Relationship between Economic Fundamentals and Industry Returns in the Healthcare Sector.

Relationship between Economic Fundamentals and Industry Returns in the Healthcare

Sector.

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Relationship between Economic Fundamentals and Industry Returns in the Healthcare Sector.
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Introduction

The proposed study is aiming to fill the inadequacy and dearth of the past researches by offering

fresh perspectives into the link between economic markers and returns in healthcare. Such may

involve, for instance, investigation into sub-groups of unstudied variables, subsequent application

of new methodologies and angles for scrutinizing the phenomenon from one side. As a step to fill

up the mentioned gaps, the study attempts to enhance the theory and provide practical solutions

for the field; therefore, this study’s contribution to the field is significant. Additionally, the study

proposes to continue on the already-established research in an attempt to better the understanding

of the relationships surrounding the main economic factors and the healthcare sector. Therefore,

the knowledge gained can be used perfectly for evidence-based healthcare decisions by the

affected stakeholders.

Theoretical review

This literature review will serve as a precursor to familiarizing with current research studies

that investigate whether there is a connection between economic basis and industry performance

of the healthcare sector. It is based on the combination of the results and findings of former studies

with the theories of the latter ones and reveals the patterns, trends and gaps in the

literature. Through the process of a systematic research review, and applying more sophisticated

methods of analysis, researchers get deeper insights into the problem area and become more

knowledgeable and sophisticated, thus preparing themselves into opening up new questions and

getting new findings. Besides, through this framework, researchers are guided towards the

identification of the most significant theoretical models and techniques that were used in earlier

studies, which provides a basis for determining the own research strategy.
Relationship between Economic Fundamentals and Industry Returns in the Healthcare Sector.
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Overview of Healthcare System

The healthcare sector has been recognized as a key contributor to social health and economic

development. Bloom et al. (2011) emphasize the crucial role of the healthcare system in creating

a basis for the welfare of the society and enhancing economic prosperity by influencing outcomes

of progress. Their pathbreaking work accentuates that this sector represents a complex setup made

up of economic fundamentals and industry returns. This calls for comprehensive knowledge about

healthcare and its elements to help in making appropriate decisions by stakeholders, policy makers

and investors. Through the integration of empirical data and theoretical models in their paper,

Bloom et al. lay the first cornerstone for more research into the complex economic landscape of

healthcare. Moreover, contemporary research emphasizes the complexity of the situation, which

demands accurate strategies for the transformation of the healthcare system and for sustainable

approaches, to cope with economic barriers in future.

The Australian Bureau of Statistics (ABS) furnishes the Australian economy with reliable

information about the prevailing conditions of the economy from published data of average weekly

earnings (ABS, 2021). These numbers provide a measure of consumer consumption patterns and

give a viewpoint about the performance of various sectors in the economy, including

healthcare. Through comparing trends of mean weekly earnings, researchers can analyze the

impact of economic changes on healthcare spending and industry productivity by comparing the

returns of healthcare companies. This information serves as a valuable input in discussing the

general economic climate in which the healthcare industry works. It also adds into the relationship

between economic factors and industry dynamics. Beyond that, it highlights the point that
Relationship between Economic Fundamentals and Industry Returns in the Healthcare Sector.
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policymakers should be paying attention to the new income inequalities and their implications on

healthcare.

Empirical literature of the relationship between economic fundamentals and healthcare

system

McIntosh, et al (2010), in their theoretical paper, examine in detail the method of cost

effectiveness analysis with regard to healthcare settings. They introduce, among other things,

investment rationale and economic policies. Although they do not directly work on industrial

profitability, they improve the management process and decision making for a healthcare

system. The authors accomplish that by using cost-benefit analysis methods and their application

in economics. This is a tool for researchers and decision makers to measure the economic viability

of health care investments. This study extends our understanding of the quintessential economic

determinants influencing healthcare decision-making processes and serves as a building block for

the dialogue on econometric features involved in the healthcare industry. Additionally, it highlights

the relevance of incorporating economic assessments into health strategies to make sure that there

is effective usage of resources and optimum welfare of the society.

