What is [Health] Economic Satisficing?

A decision-making strategy 

[By staff reporters]

Satisficing is a business decision-making strategy or cognitive heuristic that entails searching through the available alternatives until an acceptability threshold is met.

The term economic satisficing, a portmanteau of satisfy and suffice, was introduced by Herbert A. Simon in 1956, although the concept was first posited in his 1947 book Administrative Behavior. Simon used satisficing to explain the behavior of decision makers under circumstances in which an optimal solution cannot be determined. He maintained that many natural problems are characterized by computational intractability or a lack of information, both of which preclude the use of mathematical optimization procedures.

CITE: https://www.r2library.com/Resource/Title/082610254

He observed in his Nobel Prize in Economics speech that “decision makers can satisfice either by finding optimum solutions for a simplified world, or by finding satisfactory solutions for a more realistic world. Neither approach, in general, dominates the other, and both have continued to co-exist in the world of management science”.

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Assessment

“Satisficing” – a made-up word created by combining satisfactory and sufficient – indicates something good, but not great. Like the Canadian single-payer health system, like Medicare-for-All.

KEN ARROW PhD: https://medicalexecutivepost.com/2010/08/17/on-professor-kenneth-arrow-phd/

MORE: https://www.acsh.org/news/2018/09/18/canadas-single-payer-health-system-satisfices-13272

Conclusion: Your thoughts are appreciated.

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One Response

  1. Medical Prices 2022?

    I expect health care provider prices to increase in the coming years for several reasons.

    First, the long-term trend of health care provider consolidation has not only continued but has likely accelerated due to financial pressures created by the COVID pandemic. Increased consolidation will result in less provider price competition in many markets, resulting in higher prices when contracts come up for renewal in coming years.

    Another factor that has been exposed and exacerbated by the COVID pandemic is the tightening labor supply in the health care sector. The aging population along with increases in the population with health insurance coverage are combining to generate increased demand for medical care over the long run.

    At the same time, the supply of trained new health care professionals is not forecast to increase appreciably in the short run. This supply constraint along with earlier than expected retirement of front-line workers due to COVID burn-out has resulted in labor shortages in many health care organizations and rising labor costs, as organizations compete for needed staff. This is a new cost push factor that could also drive provider prices higher in the coming years.

    Glenn Melnick PhD
    via MCOL Thought Leaders

    Like

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