Health Economics Strategies


Many parties are involved in health economics within the whole process, and as a result of their relationship, the healthcare economics is affected in different ways, mainly on behalf of the strategic and operational management of the healthcare institutions. Health economics allows a deep and structured analysis of all the problems faced by the health stakeholders in promoting health for all individuals. Economic theories of the consumer, social, and producer choices can be applied so as to understand the behaviors of different individuals, private institutions, healthcare providers, public institutions, and even the government in the overall decision-making process. Understanding these relationships can help to outline any problems that may arise during the delivery of healthcare to the public such as the issue of shortage of professional manpower in the health sector. The current paper discusses the relationships that exist between healthcare economics and the stakeholders involved, as well as how these relationships affect the overall strategic and operational management of health organizations. It then addresses the problem of professional shortage in the health sector and how the solution offered would affect healthcare economics.


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Healthcare economics is an important aspect of the healthcare sector. Healthcare economics can be defined as a branch of economics that deals with the issues that are related to the effectiveness, efficiency, value, and behavior in terms of the provision of healthcare for the public (Wels, 2014). Therefore, health economics is an important aspect of the healthcare sector since it outlines the relationships between different stakeholders in the health sector. Additionally, health economics also outlines how different behaviors of these parties affect the overall strategic and operational management of the healthcare institutions. Healthcare economics is therefore used in promoting health among the public through the assessment of healthcare providers. Wels (2014) argues that the health economists use the theories of production, competition, disparities, regulation, and efficiency to inform all the stakeholders about the most cost-effective strategies. Consequently, health economists also assess how different social problems such as how the shortage of professional manpower in the health sector impact the health of the population. Therefore, health economics is an important aspect in the provision of healthcare to the public.

Relationships in Healthcare

In today’s healthcare, finance and economics play a huge role in the decision-making process regarding how healthcare is to be provided. It is, therefore, vital for the healthcare managers to understand the basics of various relationships that exist between the parties involved in the healthcare system and how these relationships affect the strategy of healthcare provision. To be able to understand all the issues that affect the healthcare sector, the relationships between the stakeholders need to be shown. The stakeholders include the healthcare providers, healthcare financing organizations, and the human resource working in the healthcare system. The major people who affect health economics are the individuals who provide health care i.e. physicians and other medical practitioners. These medical workers compete for patients who can pay for services and do not have any medical insurance. Again, these medical professionals also compete for patients who have their expenses paid by health insurance companies based on their location, referrals and reputation. Therefore, the medical practitioners affect the health economics of their places of work through the competition that they face against each other. In certain locations, there is a shortage of these medical practitioners and as a result, healthcare in those areas is not delivered effectively. Competition between medical practitioners is a benefit for health economics since their competition means the better healthcare for the patients as well as the highest standards when it comes to the delivery of healthcare. Health practitioners are an important part of health economics.

The second stakeholder important for the delivery of healthcare is the institutions that provide healthcare. These comprise of hospitals, clinics, and health centers. To be able to provide healthcare effectively, the hospitals compete for physicians and other medical practitioners who work in the health institutions. The management of health institutions must, therefore, ensure that the institutions have enough medical practitioners to be in line with health economics. Hospitals have to make better support staff and better equipment available so as to be able to get the physicians that they need to deliver healthcare to their patients. Again, in order to get more patients, the hospital management has to ensure that there are enhanced services and amenities available for their patients. Hospitals that have the best equipment and apply the greatest medical discoveries have the power to employ the best medical personnel. The hospital management having the best medical personnel stands for the highest standards when it comes to health economics.

Lastly, the stakeholders that are important for the delivery of healthcare are the health care management organizations (HMOs). These are all the companies and insurance agencies that are in charge of financing healthcare of the patients. The healthcare buyers must have adequate knowledge of the existing prices for healthcare services in various hospitals. The reason why healthcare management organizations are important in health economics is that competitions between HMOs tend to reduce the costs for hospital utilization (Egdahl & Walsh, 2012). There is a competition in the sphere of buying health insurance since the buyers of insurance have to consider such factors as accessibility, the quality of benefits, and the premiums among others. Therefore, any decisions made by the hospital management in an attempt to change their operations or strategy in the delivery of healthcare must take into consideration the healthcare management organizations.

