Around the world, inflation is a hot topic and is affecting just about everyone. It’s especially bad in the UK, where inflation recently hit a forty-year high of 11.1% in October 2022. The effects of rising inflation will lead to higher energy prices and food prices, affecting consumers and businesses. However, few industries could be as badly affected as the healthcare industry. The healthcare industry and the NHS in particular has suffered a lot in recent years but the threat of inflation could cause yet more problems.
If healthcare is to survive in this time of economic hardship, big changes are needed. Elsewhere, businesses have been redesigning their organisations to become more agile and less susceptible to the effects of inflation. However, public healthcare has often lagged behind in modernisation and processes. While the UK government has pledged increased money to the NHS, this spending power will be eroded considerably by the rising cost of labour and general prices.
You can learn more about the economics of the healthcare industry with health and economics courses online. There are a lot of important insights to be gained from looking into the economic principles that govern healthcare and how policies can be used to address challenges posed by inflation.
How to Avoid the Effects of Inflation
The main way the healthcare industry can be protected from the effects of inflation is through policy. The government is in charge of setting policies that affect the country’s economic standing, and in times of crisis, this is even more important. To reduce inflation, the government can set a contractionary monetary policy.
Contractionary monetary policy is the process of reducing the supply of money within the economy by increasing interest rates. This essentially slows economic growth by making credit more expensive, reducing the amount that businesses and consumers spend. Higher interest rates also incentivise investors to buy treasuries that offer a set rate of return rather than opting for equity investments.
Another policy that governments can use to control inflation is price controls. This is where price caps or floors are mandated by the government and applied to specific goods or services. This can be useful for controlling the rising costs of essential items. However, price controls have largely been found to be ineffective at controlling inflation for long even when combined with wage controls.
The healthcare industry can also avoid the effects of inflation by reducing spend and cutting costs to become more efficient. This is easier said than done and will limit growth. However, it’s possible to implement new technologies and ideas to create a more agile and streamlined health service without reducing the quality of care.
New Trends within the Healthcare Industry
A lot of current trends within the healthcare industry are focused on reducing costs and increasing overall efficiency and quality of care. One of the most interesting trends right now is telemedicine. This is where patients connect with a doctor online through a video call and gained a lot of popularity during the pandemic. When face-to-face appointments were hard to come by, it still allowed patients to meet with a professional and receive the care they needed.
Today, telemedicine is still extremely useful for doctors, especially in areas where there is high demand. It allows doctors to see a greater number of patients in a shorter time, helping to increase the efficiency of the service. Patients can still be referred to an in-person appointment if needed, but this will cut down on the time spent while also making healthcare more accessible to a wider range of people.
In addition, increasing funds to other areas of the industry such as social care might help to improve the overall quality of care while still saving the NHS money in the long term. What’s important is that inflation isn’t used as an excuse to cut the number of workers or facilities, as this will have an overall negative impact on the quality of care in the country.