Includes "My Letter to a Maryland Congressman", "Research Proposal on Home Health Aide Retention", and "Marketing Research on Healthcare Firms".
September 22, 2019
The Honorable C. A. Dutch Ruppersberger
Representative for Maryland’s 2nd Congressional District
2206 Rayburn House Office Building
Washington, DC 20515
Re: H.R. 2150 — 116th Congress: Home Health Care Planning Improvement Act of 2019
Dear Congressman C. A. Dutch Ruppersberger,
My name is Lionella Betts-MacCormack and I am a Registered Nurse and former Caregiver for my 85-year-old mom who was wheelchair bound. We live in your district (Maryland’s 2ndCongressional district). This letter serves as my request for your support of the above bill. “This bill allows Medicare payment for home health services ordered by a nurse practitioner, a clinical nurse specialist, a certified nurse-midwife, or a physician assistant. Currently, coverage is provided only for services ordered by a physician”, H.R. 2150 (2019).
I support this bill because it will make it easier for seniors and the disabled on Medicare to access home health care resources quickly. Access to these services in a timely fashion would prevent adverse health outcomes that come with delayed services. This bill will also help with continuity of care for these patients. They would not have to give up their providers who are already familiar with their conditions for some new physician. This also creates slow communication and collaboration between other healthcare providers like case managers and social workers. Most importantly, this bill would help reduce home health care costs. It is cheaper to use the services of a Nurse Practitioner over a Physician any day. Rural communities would also benefit the most as they use the services of Nurse Practitioners and Physician Assistants more than any other population.
This bill is important to me because it affected the care of my mom greatly. My mom who was a Medicare patient had a hard time getting home health services because her primary care provider was a Nurse Practitioner. We moved from North Carolina to Maryland in June 2016, but we couldn’t secure home health services until about three months later. It took forever for us to get an appointment with a physician to assess and sign off on home health services for my mom. This put a big stress on me as I had no choice but to became her full-time caregiver whilst also working full-time as a Registered Nurse.
I am asking again for your support in passing this bill. If this bill is passed it would be a win-win situation for everyone involved – lower spending for government on Medicare and easier access for Medicare patients. “Passage of this legislation will reduce Medicare spending by eliminating duplicative services while also improving the quality and timeliness of care for beneficiaries who need home health services”, AANP (2019). I would also appreciate a timely response to my request. I can be reached at (000) 000-0000 with any further questions. Thank you in advance for your time and attention in this matter.
Lionella Betts-MacCormack, MBA, MSN, RN, RNC-MNN
The Effect of High Wages on Home Health Aide Retention
By Lionella Betts-MacCormack, MBA, MSN, RN, RNC-MNN
April 20, 2021
As the American population continues to age at an alarming rate, more and more people are choosing to age in place. This brings the retention of the low wage-earning home health aide population at the forefront because of the important role they play in making it possible for these aging adults to continue living in their homes. And the truth is that home health aides are in short supply and would continue for the foreseeable future as long as the American population keeps aging. When these vital health care workers are not readily available, the care of aging Americans is compromised. So, it’s very important for us as a society to do all we can to retain home health aides so that our seniors can get quality home care.
Background and Significance
Home health aides, or direct care workers provide valuable support and assist seniors and the disabled in their activities of daily living and their instrumental activities of daily living. Activities of daily living include eating, bathing, personal hygiene, dressing, walking, toilet use, mobility and transfer. Instrumental activities of daily living include phone use, medications, cooking, housework, finances, shopping and transportation. These activities are all vital for daily human existence.
With the aging of the American population occurring at a fast rate, the demand for home health aide workers are growing even faster with the worker shortage all over the United States. According to the Paraprofessionals Healthcare Institute, the United States would need about 3 million direct care workers like home health aides by 2020 to meet the increased numbers of older adults needing assistance with their activities of daily living (Feldman, Ryvicker, Evans, & Barrón, 2019). However, there are significant setbacks in the recruitment and retention of these home care workers (Feldman et al., 2019). In 2008, the Institute of Medicine and Scanlon, 2001, estimated the rate of annual turnover of homecare workers are about 50-70% (Feldman et al., 2019). Therefore, carefully selecting and preparing workers is critical for providing high-quality, person-centered care to individuals in need of supportive services.
To help solve the problem direct care worker shortage, researchers need to investigate the factors that motivate home health aides to stay in their jobs (Stone, Wilhelm, Bishop, Bryant, Hermer, & Squillace, 2017). Policy makers, home health agencies and clients are now more concerned than ever about home health aide availability especially with the extensive development in home health care and community-based programs (Stone et al., 2017). There should be policies in place to improve home health job satisfaction to discourage them from leaving which would in turn lead to an increase in the retention rate.
