Hospitals and Economics

DEMAND AND SUPPLY OF HOSPITALS

FACTORS AFFECTING DEMAND FOR HOSPITALS

NEED > Demand Nature of Goods Level of Income :Engels Law Third Party Resource Allocation of Government on Health Lifestyle and Health Conditions

FACTORS AFFECTING SUPPLY OF HOSPITALS Market : Demand Production Inputs Income Profitability

Pricing Mechanism

1. 2.
3.

4.
5.

6.

FACTORS AFFECTING THE PRICING MECHANISM OF HOSPITALS Resource Allocation : Production Cost Derived Demand Supply Nature of Goods Level of Income Government Laws

St. Lukes Medical Center : Triple Cardiac Bypass Surgery normally cost an average of US $ 250,000 in the US would cost about P 900,000 (US $21, 428.60 at the exchange rate of US $ 1= Php 42) Philippine Heart Center : Triple Cardiac Bypass Surgery The same medical procedure can be done for less than P 900,000 in the, a specialist hospital that is operated by the government. St. Lukes Medical Center or in the other top-notch private hospitals in the country: Asian Hospital and Medical Center, The Medical City, Cardinal Santos Medical Center, Manila Doctors Hospital, UST Hospital and the Medical Center Manila: Kidney Transplant costs upward of $200,000 in the US, costs about PhP 1,000,000 or $23, 809.50 in the Philippines. National Kidney and Transplant Institute. 3

High-end private hospitals may charge an arm and a leg for medical procedures but the prices are still affordable when you compare them to the rates charged by topnotch facilities in first-world countries

HOSPITALS IN THE PHILIPPINES

PRIVATE

GOVERNMENT

GENERAL SPECIFIC PRIMARY LEVEL SECONDARY LEVEL TERTIARY LEVEL

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Private Hospitals

A private hospital is a hospital owned by a forprofit company or a nonprofit organisation and privately funded through payment for medical services by patients themselves, by insurers, or by foreign embassies.

PUBLIC HOSPITALS

A public hospital or government hospital is a hospital which is owned by a government and receives government funding. This type of hospital provides medical care free of charge, the cost of which is covered by the funding the hospital receives. Most hospitals worldwide are public.
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Types of Hospitals

General hospital : deal with many

kinds of disease and injury, and normally has an emergency department to deal with immediate and urgent threats to health. A general hospital typically is the major health care facility in its region, with large numbers of beds for intensive care and long-term care; and specialized facilities for surgery, plastic surgery, childbirth, bioassay laboratories, and so forth. Larger cities may have several hospitals of varying sizes and facilities. Some hospitals, especially in the United States, have their own ambulance service.

Specialized

specific needs Specialized hospitals include trauma centers, rehabilitation hospitals, children's hospitals, seniors' (geriatric) hospitals, and hospitals for dealing with specific medical needs such as psychiatric problems (see psychiatric hospital), certain disease categories, and so forth.

deal

with

PHILIPPINE HOSPITAL CATEGORY

**ADMINISTRATIVE ORDER 147 S., 2004 (A.O. 70-A s., 2004 / A.O.68-A s. 1989)

PRIMARY CARE( FIRST LEVEL REFERRAL HOSP./ SECONDARY)

Non-departmentalized hospital that provides clinical care and management on the prevalent diseases in the locality.

SECONDARY CARE (SECOND LEVEL REFRL HOSP./ TERTIARY)

Departmentalized hospital that provides clinical care and management on the prevalent diseases in the locality, as well as particular forms of treatment, surgical procedure and intensive care.

TERTIARY CARE (THIRD LEVEL REFRL HOSP./ TERTIARY) Teaching and

training hospitals that provides clinical care and management on the prevalent diseases in the locality, as well as specialized and sub-specialized forms of treatment, surgical procedure and intensive care.

INFIRMARY ( INFIRMARY / PRIMARY ) provides emergency treatment and care to the sick and injured, as well as clinical care and management to mothers and newborn babies. BIRTHING HOME provides maternity service on pre-natal and post-natal care, normal spontaneous delivery, and care of newborn babies. ACUTE CHRONIC PSYCHIATRIC CARE FACILITY provides medical service, nursing care, pharmacological treatment, psychosocial intervention for mentally ill patients. CUSTODIAL PSYCHIATRIC CARE FACILITY provides long term care , including basic human services such as food and shelter, to chronic mentally ill patients.

HOSPITAL RESOURCE ISSUES

Resource Allocation

Resource Management

Includes the distribution of resources to the hospitals within the health sector, as well as allocation among hospitals, geographic region, and population group served (urban versus rural, vulnerable vs non vulnerable, rich versus poor).