Morriss et al. (2012) did an in-depth examination of the application of economic analytics in

the healthcare field bringing together theory, as well as empirical evidence to elaborate the effect

of economic variables on use of resources allocated for quality of care. Their holistic approach

allows researchers to develop an intricate picture of the factors affecting the healthcare system,

and thereupon bring about an insight concerning the challenges and opportunities that the business

encounters. Morriss et al. (2012) underscore the nuances behind the relation of economic

fundamentals and business performance in health care businesses. They do this consistently, which
Relationship between Economic Fundamentals and Industry Returns in the Healthcare Sector.
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is intrinsic to the effective management of this industry. Besides, their contributions create a solid

base to evidence-based decision-making on the health care policy and practice. Furthermore, their

studies stress that evidence-based policy making is an essential factor in healthcare, to ensure

effective and efficient service delivery and high-quality health services to populations.

Zoidze and Abuselidze (2023) illustrate the multifaceted role of the health sector in sustainable

development, figuring out the macroeconomic impacts of health care investments on labor,

productivity, and social development. Their research reveals broader opportunities of how

economic forces affect the industry's returns, which include the connection between economic

factors, business operations, and country development. Through their investigation of economic

disparity, business operations, and the economy and how these influence the performance of

healthcare, these scholars provide policy makers and stakeholders with a useful framework to

formulate strategies for increasing efficiency and equity within the healthcare

system. Fundamental economic factors influence the profitability of the industry and this research

contributes to a better understanding of the link between the factors and the returns, which inform

evidence-based decision-making in healthcare policies and practice. Moreover, the researchers

suggest that, as the healthcare system improves, more social and economic development becomes

possible which emphasizes the question of why governments don’t pay due attention to health care

system development and workforce training.

Jones and Smith (2019) analyzed the effects of competitive market on the performance of

healthcare which revealed that the increase in the competition among providers leads to quality

improvement and efficiency which also influences returns in the industry. The study makes

observations about the complex nature of the health care market, with different economic factors
Relationship between Economic Fundamentals and Industry Returns in the Healthcare Sector.
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and suggests some implications which are relevant to strategic planning and policymaking in area

healthcare. The study puts more light on the connection between market competition and profits

in the industry, aiding in development of the evidence-based healthcare policies and

practice. Therefore, this information illustrates the necessity of creating a competitive atmosphere

in healthcare to achieve higher quality, efficiency, and superior performance of the industry.

Smith et al. (2018) studied the critical role that sophisticated technological innovation plays in

shaping industry returns in the healthcare sector. Their research found out that technologies that

improve patient care experience ultimately result in enhanced returns for healthcare entities

compared to those lacking innovations. They emphasize the major role of technology in industrial

returns, and they have a perspective of allocating resources to innovation priorities in order to keep

up competition and growth of healthcare in future. This work generates a clearer insight into the

ties between technological innovation and profits and, further provides base for evidence-based

decision making regarding the field of health care policy and practice. Also, research results make

it clear that technology can be a driver of the improvements in healthcare delivery, patients'

outcomes, and the overall industry’s success. Inclusion of technology in healthcare strategic

planning should be strongly emphasized.

Through their research, Johnson et al. (2020) evaluated effects of government policies on

financials of healthcare markets, which revealed that revenue streams and profitability of

healthcare providers are really affected by each regulatory decision. A coalesced implication from

their study is the dire necessity of policy consideration while evaluating industry profits, and this

underline the need for policymaking based on evidence. The study goes towards developing a

better understanding of the relation between the direction of government policies and returns of
Relationship between Economic Fundamentals and Industry Returns in the Healthcare Sector.
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enterprises in healthcare system. And from empirical aspect, this would lead to evidence-based

policy and practice in healthcare. Consequently, their result also underlines the hapless role of

policymaking in formulating the industry environment; thus, proves the fact that politicizing is

vital in guaranteeing evidence-based policymaking to provide a supportive regulatory environment

for healthcare innovation and growth.

Analysis and criticism of existing literature

The studies involve use of regression analysis which is a powerful tool for exploring the

relationship between the economic indicators and the returns in the healthcare sector. Through this

analysis, the researchers were able to quantify the impact of economic factors on the market

performance. This was successfully done by regressing industry returns on variables such as GDP,

inflation rates and the healthcare total spend. It was identified that all these factors have an effect

on the advancement and improvement of healthcare. Empirical studies through regression analysis

have produced crucial insights in identification of the healthcare returns. Researchers found

evidence of a positive relationship between the economic expansion and healthcare sector

performance. The research also indicates that high inflation leads to a decreased confidence of

investors and low stock prices. Regression analysis enabled the investigators to make decisions

regarding investments and strategic planning in the healthcare sector.