Another trend that lends from low retention is the economic burden on the healthcare agencies and even the clients and their families. (Stone et al., 2017). Recruiting, training and orienting costs for new home health aides increase during this turnover process. In addition to losing experienced aides and productivity, agencies also loose revenues from the loss of client that results from the former aide leaving. Morale is also lowered with the remaining aides, who must bear the added stress of sometimes picking up the shift vacancy created by the quitting aide. When home health aide workers are stressed or burned out, the people who suffer the most are the senior and disabled clients who depend on them for their everyday living.
Home health aides are one of the lowest paying healthcare jobs and one of the most physically demanding. One of the most effective ways of making the job of the home health aide more attractive is by increasing their wages. My research question is: “Would relatively higher wages as opposed to lower wages increase the retention rate of home health aides?” The key variables are high wages and the retention rate. The ‘cause’ or independent variable is the high wages and the ‘effect’ or dependent variable is the retention rate. The population of interest are the home health aides. The purpose of this research question is to determine if there is a relationship between retention rate and relatively higher wages. Since everyone is going to deal with the challenges of aging at some point in their lives, we should promote retention efforts to attract quality home health care workers so we can all happily age in place.
Home health aides and certified nursing assistants (classified together as direct care workers) perform comparable tasks in caring for the elderly and disabled. However, the main difference is that home health aides care for clients in their homes and certified nursing assistants care for clients in nursing homes. This literature review is going to cover both home health aide and certified nursing assistant retention and turnover since they face similar challenges. This review will examine key findings, intent to leave and economic consequences as well as analyze the research findings on home health aide and certified nursing assistant retention and turnover. The main purpose of this literature review is to find out whether adequate research has been done to cover home health aide retention through relatively higher wages.
Home Health Aide Retention and Turnover
The retention of home care workers has never been more important as more and more people are now leaning towards choosing care based in the community than moving their loved ones into nursing homes. Older adults choosing to receive care in their homes have a proportion estimate as high as 65% (Hewko, Cooper, Huynh, Spiwek, Carleton, Reid, & Cummings, 2015).
Key Findings. The key factor responsible for the high turnover rate of home health aides is the low level of pay when compared to other occupations. Higher home health aide wages were negatively correlated with turnover (Hewko et al., 2015). Higher wages and other favorable economic factors would provide a positive forecast for longer term tenure of home care workers (Feldman et al., 2019).
Intent to Leave. Many home care workers leave their jobs as the low wages make direct care work less attractive. Research based in the United States estimates that up to 61% of home care workers report their intent on leaving within a year as ‘very likely’ or ‘somewhat likely’ (Hewko et al., 2015). Both aides with a longer-term tenure (many years on the job) and those with a shorter-term tenure (few months on the job) maintain that low compensation is high on their list of reasons for leaving. Home health aides receiving a wage compensation between 100% and 299% of the federal poverty level were most likely to stay on the job (Stone et al., 2017).
Economic Consequences. The economic outlook of the home care industry for health aides as a direct result of lower wages make it difficult for workers to afford their household expenses if they have no other means of earning a second income. Home care aides and their families are mostly classified as low-income families (Feldman et al., 2019). About 5% to 31.4% of home care workers may need public assistance at some point to make ends meet with 10.78 % to 14 % using food stamps (Hewko et al., 2015). The majority of home care aide wage is reimbursed by Medicaid and the rates are typically low because of the limited budget of public funding (Feldman et al., 2019). The annual household income of 43% of home health aides is reported to be under $20,000 (Silver, Boiano, & Li, 2020). It is no surprise that majority of home care workers are reported to be working multiple jobs to supplement their income (Hewko et al., 2015). Home care workers are also less likely to receive future financial compensation in the form of paid leave, pensions and retirement benefits. (Stone et al., 2017).
Certified Nursing Assistant Retention and Turnover
According to Spetz et al. (2015), certified nursing assistants working in nursing home play an important role in preventing falls, hospitalizations and emergency room visits by improving the quality of life of their clients (Stone et al., 2017).
Key Findings. Organizational culture is the main force that affects the job turnover of certified nursing assistants and is responsible for creating satisfactory environments at work in nursing homes (Banaszak-Holl, Castle, Lin, Shrivastwa, & Spreitzer, 2015). The length of certified nursing assistant retention in nursing homes is positively correlated with greater empowerment opportunities (Berridge, Tyler, & Miller, 2018). The annual turnover rates for certified nursing assistants in nursing homes range from 59.4 % to 170.5 % (Hewko et al., 2015). Therefore, interventions to reduce staff turnover in nursing homes is effective through organizational culture and best championed by management and staff empowerment practices (Banaszak-Holl et al., 2015).
