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The economic boundaries of health and the factors that determine them

It is extremely difficult to define clear boundaries of healthcare as one of the sectors of the country's economy due to the fact that many activities related to maintaining and promoting health do not relate directly to medicine, to professional medical activity, which forms the basis of healthcare as an industry. Therefore, defining the economic boundaries of healthcare, we make the assumption that the main industry product is a medical service.

Since the economic boundaries of the industry are formed by a specific type of market structure, it is necessary to characterize the market model in which modern Russian health care operates. The Russian market model is closest to the model of monopolistic competition (Table 3).

Table 3 -

signs of monopolistic competition in relation to the medical services market



* Various qualitative characteristics of the services of the same name consist in the difference between the service and the conditions for the provision of the service, different technological components (the use of medicines with the same international non-proprietary name, but with a different trade name).

Scheme 3.

Healthcare structure



An important factor affecting the medical services market is the factor of state regulation, that is, this market cannot be considered a classic model of monopolistic competition. State regulation of the market implies that the state in the person of federal, regional and municipal authorities sets general rules for the behavior of market participants. Relations between the state and market entities acquire a bilateral character, interaction on the basis of agreements, government contracts and agreements is possible.
State regulation is carried out by:

• antitrust measures;

• state monopoly on certain types of products and services;

• standardization of services;

• licensing and accreditation;

• establishing minimum social standards;

• price regulation for certain types of products (the maximum allowable wholesale and retail mark-ups for drugs and medical devices);

• compulsory insurance;

• tax regulation (including excise taxes and duties);

• compensation for losses incurred by manufacturers of goods and services that sell them on the market at low prices.

The objective need for state regulation of the market for medical and pharmaceutical services emphasizes the limited possibilities of self-regulation of this market, which is due to industry-specific health care as a special segment of the social sphere. Self-regulatory mechanisms for the market of medical goods and services manifest themselves through market tools such as demand,

offer, pricing (see the section "Industry and Market").

The specifics of the formation of demand for health services is that their high social significance is combined with low elasticity of demand (an insignificant degree of change in the number of goods and services requested in response to changes in their market prices). The imperative need for these services severely limits their interchangeability.

Thus, the economic boundaries of the industry are formed not so much under market influence as under the influence of state regulators.
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