Rising Costs as a Challenge Affecting the Healthcare Sector

Subject: Administration and Regulation
Pages: 3
Words: 629
Reading time:
5 min
Study level: College

Developing a Strategic Plan

Rising healthcare costs affect access to medical services. Budget cuts from government agencies have made matters worse because practitioners are struggling to deliver quality services with few resources (Houston, Bradham, Muñoz, & Guignard, 2011). The purpose of this paper is to understand the rising costs as a challenge affecting the healthcare sector. Key sections of this paper will explain data that characterize the problem and what other people have done to address it. Lastly, a discussion evaluating broader issues that have contributed to its emergence will be provided.

Historical Analysis and Forecasting

Healthcare organizations and agencies, such as the Center for Medicare and Medicaid Services (2017), have said the rising cost of healthcare poses a financial problem to many patients because it limits access to quality health services. According to statistics reported in 2017, healthcare spending in the United States (US) peaked at $3.5 trillion (Center for Medicare and Medicaid Services, 2017). This figure means that the average American spends $10,739 per year in healthcare costs (Center for Medicare and Medicaid Services, 2017).

Reports suggest that this figure is likely to increase because of sustained demand for health services (Center for Medicare and Medicaid Services, 2017). At different levels of operation, this problem has an impact on service delivery in different organizations. Johns Hopkins Hospital is one such institution. Its mission, vision, and values appear below.

Mission, Vision, and Values

  • Mission: To provide compassionate healthcare that is focused on the uniqueness and dignity of each person
  • Vision: To provide an enriching environment for all employees and an exceptional experience for patients when they receive health services
  • Values: Respect, diversity, collegiality, inclusion, leadership, integrity, excellence, and discovery (Johns Hopkins Medicine, 2018)

Vision and Goal for Addressing Rising Healthcare Costs

The vision of Johns Hopkins hospital is to maintain fiscal stability. According to a recent financial report, the organization intends to realize this vision by introducing efficient operational systems, setting up financial controls, and employing smart processes in the delivery of healthcare services (Johns Hopkins Medicine, 2015).

Broader Issues Influencing Rising Healthcare Costs

Although rising healthcare costs are a problem affecting different healthcare organizations today, several sociopolitical factors underlie it. An increase in population is one of them. Indeed, according to the SSI Group (2018), population growth accounts for an increase in healthcare costs by about $269.5 billion. A rise in the population of elderly people has also contributed to the increase in health expenditure because more people are living longer than their predecessors did (Hazra, Rudisill, & Gulliford, 2017). Statistics reported by the SSI Group (2018) reveal that an increase in the population of elderly people has contributed to $135.7 billion in healthcare cost increments.

What other people have done to Manage the Problem

The integration of information technology tools in healthcare management has helped to control healthcare costs in organizations, such as Johns Hopkins Hospital. Many institutions have adopted new technology because it increases the efficiency of healthcare services, thereby creating opportunities for cost savings. However, the adoption of an innovative culture could address the problem.

Stakeholders that should be involved

The government, insurance firms, healthcare organizations, patients, and healthcare professionals are key stakeholders whose views should be included in the decision-making process. Particularly, the government should be involved because of its legislative power, while healthcare organizations, patients, and insurance companies should participate in strategic planning because they are the main players in the delivery and payment of healthcare services.


This paper reveals that the rising cost of healthcare services is a problem for the sector. Johns Hopkins Hospital has reported its effects on the provision of healthcare services. Innovation is a promising tool for addressing it, but the government, healthcare organizations, patients, and insurance companies should be included in the strategic planning process.


Center for Medicare and Medicaid Services. (2017). National health expenditure projections 2017-2026. Web.

Hazra, N. C., Rudisill, C., & Gulliford, M. C. (2017). Determinants of health care costs in the senior elderly: Age, comorbidity, impairment, or proximity to death? The European Journal of Health Economics, 19(6), 831-842. Web.

Houston, K, T., Bradham, T. S., Muñoz, K. F., & Guignard, G. H. (2011). Newborn hearing screening: An analysis of current practices. Volta Review, 111(2), 109-120.

Johns Hopkins Medicine. (2015). A look at our books. Web.

Johns Hopkins Medicine. (2018). Our mission, vision, and values. Web.