Intent to Leave. The intention to leave by certified nursing assistants causally relates to low work hours (Stone et al., 2017). Satisfaction with management and other job stressors like ambiguity and conflict of roles for certified nursing assistants are linked directly to their increased intent to leave (Feldman et al., 2019). About 40% of certified nursing assistants stayed in their nursing home jobs for only two years or less (Hewko et al., 2015). Prior research have also shown that staff empowerment strategies like adequate shift coverage, planning of social events, participation in quality improvement, cross-training, and being rewarded for additional education and training were associate with decreased intent of leaving (Berridge et al., 2018).
Economic Consequences. The economic consequences for both home health aides and certified nursing assistants almost mirror each other because they both suffer from relatively low wages. Like their home health aide counterparts, the annual household income of 22% of certified nursing assistants in nursing homes is reported to also be under $20,000 (Silver, Boiano, & Li, 2020). However, wages are less of a direct reason why certified nursing assistants leave as compared to home health aides (Stone et al., 2017). Like home health aides, certified nursing assistants have incomes above 300% federal poverty level and would likely need public assistance at some point (Stone et al., 2017). Additionally, nursing homes have reduced raises, bonuses and rewards awarded to certified nursing assistants largely due to budget cuts from public funding (Berridge et al., 2018).
Estimates for both home health aide and certified nursing assistant turnover are remarkably similar. To help create a high quality and more sustainable direct care workforce, actual turnover, and intent to leave determinants should be understood by policy makers, agencies, workers, clients, and their families (Stone et al., 2017). Therefore, for retention among home care workers to be promoted, wage compensation should be increased to provide adequate financial support for aides and their families.
After reviewing the literature, only a few studies have examined the effect of high wages on home health aide retention. Previous research has focused mostly on turnover and job quality of direct care workers in nursing homes and assisted living. These studies did not address the clinical question solely on relative wage increases as only a handful of research thus far have studied home health aide retention specifically through higher wages. In the light of the above findings, it is necessary to do more studies specifically on the effect of higher wages on the retention rate of home health aides.
The study location will be at the home care agencies in the natural setting where home health aides interact with their employers. A natural setting occurs in the field in a real-life environment that is not manipulated by the researcher (Gray, Grove, & Sutherland, 2017). Home care agency settings may include office spaces, private homes, apartments, senior living, assisted living, and group homes. The geographical location is Montgomery county, Maryland. The patient population would be home health aides and personal care assistants. Acuity level of patients is not applicable in this proposal since they are not the population of interest. The plan is to conduct 50 anonymous interviews with home health aides in the field.
The research question should be the guideline as to which study methodology and design may be used in a research study whilst also keeping the purpose of the study in mind (Al-Shukaili & Al-Maniri, 2017). The qualitative research design focuses on events as they ordinarily occur in their natural settings and improve our understanding from the lenses of the people going through it (Gray et al., 2017). The qualitative research method that would be used is the phenomenological method. The phenomenological method derives information from the participants involved through their perspectives and interpretation of a specific life experience (Cleland, 2017). A researcher looking to conduct a phenomenological research would be interested in participants with different characteristics but have shared a similar experience (Moser & Korstjens, 2018). Therefore, this research approach would be effective in reducing false assumptions by better understanding the subjective experience, actions, and motivations of the study participants (Cleland, 2017).
I would also include the ‘bracketing’ approach which means that I am choosing to consciously put aside any pre-conceived personal notions or views that I may have on this research phenomenon (Gray et al., 2017). I am using bracketing to approach the compensation of home health aides because of my personal experience with employing several aides to help care for my aging mother. They worked extremely hard for low wage compensations.
Qualitative research is very flexible and allows for revised notions if needed depending on how the research data progresses and the beginning conceptions of the researcher (Gray et al., 2017). As someone new to research, qualitative research would work perfectly for me. I want to gain insights about what part would relatively higher wages play to help home health aides stay put in their jobs. Therefore, the qualitative method used would be interviews that are done several times over a specific period.
Sample and Sampling Procedure
Samples represent the participants in a study, whilst sampling represents the process of selecting these participants (Gray et al., 2017). The type of sample that would be used for this study is the stratified random sampling. This type of sampling is most useful when the researcher wants to include known representations in a sample that are crucial to the study (Gray et al., 2017). The sample size and the sampling procedure is also determined by the purpose of the study and the notions that the researcher believes at the start of the research.
Participants would be chosen randomly from their home health agencies, but according to the inclusion and exclusion criteria. The most important inclusion criteria for selecting participants is they must have been on the job for one year or more regardless of experience, since this is a high turnover job. Another inclusion criterion is that their position should be a home health aide, healthcare aide or any comparable position title (Hewko et al., 2015). Exclusion criteria include the home health aide workforce resulting from paid and unpaid family caregivers (Hewko et al., 2015). Home health aides who are paid directly by the patients and who do not assist clients with their activities of daily living are also excluded from the study (Stone et al., 2017).
