Economics of Health Innovation



Economic analyses of clinical and administrative innovations become more than ever important in the healthcare industry. There are two reasons. First, healthcare markets have become more competitive.

Instead of hospital or physician shortages, there are patient shortages.

This increases the pressure on healthcare organizations to compete on the basis of price, making economic analysis of innovations more important. Second, the shifts toward value-based reimbursement and capitation make reducing costs a much more important management strategy. Billing rules no longer determine what is profitable. Organizations need to assess what changes are efficient.

Unit Learning Outcomes


ULO #3: Examine pricing strategies of bringing new drugs to market [CLO 2, 5, 6]


ULO #4: Create a list of costs and benefits of proposed new policies [CLO 3, 6, 7]


ULO #5: Examine how price of health care and other factors contribute to a shift in demand curve [CLO 1, 3, and 4]


In order to support your understanding of economics of health innovation, you will be expected to complete the following end-of-chapter problems.

Application Assignment


  1. Complete the following end-of-chapter problems and questions:

Chapter 12: Analytical problem and questions 17 and 18 [Bhattacharya, et al., p. 254]

Chapter 13: Questions 1, 2, 3, 4, 5, 6, 7, 8, and Analytical problem 9 [Bhattacharya, et al., p. 275]

  1. The submission should reflect higher-level cognitive processing [analysis, synthesis, and evaluation], which is essential for someone being prepared to serve in an operational capacity within the healthcare and related
  2. To earn the maximum number of points, the submission should reflect graduate-level execution with clear evidence of critical thinking, synthesis of relevant information from credible sources, and clear mastery of the concepts necessary to successfully execute each component of the

Submission Requirements

The submission should not exceed four [4] pages in length, excluding the title and reference list pages, and explicitly address all required components of this assignment.

The document must be double-spaced, adhere to the APA writing style [7th ed.], and include at least three [3] references of credible or peer- reviewed sources to support any suppositions and recommendations. Finally, the document should be prepared as a Microsoft Word document and uploaded to Submit Assignment.

Microsoft Excel will be used to perform the mathematical computations and graphs; however, the questions, the corresponding responses, and interpretation of the results of mathematical computations should be written up in a Microsoft Word document.

IMPORTANT: Make certain that there is a detailed description of how the calculations were performed. The Excel spreadsheet should include the mathematical formulas in the formula bar at the top of the Excel worksheet window, labeled with function symbol [fx].

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