Healthcare Laws of Supply and Demand

medical symbolSupply and Demand:

  • P – price
  • Q – quantity of goods
  • S – supply
  • D – demand

The four basic laws of supply and demand are:

  1. If demand increases and supply remains unchanged, then it leads to higher equilibrium price and higher quantity.
  2. If demand decreases and supply remains unchanged, then it leads to lower equilibrium price and lower quantity.
  3. If supply increases and demand remains unchanged, then it leads to lower equilibrium price and higher quantity.
  4. If supply decreases and demand remains unchanged, then it leads to higher equilibrium price and lower quantity.

Law #1 is the preferred choice.

  • The demand for Healthcare will be high, as long as population numbers remain.
  • If the supply of Healthcare professionals and goods is reduced => Higher Prices.
  • A smaller number of professionals can render a higher turn over of services.

Positioning Yourself as a Rare Commodity

By limiting the number of Healthcare professionals and goods, the rare commodity status is attained.
By over defining the services rendered as High quality and over stating the need, the rare commodity status is amplified. (need for regular visits; need for treatment to live longer; etc…)

Gain Control Over Supply

Lobbying the Federal Government is a must.
Laws limiting who can provide healthcare, how facilities should be, allow for negating any other type of healthcare to be used. And in doing so, eliminates any competing parties to the established Medical Field.
Add to it a foe called lawsuits, and no other parties will even attempt a breach in the market.

Gain Control Over Pricing

As more individuals become unable to pay for the said goods and services, a system encouraged by government can almost limitlessly increase the size of the Purse. The introduction of Medicaid and Medicare in 1965 helped greatly increase profits. Should Government become the sole payer for Healthcare, profits could become even greater. And the Healthcare Industry would become a class of it’s own (such as Nobility was during Monarchies).

See Also:

Marketing For Health Care

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