The procedure for obtaining participants would start with simply verbally asking for their permission to be interviewed more than once. After they have given their verbal consent, they would then be asked to sign a written permission to proceed with the interview. The plan is to originally access participants in person and with follow-up interviews being done over the phone. These follow-up interviews would be done in English by use of computer-assisted telephone technology (Jang, Lee, Zadrozny, Bae, Kim, & Marti, 2017). The projected number of participants would be 50. Demographic characteristics of participants would be men or women from 18-65 years old regardless of socioeconomic background.
Ethics and Institutional Review Board (IRB) Approval
In conducting a new study, the researcher should consider the rights and privacy of the participants (Gray et al., 2017). Researchers must make sure to obtain consent, maintain confidentiality, and limit or eliminate participants’ exposure to any risks (Al-Shukaili & Al-Maniri, 2017). Ethics and/ or any Institutional Review Board approval would not be needed for this study as it does not involve any complex physical or human risk to participants. However, I would need to obtain approval from the company I work for to be able to interview the home health aides I encounter daily at work. In order to ensure the rights and protect the identities of the home health aides, I will conduct anonymous interviews. This would also help in promoting honesty in their responses. Since participants are subject to minimal or no risks in this study, they can only benefit from it even if it is in the long run. If more studies like these are done, maybe we can just change the trajectory of this low-paying but particularly important job in terms of higher wages.
The data collection method I would be using are interviews. Interviews are conversations between study participants and a qualitative researcher that are focused to produce data from words (Gray et al., 2017). The initial interviews would be done face-to-face and the follow-up interviews would be done over the phone. The interview would last for about 30-90 minutes depending on the richness of the participant’s answers.
Fifty home health aides who provide personal care to seniors and the disabled in their homes would be interviewed. I would increase that number if necessary, to derive a richer data. Home health aide retention would be examined over a one-year period by conducting interviews. The goal is to achieve a 100% response rate. I am hoping all 50 subjects approached would agree to participate. If a subject declined to participate in the study, a new subject would be approached to fulfil the desired number of 50. The participants would be given a consent form after their verbal approval and interviewed on the spot or at a future mutually convenient time and followed by two follow-up phone calls at six months and in one year.
To get the bigger picture, the interview would be conducted as an open interview that would include personal questions about the past, present, and future (Moser & Korstjens, 2018). The format of the interview would be unstructured, which means it would be informal and include some open-ended questions (Gray et al., 2017). These would include detailed follow-up questions, probes and prompts to encourage the participants to expand their responses like “can you tell me more?”, “what led to that?”, and “what happened after that?” (Moser & Korstjens, 2018). Study participants are also implored to freely speak about their experiences, perceptions and thoughts without any guidance or influence from the researcher (Moser & Korstjens, 2018). Participants would be prompted through continuous eye contact and open body language by the researcher (Moser & Korstjens, 2018).
The interview would consist of questions about their age, sex, race, marital status, educational level, the homecare agency they work for, how long they have been a home health aide, their hourly rate, how many hours they work a week, job satisfaction and their overall health (good, fair or poor). In addition to the above questions, an open-ended question would be asked to obtain a rich account of their experience, which is the focus of this study. Participants would be asked to ‘describe in their own words if a higher wage would make them stay in their job or not?’. Participants would also agree to report to the study if they resigned during the one-year duration of the study. Home health aides who left the job were promptly given a follow-up telephone interview and their information updated. Study participants would be compensated with a $15 Amazon gift card for their time.
The process of qualitative data analysis happens in three steps, data extraction and reduction; data display and organization; and data explanation and conclusion (Cleland, 2017). The analysis of qualitative data involves both thought processes and a code that go into assigning meaning to a study data (Gray et al., 2017). When the phenomenological approach is used, data analysis attempts to identify underlying and major themes to interpret the meaning of an experience (Moser & Korstjens, 2018). Common themes among participants and experts in the field of study are extracted from the interviews in the process of data analysis. In other words, a phenomenological study captures the vital meaning of an experience by offering a detailed description of the themes discovered (Moser & Korstjens, 2018).
Qualitative research methodology starts with the organization of huge amounts of research data and breaking it down to smaller amounts for storage and retrieval (Moser & Korstjens, 2018). A large part of the data interpretation is done in the researcher’s mind. Interpretation in data analysis would include processing the data through digging deeper into the data by reading, re-reading, understanding the responses, looking for themes, and the big picture in participants’ responses (Moser & Korstjens, 2018). The notes and themes emerging from the study data “speak for themselves” by the resulting patterns, concepts, categories, and descriptions that in turn become the guide to the strategical analysis of data (Cleland, 2017).
