satisfaction, and superior services or products; however, competition can entail the application of technology and innovation.

One of the vital roles of competition in healthcare entails the ability to offer a formula for minimizing healthcare expenses (Khan & Vaheesan, 2017). Competition usually eradicates inadequacies that would otherwise create a high production cost that triggers down to the patients through high delivery and healthcare services prices. Competition remains an essential activity in the healthcare business and encompasses three elements that entail healthcare providers, patients, employees, and players (like governments). People who offer healthcare services, such as medical practitioners and physicians, may compete for customers who can settle their medical bills without insurance or pay their expenses through third-party insurers. Physicians compete for these clients on a non-cost basis like coworkers' recommendations, geographical location, and reputation (Khan & Vaheesan, 2017). Medical practitioners can also compete for patients with membership links to preferred provider organizations (PPO) or through launching an independent practice association (IPA) to guarantee an increased customer base.

Besides, medics can compete in the market environment by minimizing competition from non-practitioners like podiatrists and psychologists. Furthermore, competition can come from companies that offer healthcare services, such as health service organizations, hospitals, and clinical schemes. These healthcare organizations compete for patients, third-party players, and physicians. Hospitals compete for consumers by giving quality services, various services, and discounted expenses (Schmidt & Finan, 2018). Also, there exists fierce competition for skilled personnel, both domestically and internationally. Some healthcare service providers deploy technology and innovations to hire the best and competent medical workers. The final element involves firms that financially support the healthcare industry through insurance and medical plans, such as PPOs, health management organizations (HMOs), and different insurance providers.

Some people assert that intense competition makes companies implement cost-cutting approaches that undermine the quality of healthcare services, which can lower patient contentment (Schmidt & Finan, 2018). Others suggest that enhanced investment in technology can ensure high healthcare quality that can improve and sustain a dependable patient base. Another viewpoint holds that increased healthcare quality can reduce operational expenses without necessarily impacting on the contentment of consumers. Individuals that advocate for competition argue that as HMOs increase market share, hospitals will become increasingly pre-conscious and economical. HMOs minimize expenses through stable budget funding, decreased inpatient use by making patients stay out of hospitals, and employing limited resources on patient admission (Ganapati, 2018). In case HMOs regulate a massive quantity of patient volume, the competitive effect focuses on healthcare framework expenses, giving patients an advantage of low prices and improving customer satisfaction.

Impact of Oligopoly in the Health Care Sector

An oligopoly happens when only some companies offer the required healthcare services. An oligopoly can ensure naturally, although they may develop due to the federal government's order to streamline the number of companies offering healthcare services to the population (Schmidt & Finan, 2018). The regime may formulate policies that favor certain providers over others by eradicating or restricting competition that results in high costs and reduced quality. A company can also form a better product that appeals to several purchasers. The shift in Medicaid and Medicare compensation eliminates single clinics in the market and changes healthcare market dynamics. Universal healthcare and the emphasis on giving quality healthcare services in an outpatient environment encourages oligopoly.

The healthcare market moves towards oligopoly, and the reforms in the healthcare industry can hasten the process (Ganapati, 2018). The Healthcare sector continues to demand heavy investment in technology and infrastructure that increases competition to successfully manage the healthcare, pushing insurance and healthcare companies out of businesses. Some healthcare plans cover approximately two-thirds of cover in the United States of America business market. While present government regulations and cost controls enhance oligopoly, the healthcare sector began consolidating several years ago. Some research findings indicate that almost half of the states in America have only two health insurance companies covering over 70% of the populace (Schmidt & Finan, 2018).

Although multinational insurance companies that can function under the regulations and restrictions enacted by various states lead private insurance coverage, many small players have started developing novel, creative, and economical health insurance plans that encourage competition in the industry. The competitive pressure continues to diminish since some smaller healthcare insurance firms have ceased providing insurance services in the personal healthcare coverage business since the introduction of Obamacare. Such organizations cannot give a comprehensive insurance coverage demanded under the guidelines for Obamacare (Ganapati, 2018). Such firms believe they cannot implement change in their operational model to provide them with the platform to compete effectively with these large companies.

Other small and medium-sized insurance companies have shifted their attention to other ventures like supplemental insurance coverage for Medicare recipients. Some organizations provide Aflac-variety services that settle a fixed sum of money in the event of a particular medical condition (Ganapati, 2018). Other health insurers wish for mergers or getting bought by one of the larger companies. Multi-corporations possesses the resources to continue operation, recruit extra campaigners and advocates, and expand into de factor community utilities that regularly negotiate with government agencies over the cost regulations introduced by the federal or state governments. Some people argue that Obamacare gives little chances for start-up health insurance firms to gain competitive advantage.

The regime policies and the contemporary state dealings, state-built, and regulated markets in which consumers and small organizations purchase their insurance covers, make decisions and rules that favor certain companies over others (Ganapati, 2018). Hospitals and healthcare facilities face the same impact of oligopoly. Hospitals began merging some ten years ago, under the drift may hasten due to Obamacare. Having less, grander healthcare facilities offers a better environment for medical administrators when discussing prices with health insurance companies. These hospitals may negotiate with a budget-impoverished government shortly. When healthcare prices start to surge under the Obamacare plan, as has happened in Massachusetts, the federal government may opt to minimize the levels of compensation (Schmidt & Finan, 2018). The government may also enact laws necessitating wealthier health facilities to financially cushion the program and decrease insurance costs for small and medium-sized traders and people. Besides, the program may expose physicians to the oligopoly of the healthcare industry. Oligopoly disadvantages patients limit innovation and restrict competition.

The Concept of Efficiency

The idea of healthcare industry efficiency and associated matters like value for money and pricing helps determine healthcare productivity. These concepts intend to assess the level to which the inputs to the healthcare frameworks, regarding expenses and various resources, get employed to guarantee worthy healthcare system aims (Schmidt & Finan, 2018). Other factors, like patient preferences, support productivities at an affordable cost.

Efficiency within a system of a standard linear regression approach draws many assumptions due to market-related failures. Conventional market apparatuses cannot function, sanctioning ineffectiveness or unsuitable healthcare to continue at increased rates without legislative intervention. Such consequences require decision-makers to formulate strategies that enhance efficiency with frameworks for determining and comprehending efficiency (Schmidt & Finan, 2018). Inefficient utilization of health system assets may result in detrimental consequences, such as denying patients health benefits after treatment due to the poor quality service within the framework (Schmidt & Finan, 2018). The misuse of funds could deny services to other customers that can profit from healthcare treatment if the assets remained available without wastage.

Conclusion

Thus, misappropriation of monies on incompetent healthcare may decrease a country's readiness to contribute to the financing of healthcare services, thus impairing social cohesion, social well-being, and healthcare structure profitability. The efficient system reassures stakeholders that their resources get invested properly, patients, citizens, and caregivers get reassurance that they have a better healthcare system that carters for their health needs (Khan & Vaheesan, 2017). Healthcare supporters and sponsors, such as insurance firms, governments, and households, have the liberty to evaluate healthcare systems, healthcare service providers, and treatment plans to establish the relationship between their effectiveness and resource utilization.