The cost of healthcare is rising every year because of the increase in cost implications in the country. Many people’s financial budget is gradually increasing due to spending a fortune on healthcare. From high insurance premiums, deductibles to other out-of-pocket expenses. The list goes on and on. These costs have also created a complex web that significantly influences individuals, businesses, and governments. In this blog, we will discuss some of the factors contributing to rising healthcare costs and planning. Continue reading.
What is Healthcare Cost Implication and Planning?
Healthcare cost implication is the time, estimated budget, cost, and planning required to build, operate, and maintain the healthcare industry. The cost implications of healthcare have far-reaching effects on both the government and the citizens of the country. Therefore, effective planning is imperative to ensure financial sustainability without compromising the quality of healthcare services.
Factors Contributing to the Rising Cost of Healthcare
The increasing cost of healthcare is a global crisis, impacting individuals, families, and entire economies. These dynamics have also placed immense strain on healthcare systems and their finances. Here are some of the contributing factors to the rising cost of healthcare.
Technological Advancements
While technological advancement brought a breakthrough in patient diagnosis and the overall healthcare system, it also comes with a hefty price tag. The latest inventions in medicine and patient treatments, such as precision medicine, novel drugs, the Next generation of mRNA vaccinology, PSMA-targeted therapy, gene therapy and more has contributed immensely to the escalating healthcare costs.
Ageing Population
The ageing population poses significant financial challenges for healthcare systems. Older individuals like baby boomers are now approaching their retirement age. According to research, they also require more healthcare services, increasing the healthcare budget. Additionally, preparing for their healthcare needs and demands with proactive financial planning is necessary to ensure better life expectancies.
Increase in Chronic Diseases
According to statistics, more than five million Indians die because of diabetes, cancer, stroke, heart and lung diseases each year. This means one out of four Indians is prone to dying from non-communicable diseases before the age of 70. The long-term nature of these health complications requires sustained healthcare interventions. These have impacted and contributed to rising healthcare costs and planning.
Increase in Drug Prices
The contradiction between the pharmaceutical policy, precision medicine, pharmaceutical specialties, and the healthcare needs is one of the major causes of high drug prices. Also, the intricate nature of specialty drugs makes it complex to research, develop, and manufacture, increasing the market price. Furthermore, drug manufacturers are inflating the price of drugs according to demand and value. These have also contributed to rising healthcare costs. But, the regulatory bodies are now establishing regulations to prevent manufacturers from inflating drug prices in this way.
Healthcare Administrative Cost
The government spends millions of dollars on healthcare administration every year. These include social health insurance programs, government-financed health insurance schemes, contracting with healthcare providers, human resources, medical reimbursements, and many more. With so much finance involved, healthcare administration has become a complicated, inefficient process. Thereby contributing to excess administrative spending.
Increase in Manufacturing Cost
There has been an increase in the manufacturing cost of pharmaceutical drugs by factors such as research and development expenses, regulatory requirements, and market dynamics. Large pharmaceutical companies are struggling to strike a balance between embracing innovation, ensuring access to essential medications, and managing operational costs. This has greatly affected both the planning and finance of the people.
The Correlation Between Healthcare and Finance
The relationship between healthcare and finance is limitless. Healthcare needs finance and proper planning to achieve its goals. Also, effective financial management is crucial to maintaining drug prices and the quality of healthcare services. Here are some of the correlation between healthcare and finance.
Health Insurance
Health insurance plays a pivotal role in finance. High health insurance increases people’s financial burden, while low health insurance reduces it. Therefore, the plan and implementation of insurance programs must be favourable to the masses to ensure financial sustainability.
Planning Healthcare Expenses
Governments play a prominent role in financing healthcare through budgetary allocations. As healthcare costs rise, the government must prioritise the healthcare industry without compromising other essential services. These include providing resource allocation, financial planning, drug price regulation, and many more.
Health Wellness Program
Prioritising preventive measures by organising health awareness for the masses leads to significant cost savings by reducing the incidence of diseases and the need for expensive treatments. Focusing on wellness and early diagnosis of disease is also a fundamental component of financial planning for the healthcare industry.
Final Thoughts
Healthcare and finance are inseparable, and the cost implications of healthcare investing options pose challenges that require careful planning. Therefore, by identifying high procedure costs, healthcare organisations can help implement cost savings measures and operational efficiencies.