After all the interviews have been completed, the next step would be coding. Coding identifies the similarities and differences revealed by the narrative of the participants’ as the researcher interprets it (Sutton, & Austin, 2015). An inductive coding system is developed based on actual research data by open coding, category creations, and abstractions (Moser & Korstjens, 2018). Several labels as needed are derived from the emerging data by asking questions like, “what is this data?”, “what does it mean?”, “what does it represent?”, “what else is similar to this?”, and “what is different from this?” (Moser & Korstjens, 2018). A coding sheet is then made of collected labels organized into primary categories and further divided into related or unrelated categories based on interpretation (Moser & Korstjens, 2018). The categories are named using words characterized by the content of the data, and abstraction is used to generalize a description of the phenomenon that is being studied (Moser & Korstjens, 2018).
Missing analytic information is identified during the analysis process and data collection is continued to fill the gap. Data is re-read, re-coded, re-analyzed, and re-collected if needed until the researcher is satisfied with the strength and richness of the study findings (Moser & Korstjens, 2018). Qualitative researchers should be flexible to different possibilities of dealing with research problems through multiple stimuli, mental excursions, changing thinking patterns, ‘side-tracking’, and making ‘seemingly unconnected’ links with the intention of making the world open up in way that it has not done before (Cleland, 2017).
Qualitative Data Analysis Software. A valuable tool that would help with data analysis in this study is a qualitative data analysis software (QDAS). I chose this tool because it would save time as qualitative data analysis can sometimes be time consuming. The number of qualitative studies using qualitative data analysis software is growing every year with the bulk of those studies being health science studies by researchers in the United States, Canada, United Kingdom, Australia, and the Netherlands (Woods, Paulus, Atkins, & Macklin, 2016). A whopping 95.3% of researchers reported using qualitative data analysis software to support their qualitative research(Woods, Paulus, Atkins, & Macklin, 2016).
And as a new researcher, I am willing to incorporate both the richness of qualitative research in combination with data analysis technology. Although this data analysis software may be expensive, the advantages far outweigh the disadvantages. Some advantages include its concept-mapping features, the minimizing of time-consuming clerical tasks, the reduction of paperwork, the storing and organizing files, the integration of research teams and the provision of line by line analysis (Gray et al., 2017).
Qualitative data analysis software can help support data management by naming and labeling; sorting and organizing; locating words, phrases and raw data; identifying units of data; storing, annotating and retrieving texts; extracting quotes; and preparing diagrams (Moser & Korstjens, 2018). However, even though you can generate large amounts of data from just a few interviews, qualitative research must be managed before it can be evaluated (Cleland, 2017). Therefore, the researcher would still be required to do interpret the data, assign codes, make decisions, and identify concepts and patterns in order to do any analytical work on the proposed research using qualitative data analysis software (Moser & Korstjens, 2018). A specialized qualitative data analysis database may need to be used to simplify data management and analysis. The choice of database would be determined by the researcher’s personal resources, institutional resources, availably of technical support, or the researcher’s personal preference (Cleland, 2017).
The strengths of this study include the natural setting, the small sample size, the ease of the sampling method, the rich data that can be obtained from participant experiences, the creativity that can be employed by the researcher and the flexibility it affords if needed as far as revisions. Qualitative research helps answer the “how” and “why” research questions that leads to an enhanced understanding of participants experiences and phenomena (Cleland, 2017). The questions asked in qualitative research attempts to understand a human experience in everyday reality that cannot easily be quantified (Cleland, 2017).
A good qualitative research would provide a multiple source of evidence to support a phenomenon, a logical reasoning process and a solid argument to discredit any competing hypothesis (Cleland, 2017). The analysis would most likely mirror the data strictly from the participant’s point of view with little or no attachment to any theoretical influence (Gray et al., 2017). As the analytical process develops in qualitative research, there is a possibility for several interpretations to be considered before a definitive argument is chosen (Cleland, 2017). However, even with the afore-mentioned strengths, there are several weaknesses of qualitative studies.
Data analysis of qualitative studies can be incredibly challenging, not only because they are time-consuming but because it is also expensive to manage the large amounts of data generated (Gray et al., 2017). Sometimes the information sought in qualitative studies are overly sensitive in nature. One such sensitive question asked in this proposed study is the question about the amount of wage the participants make. The study participants were employed by a variety of agencies and organizations, each with differing structures and policies. These differences were not accounted for in the analysis, and thus potentially valuable information may not be contained in the study’s findings (Butler, 2018).
