As the virus spreads, the number of Covid-19 patients in hospitals rises and the number of healthcare workers available falls. Hospitals must make difficult choices about which patients to treat—those with Covid-19 or those wanting elective surgeries. In this post, we use the economic way of thinking to analyze this problem in California.
What do the data tell us?
Click here to watch a short video to see what the data tell us or work through the interactive below.
The takeaway: These data show that as the number of Covid-19 patients increases, the percentage of hospitals with a critical staffing shortage also increases.
Let’s now look at the economic problem faced by hospitals in California.
Does a hospital face a tradeoff when it treats Covid-19 patients?
Yes: A hospital faces a tradeoff between treating Covid-19 patients and other patients. To treat more Covid-19 patients, a hospital must perform fewer elective surgeries.
What is the benefit of providing medical treatment to Covid-19 patients and who receives the benefit?
The benefit of treating Covid-19 patients is improved health for the patients and a smaller spread of the virus to others. So, treating Covid-19 patients is in the self-interest of the patients and in the social interest—the interest of everyone who avoids Covid-19 by limiting its spread.
What is the cost of providing medical treatment to Covid-19 patients?
The cost of treating Covid-19 patients is the forgone alternative—an opportunity cost. When healthcare services are used to treat Covid-19 patients, they cannot be used to treat other patients. Not treating other patients is the cost of treating Covid-19 patients.
How do hospitals make a rational choice about the number of Covid-19 patients to admit?
Hospitals make a rational choice by comparing the cost and benefit of admitting one more Covid-19 patient and admitting the number of patients that achieves the greatest benefit over cost.
What incentive might a hospital offer its patients to decrease the number requesting elective surgeries?
A hospital might offer a higher price for a non-life-threatening elective surgery or a lower the price for those willing to wait longer for elective surgery.
Work these questions to check your understanding and get instant feedback.