The use of the resources of hospitals comparing the output to input, which are assessed according to efficiency.

Resource Generation

Generating additional resources for additional funds. Insurance, user charges, community financing hospital

RESOURCE ALLOCATION

Production Function

allocation of the department of inputs to achieve the greatest output (< reduction in morbidity and mortality)
ALLOCATIVE EFFICIENCY

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Budget Allocation

The average budget allocation for health since 2001 under the Arroyo administration is just 1.8% of the total budget- the lowest share for health among the last three administrations (Aquino at 3.1%, Ramos at 2.6%, and Estrada at 2.4%).

Under the 2010 national government budget proposal, the health sector is allocated P37.9 billion or only 2.46% of the total proposed budget. Based on an estimated population of 94.01 million for 2010, this means that real per capita spending is just P403 per Filipino for health services.

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DEPARTMENT OF HEALTH CY 1991-2009 BUDGET APPROPRIATION

YEAR 1991 1992 1993 1994 1995

PS 2,970,670,000 5,089,652,000 2,227,344,000 2,274,670,000 2,872,405,000

MOOE 3,882,689,000 4,710,415,000 3,862,613,000 3,679,651,000 3,595,884,000

CO 319,392,000 427,677,000 824,775,000 1,377,870,000 2,065,787,000

TOTAL 7,172,751,000 10,227,744,000 6,914,732,000 7,332,191,000 8,534,076,000

1996
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

3,370,752,000
3,965,000,000 4,967,983,000 5,042,874,000 5,028,963,000 5,020,223,000 5,404,739,000 5,368,302,000 5,368,302,000 5,397,944,000 5,397,944,000

4,089,307,000
4,537,828,000 5,435,953,000 5,300,903,000 5,313,600,000 4,392,428,000 5,115,498,000 3,807,988,000 3,789,927,000 3,942,388,000 3,760,310,000

1,777,494,000
2,435,029,000 2,539,281,000 922,061,000 396,342,000 43,612,000 899,000,000 730,000,000 405,575,000 384,986,000 299,031,000

9,237,553,000
10,937,857,000 12,943,217,000 11,265,838,000 10,738,905,000 9,456,263,000 11,419,237,000 9,906,290,000 9,563,804,000 9,725,318,000 9,457,285,000

2007
2008 2009

5,789,064,000
5,832,513,000 6,727,340,000 SOURCE: General Appropriations Act 1991-2009

4,639,809,000
10,643,479,000 10,584,705,000

969,898,000
2,436,018,000 6,354,610,000

11,398,771,000
18,912,010,000 23,666,655,000

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St. Luke's has taken and applied the best practices in the field of hospitality in its premises, providing services and amenities such as a selective menu, private butler service, and cable television. St. Luke's believes that comfort and a positive experience are vital in the quest for health and recovery. St. Luke's has a total of 650 beds, which include 342 private suites, one presidential suite, one ambassador suite and a newlyinaugurated Birthing Room.
A range of accommodations to suit different needs and budgets is available at St. Luke's. More affordably-priced semiprivate rooms and wards are also wise choices. To St. Luke's, what is essential is an uncompromising standard of excellent service at any level.

Patient Rooms

Ambassador Suite Birthing Room Presidential Suite Private Room Semi-Private Room Suites Ward
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RESOURCE ALLOCATION

Cost Function

The relationship between hospital cost and output levels; Minimization of operating unit costs, ECONOMIES OF SCALE : constant, increasing, decreasing

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OUT OF THE POCKET HEALTH EXPENDITURE

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RESOURCE MANAGEMENT
MANAGEMENT FUNCTION 1. Technical Efficiency: inputs : personnel, equipment, supplies 2. Economic Efficiency : least combination at the desired level of output 3. Scale Efficiency 4. Efficiency Interrelationships

Poor management results to wastage of resources, including money, staff, building and equipment

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Health Professionals

Professionals for Healthcare Consumers St. Lukes Medical Center has over 1,500 medical consultants, 230 medical
residents and 123 fellows on its roster, apart from interns from its College of Medicine. There are 644 nurses and 2,000 other paramedical, administrative and support staff.

Over 4,000 professionals in medicine and its allied fields, as well as business management and hospital support staff, are the crown jewels of St. Lukes. Their collective expertise and dynamic synergy provide a roster of local and international patients with health care skills and optimum technology.

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RESOURCE GENERATION

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Equity in health
fair,

just, and equal access to health care by all Filipinos.

Constitutional

guarantee: Article II Section 15 The State shall protect and promote the right to health of the people and instil health consciousness among them.

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