SSI Group. (2018). Rising healthcare costs impact patients and providers. Web.

Developing a Strategic Plan

According to Hamidi and Delbahari (2011), a SWOT analysis is a strategic planning tool for improving system-level performance. The purpose of this paper is to review the strengths, weaknesses, opportunities, and threats of rising healthcare costs, as a resource for planned change.

SWOT Analysis


A quest for high-quality healthcare services is a positive byproduct of the high cost of health services because even though insurance premiums are increasing, there is a push for quality care. Increased emphasis on disease prevention is another trend that could alleviate healthcare costs because it minimizes the need for expensive treatment (Grootjans-van Kampen, Engelfriet, & van Baal, 2014).


The privatization of healthcare services is a significant weakness associated with the rise in healthcare costs. A private-based healthcare system means that it is difficult for the government to influence the cost structures of health services because it is guided by a profit-making motive. A lower rate of utilization of healthcare services is another weakness in the management of healthcare costs. This finding means that when the cost of healthcare services increase and the utilization of services declines, it is difficult to realize a future where healthcare costs are affordable (Bricker, 2018).


Through proper research and development, solutions for increasing the efficiency of service delivery can be sought by eliminating bottlenecks in the delivery of services. Information technology offers an opportunity for doing so, as seen in the area of data management where healthcare facilities have realized significant cost-savings by adopting innovative systems of healthcare management. Increasing the cost-effectiveness of specific treatments is another opportunity for reducing the cost of healthcare, albeit indirectly (Raj et al., 2018).


The push for compulsory care to all citizens is a threat to the financing of health services because it places a financial burden on citizens who cannot afford health insurance. This trend has been witnessed in the US and some European countries such as the Netherlands (Baars & Kooreman, 2014). Innovation in the healthcare sector is also another threat to the rising cost of health services because, every year, newer and better drugs or techniques are introduced in the market to treat various diseases. However, they are expensive (Baars & Kooreman, 2014).

Do Threats and Weaknesses Pose Opportunities?

As Gott, Allen, Moeke-Maxwell, Gardiner, and Robinson (2015) say, healthcare costs are often out of reach for many families. However, innovation and compulsory care are current threats in the healthcare sector, which pose opportunities for decreasing healthcare costs. For example, redesigning the healthcare payment system could create resource efficiencies, which may translate to healthcare savings because compulsory insurance creates a larger pool of funds for healthcare payment. Innovation is also an opportunity for realizing cost savings because it could create new efficiencies and cost-effective technologies for healthcare management.


In this paper, the strengths associated with rising healthcare costs include an increased emphasis on disease prevention and improved healthcare quality. Associated weaknesses are the privatization of healthcare services and a lower rate of utilization of healthcare services. Innovation and improvements in the cost-effectiveness of existing treatment methods are possible opportunities for cost reduction, while the introduction of compulsory care and expensive innovation are possible threats. Nonetheless, these threats present opportunities for growth because they could create resource efficiencies and a bigger pool of finances to pay for health services.


Baars, E. W., & Kooreman, P. (2014). A 6-year comparative economic evaluation of healthcare costs and mortality rates of Dutch patients from conventional and CAM GPs. BMJ Open, 4(8), 1-10. Web.

Bricker, E. (2018). What is the cause of rising healthcare costs? High prices, not utilization. Web.

Gott, M., Allen, R., Moeke-Maxwell, T., Gardiner, C., & Robinson, J. (2015). No matter what the cost: A qualitative study of the financial costs faced by family and whānau caregivers within a palliative care context. Palliative Medicine, 29(6), 518-528.

Grootjans-van Kampen, I., Engelfriet, P. M., & van Baal, P. H. (2014). Disease prevention: Saving lives or reducing health care costs? PloS one, 9(8), 1-13. Web.

Hamidi, K., & Delbahari, V. (2011). Formulating a strategy for a university using SWOT technique: A case study. Australian Journal of Basic & Applied Sciences, 5(12), 264-276.

Raj, R., Bendel, S., Reinikainen, M., Hoppu, S., Luoto, T., Higgins, A., … Skrifvars, M. B. (2018). Temporal trends in healthcare costs and outcome following ICU admission after traumatic brain injury. Critical Care Medicine, 46(4), 302-309. Web.