The United States has experienced a dramatic growth both in technical
capabilities and in its allocation of resources to the healthcare sector. Because of
the aging population, the U.S. fears that demand for healthcare will outstrip
available resources suggesting the need for adding more healthcare capacity.
However, recent studies have found that more care may not necessarily
mean better health. These studies demonstrate that more hospitals in an area
lead to more days spent in hospitals with no discernible improvements in health.
Interestingly, supply tends to drive demand; more doctors and hospitals lead to
more demand for services. This appears to be an unintended consequence or
policy resistance to public policy.
One contributor to this “vicious circle” is hospitals competing for specialist
affiliations, which in turn, compete for patients by offering specialized services.
Apart from care, retailing hospitals tend to duplicate services and aggressively
expand capacity when their competitors do.
The objective of this MBA Project is to further explore the relationship
between demand and supply of healthcare in the United States using the System
Dynamics feedback loop perspective. Furthermore it discusses how the System
Dynamics and Systems Thinking fields of study facilitate understanding the
behavior of complex problem structures.

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