Dear Lesvin,
Healthcare is definitely part of the ?old? economy as well as the new
one. In order to determine that, all we have to do, is look at the
definitions of ?old? and ?new? economy. ?New Economy? (a concept
against which ?old economy? is contrasted) is defined, generally, as
?a period in which there is discontinuity in the normal progression of
economic events resulting from a fundamental change in the structure
of the economy. Currently, this change stems from the convergence of
telecommunications and digital technologies.? (SOURCE: Pearson
Education, <http://wps.prenhall.com/wps/media/objects/211/216259/glossary.html>).
More general definitions, describe it as referring ?to electronic and
high-tech sectors such as the Internet, telecommunications,
biochemicals, and semiconductors? (SOURCE: VanKampen
<http://www.vankampen.com/knowledge/educ/glossary/index.asp> ) or as
?an economy in which information technology plays a significant role
and that enables producers of both the tangible (computers, shoes,
etc.) and intangible (services, ideas, etc.) to compete efficiently in
global markets. (SOURCE: Pearson,
<http://myphliputil.pearsoncmg.com/student/bp_jessup_ist_1/JessupGlossary.html>).
In other words, the ?old? economy is the stable one, the one that had
existed since men began to barter commodities against each other. In
this economy, like in any society, there was place for the healthcare
sector as an economic sector. By definition, healthcare is ?the
preservation of mental and physical health by preventing or treating
illness through services offered by the health profession? (SOURCE:
Princeton WordNet, <http://www.cogsci.princeton.edu/cgi-bin/webwn?stage=1&word=healthcare>).
As one could understand from this definition, the essence of
healthcare has nothing to do with changing technological trends or
with information technology. As the name suggests, it has to do with
something primordial: the need to support and advance better health.
Beginning with the Shamans and healers of ancient periods, going
through doctors and nurses in the pre-modern period, their profession
was part of the economy. One made profits from developing and selling
healthcare products such as patient care (nursing and healing),
medications and drugs, or special techniques to eliminate diseases or
ailments. This was done directly (the healthcare provider gets a
reward for their effort) or indirectly (a cure or a treatment enlarged
the labour force, reduced the baby mortality, etc.).
So, on the face of it, healthcare surely belongs to the ?Old? economy.
Nevertheless, ?old economy? is not just everything that is ?old? and
not only a contrast to the ?new? economy. ?The Old Economy, rooted in
the Industrial Revolution, is very good at the mass production and
consumption of physical objects. Value is located in the physical
attributes of the object. The value and most of the cost of a
sledgehammer are linked to the iron head and wood handle; the
non-physical costs, like labour and design, are minimal. As the Old
Economy evolved, society began developing the skills and perspectives
that became the foundations for the New Economy. As consumers, we
began to understand and value intangible aspects of our products. The
prestige of the Cadillac brand was becoming as important as the
quality of Cadillac coachwork. The Old Economy creates value in a
product through a simple formula: The object?s value is the sum of its
obvious parts. The New Economy produces additional value by a complex
interaction of the obvious parts with intangibles, like design,
engineering, brand and cachet.? (Byron Glick and Sandy Plisch, ?The
Old Economy Vs. the New Economy?, 02/04/04, Wisconsin Technology
Network, < http://www.wistechnology.com/column.php?id=557>).
If we look at it that way, the costs of healthcare are based mostly on
development, labour costs, and other component irrelevant to this
approach to define the ?old economy?. Still, the basic meaning of
healthcare is not changed even with this definition. It still
encompasses a wide range of activities designed to protect and enhance
the population?s health. Some of these services, but not those at the
heart of healthcare ? the physician and the nurse ? are development of
anew, dependant upon the information technology and rewarded on the
premises of their reputation and design.
However, information technologies, and especially bio-informatics and
biochemistry, have developed tremendously since the break of the ?New
Economy?. In no period before did technology assisted to reduce
ailments, to improve care and to administer the healthcare system. In
no period before did healthcare-related technological innovations play
such an important role in the economy ? through drug development and
gene research and its implications on healthcare.
In the West, healthcare became part of the economy in much more
mundane way: the question of healthcare costs and who carries them.
The new technologies made medical innovations possible, but not
available to all. Here in Europe (and in a similar way, in Canada),
governments are struggling to find a solution for the raising costs of
the public health system. In the United States, where there is little
government support, many find themselves without appropriate coverage
that would support any medical treatment. An almost entirely new
sector has developed as a consequence, selling cheaper drugs and
medical advice to US patients from across the border, using
information technologies to do so.
As James T. Robinson writes ?Nowhere is the chasm between the old
economy and the new wider than in health care. The past two years have
witnessed an unprecedented flood of private capital into the health
care Internet sector, as individual angels, venture partner-ships,
investment banks, pension funds, university endowments, and
caffeinated day traders scramble to get their share of the social
transformation of American medicine. The midyear market volatility
trashed e-health stock prices, but the mood remains optimistic about
long-term prospects for consumer empowerment, provider connectivity,
and investor liquidity. Meanwhile, the old health care economy faces a
capital drought of unparalleled severity. Bond underwriters have
raised the red flag over the hospital sector, health insurance plans
are repurchasing their own devalued shares, and the physician practice
management (PPM) industry has disappeared in a firestorm of
bankruptcies and leveraged buyouts.? (SOURCE: James C. Robinson,
?Financing the Health Care Internet?, Health Affairs, MedScape, <
http://www.medscape.com/viewarticle/409828> - requires membership).
If one needs to summarise, despite the long tradition and basically
?old? structure of the healthcare industry, the ?New Economy?
contributed much to the development of the healthcare sector in the
past few years, enabling innovations, but also opening the road for
new risks. The healthcare sector includes, in fact, the two types of
economic activities, some rely on information and post-industrial
technologies, while hospitals, physicians and nurses around the world
continue to work without being mainly a ?new economy? sector, but
actually an ?ancient economy?, pre-industrial one.
Additional Articles
==============
Jeff Lemieux, ?The Future of Health Care?, December 6, 1999, PPI
Online, < http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=111&subsecID=138&contentID=604>
e-Health Shifting From Industry Buzzword to Practice <
http://www.themcic.com/company/press/pr132000.htm>
How to prosper in the `New Economy' Healthcare Purchasing News, June,
2000 < http://www.findarticles.com/p/articles/mi_m0BPC/is_6_24/ai_65099480>
I hope this answered your question. Please contact me if you need any
clarification on this answer. |