The healthcare sector contributes to the country’s Gross Domestic Product. From the findings

in the study it is evident that services provided by this sector generate revenue through payments,

government funding and insurance. Investments in health-related research by the government and

other private companies leads to the development of new drugs and advancement of technologies

in the medical field. The construction of facilities and maintenance of equipment in the hospitals
Relationship between Economic Fundamentals and Industry Returns in the Healthcare Sector.
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also contributes to the Gross Domestic Product by creating jobs that help in stimulation of

economic activities.

Gross Domestic Product serves as a crucial driver of the health sector in terms of the spending

rate. Increased healthcare expenditure attributes to a higher GDP growth rates. This is as a result

of advancement of infrastructure, increased incomes and rising technology. Some studies show

that the co-relation between healthcare expenditure and GDP varies in different countries due to

factors such as government policies, structure of healthcare systems and population.

Inflation affects the cost of healthcare and prices dynamics. This rates affects the customers and

the healthcare workers. Due to the rise in inflation rates, the cost of medical equipment increases

and thus leading to an increase in the cost of medical services. The research shows that controlling

inflation contributes to a significant decrease in the cost of medical services. This subsidy ensures

that healthcare is affordable and sustainable to all citizens in the country.

Both private and public sectors play an important role in ensuring smooth running of healthcare

services. The government has an influence through funding healthcare facilities and also providing

medical equipment necessary for services in the medical facilities. Private facilities have shown a

great significant by providing advanced medical care and supplementing the public sectors to reach

all citizens. The private facilities also play a role in providing training for healthcare workers.

Policies also affect the running of healthcare services by shaping the environment and market

changes within the health sector.

The healthcare sector has grown over time due to advancement of technology. Through

analysis, the government is able to trace the development rate in the country. The Australian

Bureau of Statistics (ABS) is the official Australian government agency of analysis (Yusuf and
Relationship between Economic Fundamentals and Industry Returns in the Healthcare Sector.
9

Leader, 2019). The main role of this agency is collection, compilation, analysis and dissemination

of statistical data about the population, environment and economy in Australia. It provides detailed

information about main sectors in the country such as healthcare. The agency conducts surveys

that enable them to gather information about the different aspects of health. Through these surveys,

it is easy for the government to trace the health status, how the services are utilized and the usage

of funds. The ABS also collects information on the workforce including the number of doctors,

nurses and other healthcare staff so as to ensure that patients are attended to efficiently and timely.

Conclusion

The literature review indicates the critical significance of regression analysis in understanding

the complex relationship between economic fundamentals and industry returns in the healthcare

sector. Through empirical studies, the study has employed the regression models to quantify the

effects of variables such as Gross Domestic Product, inflation and public healthcare policies. The

market nature has an effect on the healthcare sector. The Customer Price Index is a crucial indicator

that measures changes in prices of commodities. It assesses the affordability of healthcare services

and the impact of change in price on the customer purchasing power.

Modern trends show that the health sector has contributed to the country’s economic growth.

The findings of the research shows potential to inform the strategies for investment, policy and

economic forecast in the industry. It is evident that the research captures long-term trends in the

healthcare sector that have influenced economic growth. Industries such as pharmaceuticals,

biotechnology and medical equipment have shown success in the business industry and contribute

significantly to the growth and development of the country.

Relationship between Economic Fundamentals and Industry Returns in the Healthcare Sector.
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References
Folland, S., Goodman, A. C., & Stano, M. (2016). The economics of health and health care:
Pearson new international edition. Routledge.
McIntosh, E. (Ed.). (2010). Applied methods of cost-benefit analysis in health care. Oxford
University Press.
McPake, B., Normand, C., Smith, S., & Nolan, A. (2020). Health economics: an international
perspective. Routledge.
Morris, S., Devlin, N., Parkin, D., & Spencer, A. (2012). Economic analysis in healthcare. John
Wiley & Sons.
Yusuf, F., & Leeder, S. (2019). Recent estimates of the out-of-pocket expenditure on health care
in Australia. Australian health review, 44(3), 340-346.