Economic Tools and Concepts
Wesley Hill
HCS/522
Health Care Economics
University of Phoenix

Introduction
Current health care issues in the United States use economic tools and concepts to understand and explain how to improve quality and minimize cost. Although there are many issues facing health care, one area of focus is a nursing shortage in health care facilities. Three economic tools that will be focused on in this essay are choice and opportunity cost, supply and demand, and marginal analysis. Registered nurses (RN) are the largest group of health care professionals in the United States, strengthening the entire health care delivery system (Caron, 2004). It is important to understand the effects that a nursing shortage has on the economy and the health care system.
Choice and Opportunity Cost Choice and opportunity costs are two of the most important concepts in economics. There is never an endless amount of resources, supplies, or even time so choices must be made on a daily basis. The choices that must be made in health care organizations are how to spend their limited income in the best way. The term best can be hard to define when dealing in terms of buying or spending. Health care organizations must consider what choice will give the most satisfaction or maximize gain. Wiseman explains opportunity costs as being, “…any good, including service, is the satisfaction or benefit foregone in not being able to use the resources involved to obtain some other good which is also desirable and provides satisfaction” (2011). In terms of the nursing shortage, because there are not enough nurses to fill positions, decisions must be made involving mandatory on-call shifts, giving more patients to nurses, and using float or agency nurses. Opportunity costs can also express how nurses make decisions to prioritize the needs of their patients on a daily basis. With a smaller number of nurses in the workforce, the number of patients each nurse will need to care for increases. A nurse must therefore decide which are the most important tasks that need to be completed during their shift, and what tasks can be delegated either right away or even into the next shift.

Supply and Demand
Supply and demand curves are an important factor in determining the amount of registered nurses needed to deliver quality services that are in high demand. Supply and demand curves are vital when considering the number of registered nurses available to provide services to patients in need of care. The following chart displays the supply and demand projection through the year 2020.

Jones and Yoder explain, “A good or service is said to be scarce when more is desired than can be satisfied with available resources, when demand exceeds supply” (2010). As depicted in the chart the demand continues to increase steadily whereas the supply remains consistent. Nursing is a professional field in which they are there to provide services to the patients. These services must be completed in his or her given shift. “Nurses can thus be conceived as consumers, they spend their time to buy services for their patients” (Jones & Yoder, 2004). The nursing shortage has an effect on the services that they can provide. This affects the quality of care that a patient receives. For example if a nurse has too many patients to take care of he or she has to prioritize the patients’ needs and provide the necessary care first. The health care industry for many centuries has been experiencing a shortage in nursing. As technology advances with more treatment and diagnosis options the demand for nurses in all health care organizations grows on a daily basis. The consumers are always demanding for higher quality and more personalized services through health care delivery. As the population increases in the United States the requirement for health care providers will increase making the need for nurses more notable. According to Getzen, “There has recently been a growing recognition that instead of a surplus, a future shortage of physicians may occur. Since the number of U.S. medical graduates has not kept pace with the growth in U.S. population” (2007). The nursing and medical provider shortage has become a large demand while the supply is steadily diminishing.
Monopsony
The definition of a shortage in the economy is “quantify demanded is greater than quantity supplied at the market place” (Lane & Gohmann, 1995). Through the previous graphs and explanations given from data of the US Bureau of Labor Statistics, the possibility of nursing shortages is seen. Lane & Gohmann explain, “Paying a wage equal to the competitive equilibrium wage at the intersection of supply and demand could help to solve the nursing shortage problem” (1995). The monopsony in the labor market has one demander of labor. In the case of nursing shortages health care organizations have been the demanders of nursing labor. As the only employer of nurses in the same geographic community, health care facilities can lower wages to the registered nurse labor force. The following graph depicts the explanation of monopsony in the labor market.

Conclusion
Using economic tools and concepts such as choice and opportunity cost, supply and demand curves, and the principle of monopsony current health care issues including the nursing shortage can be assessed. Economic projections can help health care organizations understand how to solve this issue by discussing where the current system lacks. Improving our understanding of the economic tools around the idea of a shortage in nurses will help increase the quality of care given.

References
Getzen, T.E. (2007). Health Economics and Financing. Retrieved from The University of Phoenix eBook Collection database
Jones, T., Yoder, L. (2010). Economic Theory and Nursing Administration Research. Nursing Forum. 45(1). 40-53.
Lane, J., Gohmann, S. (1995). Shortage or Surplus: Economic and Noneconomic Approaches to the Analysis of Nursing Labor Markets. Southern Economic Journal, 61.

Wiseman, V. (2011). Economics and Health Economics. Retrieved from The University of Phoenix eBook Collection database.