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Strategies to Fix Shortage of Professional Manpower

Based the above information, one of the issues that healthcare economics tend to face is the shortage of personnel to deliver healthcare to the public. Lack of professional manpower in the health sector affects effective delivery of healthcare. Without enough manpower, hospitals cannot effectively deliver healthcare to its patients. In this regard, an important issue should be noted: there is no single policy that can be used to completely solve the problem of the shortage of professional manpower in the delivery of healthcare. However, to be able to fix the problem, two factors must be highlighted. The first one is the need to consider the fact that HR policies in any institution must be implemented so as to fit the characteristics, context, and the priorities of the given institution where they are being applied. The second factor is that the groups of coordinate HR policy interventions are more likely to achieve long-lasting improvements in the performance of the institution than interventions that are uncoordinated.

To be able to tackle the issue of the shortage of professional manpower, two strategies need to be developed. One of them should address the supply side issues, and another should address the demand side issues. When fixing the supply side issues, the strategies must address such issues as the improvement of recruitment, retention, and return, among others (Cowden, Cummings, & Profetto-McGrath, 2011). Research shows that professional manpower remains in a certain institution and is attracted to work in an institution that gives them the ability to grow professionally, and the chance to participate in the decision-making process while at the same time being rewarded for their work. Again, a decentralized management style that gives employees flexible employment opportunities can lead to an increased retention of the manpower as well as improvement of the healthcare delivery to patients. Therefore, this strategy goes a long way in improving the health economics in the given institution. There is one aspect of recruitment that should be carefully considered due to its potential impact on health economics: international recruitment. International recruitment means that an organization or institution seeks manpower from other countries in order to tackle the issue of the shortage of professional manpower. This mainly happens in developed countries in which case medical practitioners from developing countries are willing to cross over to the developed countries to practice. These institutions take advantage of push factors that include poor career models, poor pay, lack of opportunities to continue their education, and likelihood of violence among others. The reason why such a strategy must be well thought is because it has an impact on the health economics. Using such a strategy to fix manpower shortage would mean that the manpower shortage would be transferred to another country thus affecting their health economics.

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The second strategy involves dealing with the demand side challenges. To develop long-lasting solutions for the healthcare sector, the interventions must also focus on the demand side. It should be noted that the healthcare sector is known to be labor-intensive hence the existing manpower should be used effectively (Osuji, Uzoka, Aladi, & El-Hussein, 2014). Shortage in the health sector might not necessarily mean that there is not enough manpower, but can mean that the health structure of the institution does not allow the manpower to use their skills effectively. For this solution to be effective, the government should line up their workforce planning capacity in order to fix the reduced manpower in the health sector. This strategy revolves around long-term structuring of the education sector with the funded demand. This strategy also concerns lining up the medical manpower with their workload in the health institutions. Efficient working patterns should be used in order to balance the work of the medical manpower with their personal life.

As seen from the above interventions to the shortage of manpower in the healthcare system, all of them in one way or another affect the health economics. Giving the manpower the right equipment and working conditions is the best strategy to be employed since it ensures that healthcare is deployed to the public efficiently. However, care should be taken so as not to affect health economics in the wrong way. This means that if professional manpower is outsourced from another country, the health economics in that country can deteriorate. Lastly, the government should take long-term measures to ensure that there is a balance between the workload in the health sector. However, care should be taken since applying one strategy alone cannot guarantee that the shortage problem will be solved.


Healthcare is an important sector of every country. Health economics helps to make the delivery of healthcare as seamless as possible. It is the metrics used to evaluate how effectively health care is delivered to the public. Understanding the relationships found between the different stakeholders of the health sector goes a long way in understanding the issues that might arise in the health sector. One of these problems is shortage of professional manpower to work in the health institutions. Different strategies, both long-term and short-term, can be used to fight the shortage problem. First, incentives should be provided to attract and retain medical practitioners in a certain health institution. Again, the manpower can be found in countries that have a surplus workforce. In terms of the long-term strategy, the government should outline its educational curriculum to balance the workload in need of the education. All these strategies go a long way in ensuring that the manpower problem is fixed.

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