Aug 28, 2020
folder_opencategory: Medicine


The need for hospitals has forced providers to seek for the better service provision due to the changes of quality standards and population, as well as the increase of infectious diseases in the contemporary world. Consequently, patients requested for the improved health maintenance system and inherent costs. The paper aims at outlining the factors, which determine the demand for hospital care and its relevance to the price. According to Rodriguez-Alvarez, Roibás & Wall (2011), the health care sector requires the economic analysis of the efficiency, value, , manufacture and consumption of medical products and services. The health economists consider that the health care system is operating in response to the behavior of the demand. Thus, its elasticity function is measured correspondingly to the product market changes such as the price and income of consumers. In this aspect, flexibility becomes useful in evaluating the unit price of a product in comparison to the magnitude amendments in the value of healthcare. The demand for better hospital products and service is different from the one for other goods and services since it has a direct influence on human life (Rodriguez-Alvarez, Roibás, & Wall, 2011). Therefore, the government determines the capital allocation and the level of investment in the health care sector.

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Governmental Health Care Regulations

The price control regulation in the health care has failed since the cost administration mechanism prevents market efficiency. Consequently, this has led to the quality deteriorating and appearance of the inequitable counterfeit products in the market. A good example is the government executive document in Maryland, which involved a fixed price for hospitals and health care products that caused inflation of the production cost and great power for doctors. Another country that failed in manifesting price control is Japan, and it resulted in a bad quality service. However, the Netherlands, Australia, and the U.S.A have prioritized on health care by allowing the market-based pricing determinant. Thus, the price negotiation in the United States of America has yield high-technology service delivery hence improving the quality of the health care provision. The value of medical assistance determines the demand for hospitals and the price level of products in a country (Schapper, 2012)

Legal Impact on Health Care

Therefore, in order to decide on the demand and pricing for the health care in a hospital, the relations between the quantity of services and the utility need to be established. The medical stock is treated as a durable asset in which the service is subject to the law of diminishing returns. The latter applies to any improvement in the health sector that contributes positively to the medical attendance. It clearly supports the idea that an input of medical products in human life will restore or improve physical condition. Moreover, the marginal productivity of this law causes the minimal improvement in the additional unit of medical care input by a person. In this concept, advancement in any medication will restore human health. It indicates that a patient may opt for further treatment to recover. Consequently, this will lead to the increase in prices for healthcare. Thus, the government investment will lower the costs of product and service delivery in the industry.

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Individual Factors

Other personal factors that influence the demand for hospitals are tastes and preferences. In this consideration, the individual features such as education and lifestyle will determine the value of better health care. The educated people seek for medication due to the understanding of the influence of medical care in his/her life. Therefore, they will find a remedy in case of illness or take frequent examinations to avoid sick condition. Secondly, the state control of health care is another factor, which makes people who were born with physical complication such as asthma demand better medication. In this aspect, the individual price will depend on the severity of health complications. Thirdly, the gender difference contributes to changes in hospital demands, specifically the female sex requires more comprehensive medical attendance due to their vulnerability to diseases. Hence, the health providers have acknowledged the need for women hospitals for prevalent disorders. Finally, another element is the way of living. For example, some people get exposed to unhealthy physical state by smoking cigarettes and alcoholism. Consequently, this increases the demand for hospitals and better health care around the globe. The World Health Organization supported a study on diseases that are caused by modern human lifestyle in connection with the effects of pollution on air.


The world has strived to accommodate the demand for hospitals and better health care. The expansion of diseases is a contributing factor to the need for medical institutions in consideration of the population changes. The prediction for hospital demand has become valid due to the factors causing increased specialization for improved medication. Several countries have adopted regulations, which in turn enhance the demand for hospitals to accommodate the growing population. The health providers have also used the managerial technique to monitor patients’ requirements and advance the service provision. Moreover, some governments influenced the health care service through continuous investments in medication and innovations in order to meet human requests (Brunner, 2011). In this aspect, the authorities alongside the private sector have played a significant role in providing quality products and services to the citizens of different countries.

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