The ambiguity of qualitative research makes new or less experienced researchers feel overwhelmed or unsure of how to proceed (Gray et al., 2017). Additionally, researchers may need to tackle several interviewing problems like the hesitancy of participants to be truthful about their story, securing a private space for recording confidential data, the difficulty of gaining access to certain participants and prematurely quitting the research because of data fatigue (Moser & Korstjens, 2018). As a primarily qualitative study, the findings of this study are meant to be intuitive rather than generalizable (Gray et al., 2017).
Impact of Christian Faith on Nursing Research
As Christian nurses, we are called to honor God and love our neighbors as ourselves. The purpose of any nursing research is to gain knowledge and apply it to improve patient care. This brings to mind Proverbs 2:3-5, which states that, “indeed, if you call out for insight and cry aloud for understanding, and if you look for it as for silver and search for it as for hidden treasure, then you will understand the fear of the Lord and find the knowledge of God” (New International Version). This verse is simply stating that we learn by seeking knowledge and we have understanding when we gain wisdom through the fear of the Lord and wisely apply it. The nursing research process is no different.More uplifting research studies need to be done that include the Christian faith, and not only studies about chronic illnesses where faith is considered a necessary component of healing (O’Brien, 2014).
The retention of the low wage-earning home health aide population play an important role in making it possible for aging adults to continue living in their homes. My research question is: “Would providing relatively higher wages as opposed to lower wages increase the retention rate of home health aides?” A literature review was done for the purpose of finding out whether adequate research has been done to cover home health aide retention through higher wages. The study location will be in the health care agencies in the natural setting where home
aides are employed. Qualitative research would be the methodology used because it derives information from the parties involved through their perspectives of a specific life experience or process. The data collection tool to be used would be interviews. The analysis of qualitative data would be done through thought processes and a code that assigned meaning. More qualitative research studies need to be done to include the Christian faith.
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Market Structure of Healthcare Firms
By Lionella Betts-MacCormack, MBA, MSN, RN, RNC-MNN
August 16, 2020
Managers of organizations make decisions after considering several market structures and factors. Managerial decisions are made about the pricing of goods and services, number of outputs that should be produced, and the amount of spending on advertising and market research and development (Baye & Prince, 2014). Market structures differ according to the type of industry, so a manager must remain flexible in making decision changes according to changes in their industry. Major market structural variables that influence managerial decisions to include firm size, industry concentration, technology and cost conditions, demand and market conditions, potential for entry, and competition among firms will be discussed. Several findings encompassing support, opposition, and my personal views of existing market structures would be analyzed. Biblical integration relating to market structures and recommendations for future research will also be discussed.
The size and scope of healthcare industries vary just as they are dynamic in nature because of changes in market structure (Baye & Prince, 2014). The size and structure of healthcare organizations have also had a marked impact on the social well-being of the United States because of the numerous changes over the years. In the last ten years, because the United States has seen a per capita income rise in personal healthcare expenditure from 18% to 27%, it has attracted the curiosity of economists (De Silva, Jung, & Cosmopolis, 2018). Some healthcare firms are small, some medium-sized, and some large due to several factors like location, patient population, income, and health insurance coverage. For example, the number of physicians located in a particular area depends on the size of the population (Lábaj, Silanič, Weiss, & Yontcheva, 2018).
Generally, it is widely believed that the larger the healthcare firm, the more resources and desirable market structural features it has to offer (Pineault, Provost, Borgès Da Silva, Breton, & Levesque, 2016), but it also depends on who the consumer is. Large healthcare firms generally provide advantages through advanced technology, great accessibility, extensive scope of practice, better economies of scale, and increased efficiency, but they are lacking in cohesiveness, close relationships, and continuity. Additional disadvantages of large firms include complex open systems and impersonal relationships with a more differentiated patient population (Pineault et al., 2016). Small firms on the other hand tend to provide advantages in better continuity of care, more comprehensive care, increased focus on prevention, a closed system, and increased cohesiveness and responsivity. What small healthcare firms lack in accessibility; they make up for it in the personal relationships they form with their patients who are often regulars at the organization. Most consumers tend to prefer large organizations, but personally I prefer small organizations because my physician knows me personally and can therefore pick up on more preventative measures tailored for me before they become a problem.
The industry concentration refers to the size distribution of the various firms (Baye & Prince, 2014). An increased number of healthcare industry concentrations have occurred in recent years because of large-scale hospital consolidations among healthcare organizations. From 2010 to 2014, medical providers and hospital mergers and acquisitions increased by 44% (Scheffler, Arnold, Fulton, & Glied, 2016). According to Gaynor, Ho, and Town (2014), a whopping 162 mergers occurred among hospitals between 2010 and 2011 (De Silva et al., 2018). Majors health plan organization mergers between Anthem and Cigna, and between Aetna and Humana were underway in 2015 which if successful will decrease the total health insurance firms from five to three, and the third firm being United Healthcare (Scheffler et al., 2016).
