Supply & Demand in the Health Care Field

Economic equilibrium occurs in most industries when supply equals demand. Everyone is satisfied. However, in health care, equilibrium cannot occur. Demand in health care can never be satisfied. No country--none--can ever meet its population's need for medical services. Another person will always need treatment, after supply of goods and services is exhausted.

Supply

• Delivery of medical care services requires both organic and inorganic resources. Inorganic resources include beds, buildings, professionals' time, disposable syringes, catheters, scalpels, money and bandages. Organic resources include body parts, blood, skin tissue, organic compounds, and organs for transplant. In order to treat one patient's disease, all necessary inputs--organic and inorganic resources--must be available all at the same time and in the same place.

Demand

• Each patient's disease and treatment needs both organic and inorganic resources from the supply pool. As long as all the necessary inputs are timely available, each patient gets treated. If one indispensable supply item is missing, then a patient's medical need cannot be met.

Equilibrium

• Because unlimited demand will always exceed limited supply, resources needed to treat some patients will be exhausted too quickly, leaving some patients without treatment. Nations must choose which resources to make available and how those will be utilized. Nations must also choose which patients will be treated, and who must be denied medical care.

Roles

• In a free-market system like the United States, the allocation of goods and services to patients is controlled by law, market competition, insurance contracts, provider organizations, pharmaceutical firms, geography, population demographics, and for-profit versus not-for-profit businesses. Government is the legislator and regulator. Providers decide whom they will treat, when, and on what terms.

  In the United States, providers (for example, cosmetic or eye surgeons) and manufacturers, like pharmaceutical firms, can artificially alter the population's demand for goods and services and cause re-allocation and diversion of supply, that is, the pool of resources. Some patients' desire for non-necessary medical care will be satisfied at the expense of other patients' untreated disease. That imbalance of power within the health care delivery system can result in unduly premature deaths. Some countries restrict profit-driven manipulation of their medical care delivery systems.

Patients

• Patients' demands for care cause supply to be utilized. Two patients cannot use the identical resource. One patient's choices affect the remaining supply for other patients' needs. Patients must judiciously balance their choice to receive care and utilization of resources with the resulting unmet, medical needs of their neighbors.

  To ensure fair and sufficient allocation of each nation's limited resources, patients must consider their neighbors' needs, when choosing and refusing treatment for themselves.