Industry concentration could comprise of either many large industries, many small industries, or relatively equal numbers of large and small industries. Hospital prices tend to increase with high provider and hospital concentrations, and insurance premiums tend to increase with higher health plan organizations concentrations as market power shifts to the health plan providers. According to Capps (2010), several researchers have raised concerns about the market concentration of hospital and health insurance firms being the key reason for increased provider prices, increased insurance premiums, and increased healthcare costs overall (Dauda, 2018). However, I am in favor of hospital mergers and concentrations because it makes it easier for consumers to have similar quality healthcare services regardless of where they are located.
Technology and Cost Conditions
Differences in the technology used to produce goods and services varies from one industry to another. Some industries are very capital intensive, whereas some are labor intensive (Baye & Prince, 2014) like with healthcare industries. Access to technology can help reduce production costs for most industries. As one of the global leaders in technology advancement, the United States healthcare system has seen an increase in new technology adoption from 16% in 2009 to 80% in 2013 (Okpala, 2018). For the most part, most healthcare firms have access to similar technology and therefore have similar overheads. On the other hand, industries who have superior technology are at an advantaged position to dominate the other industries with inferior technology (Baye & Prince, 2014). Healthcare advancement through technology has shown improvements in data management, medical diagnosis, patient and disease monitoring, and virtual provision of care from remote locations (Okpala, 2018).
Although technological advancements in healthcare have enhanced the quality of care provided by hospitals and providers, this new adoption also comes with an initial increase in the cost of services. The cost of adopting the new technology through the stages of development, teaching, implementation, and maintenance of the technology leads to the initial rise in costs (Okpala, 2018). Technology cost management can assist healthcare providers in monitoring utilization across patients and appropriate interventions developed to decrease cost of services (Orzol, Keith, Hossain, Barna, Peterson, Day, . . . Moreno, 2018). Even though the initial cost of technology adoption is high, I am strongly in favor of advanced technology in healthcare, because I believe overtime healthcare firms will realize that the benefits of advanced technology far outweighs the cost of adoption. Managers need to come up with innovative strategies to reduce costs associated with the adoption of new technologies, while at the same time making sure that quality healthcare is delivered.
Demand and Market Conditions
The degree of influence that demand and market conditions have on some firms sets them apart from other firms. Only a few firms are required to sustain an industry when demand is low, whereas when demand is high, many forms would be required to cover the production of the quantity demanded (Baye & Prince, 2014). The healthcare industry market demand can be determined by the population size, the number of insured patients, the household income of patients, the number of medical procedures performed, the hospital care quality, and the competitor pricing strategy. The demand for healthcare services is inelastic as changes in price do not affect demand. Patients are also typically willing to pay a higher price if the same high price is being charged across the board in other competitor hospitals especially if the hospital in question provides high quality care.
Furthermore, market conditions can be shifted when dominant private health insurance firms use their buying power to pressure hospitals into implementing cost-saving measures and prevent any further price mark-ups (Bates, Mukherjee, & Santerre, 2016). I like that some of these health insurance companies can act as check and balance system for hospital efficiency, but I also dislike the fact that the check and balance for efficiency in production is not in the hands of the patients who are often the vulnerable party.
Potential for Entry
The degree of ease or difficulty involved in entering the market in an industry will greatly influence the managerial decisions of the firms. It is somewhat easy for new firms to enter some markets, whilst it is harder for new firms to enter in other markets. Physicians attempting to enter most markets face no restrictions, but the same cannot be said for home health agencies or pharmacies. There may be factors present that lead to entry barriers like regulations, patents, cost to enter, and economies of scale (Baye & Prince, 2014). Personally, I would like to see the entry barriers lifted in some markets, especially home health agencies. Large numbers of people are turning 65 each day, and many of them need the care provided by these home health agencies.
The regulation of pharmacy entry restricts pharmacies to a maximum number based on the population size in a particular area (Lábaj et al., 2018). Home health agencies also face entry barriers because of the certificate of need requirements. According to Polsky et al. (2014), new home health agencies are not considered threats to existing agencies in states that require certificate of need, because they are seldom approved in these states (Wu, Jung, Kim, & Polsky, 2019). Several financial and time-consuming entry barriers exist for the production and distribution of medications. Financial barriers to potential entry relating to medicines include regulatory review fees, product registration cost, clinical trial cost, and the cost of sales license (Morgan, Yau, & Lumpkin, 2017). The long regulation process involved is very time-consuming. However, other researchers have disagreed with the viewpoint that regulatory fees act as an entry barrier for medication manufacturers (Morgan et al., 2017).
Competition Among Market Rivals
Buyers and sellers participate in competition by interacting with each other and forming exchange relationships (Goddard, 2015). The degree of competition is optimum when it produces the best possible outcomes for both buyers and sellers. Some markets welcome competition as a mechanism to increase productivity and efficiency because it lowers prices, while others see it as a dividing market force that causes more harm than good. Healthcare industries are plagued by serious inadequacies and therefore operate in heavily regulated markets (Goddard, 2015). Therefore, I strongly believe that it is crucial for managers to study the forces that drive competition in healthcare firms to improve population health.
There is also complementary competition among healthcare firms. For example, physicians and pharmacies benefit from the presence of the other through engaging in non-pricing competition, as they provide complementary services for the convenience of their patients (Lábaj et al., 2018). I am in favor of these types of ‘friendly’ competition because it mostly benefits the patient. The nature and intensity of the competition among firms is largely influenced by the relationship between market size and market structure (Lábaj et al., 2018).
In the secular world, humans are only concerned with creating their own happiness by efficiently managing their business through the making of decisions that makes economic sense given the scarcity of resources. Humans attempt to make the best of market alternatives through economics, technology, and political processes (Liang, 2018). However, sometimes we lose our way and allow money to control our lives instead of God by giving in to our selfish worldly desires. 1 Timothy 6:10 states, “for the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs” (New International Version). As Christians, we should view business as an opportunity to work in God’s will to obey His second commandment to love your neighbor as yourself. Actions grounded in marketplace faithfulness, is where business activities and the Christian faith fuses together (Liang, 2018). God commands us to use our talents and material possessions to serve our brothers and sisters, especially the poor. Proverbs 22:16 states, “one who oppresses the poor to increase his wealth and one who gives gifts to the rich—both come to poverty” (New International Version). Christians must glorify God in not only their personal lives, but in everything they do, including their business practices.
Recommendations for Future Research
In the future, I would like to see research studies focusing on several issues relating to market structures. Additional research needs to be done on the size of healthcare firms to make it more consistent. There was adequate research about the effects of industry concentration on hospital prices, but less research on how industry concentration influences the prices charged by physicians. More research studies need to be done on the phenomenon of hospital competition and how policy regulators can use this information to improve market conditions. One of the most under-researched study is the evaluation of new advanced technology as to whether they are leading to a cost reduction in healthcare like it was supposed to do (Okpala, 2018). There should also be more research on how Christians can incorporate the Christian faith into their businesses, so they can be a shining light in this dark world.
Organizations make managerial decisions after considering several market structures and factors. The size and scope of healthcare industries vary just as they are dynamic in nature. Some healthcare firms are small, some medium-sized, and some large due to several factors like location, patient population, income, and health insurance coverage. An increased number of healthcare industry concentrations have occurred in recent years because of large-scale hospital consolidations among healthcare organizations. Industry concentration could comprise of either many large industries, many small industries, or relatively equal numbers of large and small industries. Differences in the technology used to produce goods and services varies from one industry to another. Access to technology can help reduce production costs for most industries.
The degree of influence that demand and market conditions have on some firms sets them apart from other firms. The degree of ease or difficulty involved in entering the market in an industry will greatly influence the management decisions of the firms. It is somewhat easy for new firms to enter some markets, whilst it is harder for new firms to enter in other markets. Buyers and sellers participate in competition by interacting with each other and forming exchange relationships (Goddard, 2015). The degree of competition is optimum when it produces the best possible outcomes for both buyers and sellers.
In the future, there should be additional research studies on the size of healthcare firms to make it more consistent, the effects of industry concentration on the prices charged by physicians, the phenomenon of hospital competition, and the evaluation of new advanced technology on the reduction in healthcare costs(Okpala, 2018). As Christians, we should view business as an opportunity to work in God’s will to obey His second commandment to love your neighbor as yourself. There should also be more research as to how Christians can incorporate the Christian faith into their businesses, so Christians can be a shining light in this dark world.
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Baye, M., & Prince, J. (2014). Managerial Economics and Business Strategy. (8thEd.). New York: McGraw-Hill Irwin.
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Liang, E. (2018). Christianity in Business: Applying Biblical Values in the Marketplace. Houston: High Bridge Books.
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Orzol, S., Keith, R., Hossain, M., Barna, M., Peterson, G., Day, T., . . . Moreno, L. (2018). The impact of a health information Technology–Focused patient-centered medical neighborhood program among medicare beneficiaries in primary care practices: The effect on patient outcomes and spending. Medical Care, 56(4), 299-307. https://doi:10.1097/MLR.0000000000000880
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