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Impact of Economic Crisis on Local Healthcare


Table of Contents-


The global financial crisis had dominated the society in this natural course.  As a result of the global financial crisis, many Australians had lost their jobs. Unemployment is on verge of reaching eight percent and billions of Australian dollars are at stake.  The financial downfall has been identified to directly impact the overall health and spending by the public to afford healthcare. It is a matter of concern in Australia how the economic crisis has affected the health of the population, death rates and various impacts of mental disorder (Andersen, et al., 2011). The analysis would help to identify the challenges which are faced by healthcare manager at social level due to the financial crisis. In Australian context, healthcare service is one of the complex, as well as a costly sector which is prevailing in contemporary society.

Since people gain the capacity to access modern healthcare services with increase in income, the opposite occurs during economic downfall. The people lose their ability to spend behind healthcare services. The economic downfall has forced the need for multifactorial health aspects, especially at local levels. This paper would reflect on the health care managerial problems faced by the economic crisis at local level and present a comprehensive analysis.

Impact of Economic Crisis on Society

Society requires efficient high-quality healthcare with expanded access for all people. However, the healthcare situation, as well as national income, has always formed a bidirectional relation. In simple terms, health has a direct impact on the income which reflects on the productivity of the employee or labor and how people tend to save their earned income as well as structure of age (Zimlichman, et al., 2013). When the income level of the individuals are high, it improves the health standard where they can afford better healthcare, housing, and education.

There is a lack of identifying the health outcome due to the economic crisis which Australia had to face like other countries. There is a comprehensive lack of systematic study and constant monitoring of the situation which had led to the gap. There are various factors to be identified from the situation. Firstly, there has been obvious case of a decrease in the salary as well as losing employment. Australia had experienced drop of GDP by 1.7 percent, and fall in employment by 3.4 percent (ABC, 2019). Hence, drop in the financial situation of the country as well as loss of employment led to stressful situation experienced by many people in local communities. Hence, physical health issue, as well as mental issue, became a common situation. Hence, there was an increase in healthcare demand where the financial crisis had created a situation of chaos.

The real income had dropped significantly and as a result, individuals and various households were forced to cut expenses on essential needs. These needs included promoting, preserving health and required medications. In addition, the approach to high-quality healthy foods had reduced which resulted in damaging the growth of children. Australian department of health and nutrition had identified that the loss in financial stability had much-affected nutrition as well as the health of the families (Australian Medical Association, 2019). Various health facilities were forced to close the gates along with similar other facilities. There were layoffs, by medical experts and pay cuts which led to disastrous situation. Control over infectious diseases was lowered and service standards had decreased drastically. As a result, the society to the local level suffered from the resultant health issues.

The financial resources had reduced as a result of the crisis. Hence, the public health programs had suffered as the government itself was facing a drop in national income. Though Australia runs partly on the privatized healthcare system and partly government, both the sectors had suffered drastically due to the effects of financial crisis.  According to the Australian Medical Association, the public hospitals have actively faced a budget crisis when the federal, as well as the state government, had failed to provide adequate funding for supporting the local healthcare system (Nutrition Australia, 2019). Though there was a slight rise in the number of beds through the years, there was no direct attempt to meet the crisis for the rising demand for healthcare. In fact, the Australian households faced large depreciation in the equity and hence it reduced the overall wealth of the Australian citizens.  The prevailing policies of the Australian healthcare were on verge of closing or the impact had been becoming loose in most aspect. The resultant fact was that people at the local level had suffered due to a lack of healthcare services which they needed more than before.

One must understand the situation as financial stability is directly linked with well-being. Its effects can be identified in both tangible and intangible manner. Intangible manner, the financial stability would provide the ability to afford better healthcare facilities, medication, doctors and routine check-ups. Furthermore, one would be able to purchase nutritious or high-value food which is a key to good health and well-being (Raghupathi & Raghupathi, 2014). Secondly, in terms of the intangible approach, financial stability releases the pressure from the mind. Hence, the physical health of the individual would be perfect. The financial crisis had affected both the tangible and intangible aspects of the people living in Australian society. Most of the individuals were in need of psychological as well as physical healthcare service for their well-being or recovery from mental stress. As there was a lack of comprehensive standard health care routines, the overall health of the society had worsened. Hence, indirectly or directly, there have been many areas where financial crisis has made healthcare service and its affordability more and more complex in terms of providing it to the people of the society (Dyrbye & Shanafelt, 2011). There were a significant loss financial aspects which had failed to develop the required resistance from both ends of people as well as the government. Both the aspects had played their role in creating challenges which actually limited the healthcare service provided to the people when they needed it at most. In the upcoming section, the managerial challenges which have been identified in terms of health care during economic crisis would be analyzed.

Managerial Challenges during Economic Crisis

Economic-crisis had invited multi-faceted results across the globe, as both the financial as well as the economic sectors were in jeopardy. In any process, the manager or management are the ones working to achieve organizational goals. There are various layers like planning, organization, direction and implementing control to achieve the desired goals. The financial crisis had highly affected in carrying out the various aspects of managing a tough and complex job. Effective management, especially in the healthcare sector became a challenge. Healthcare organizations are the ones which require effective leadership and management (Lewis, 2015). The leaders must be adaptive and acquainted with the nature of the work to develop effective strategies to enhance the service and impart better control. The manager has to rely on experience and analytical ability to lead the organisation through crisis period. They are the ones responsible for identifying the resources which would be able to run the services for the society and its people.

During the economic crisis, various governments had reduced the spending on the healthcare sector and as a result, there were few financial systems which was aiding the public health services. The individuals had to spend more out of the pocket and the health insurance policies become costly in countries like Australia. Health is an essential sector but lack of comprehensive funding had created a tough situation for the managers (Carman, et al., 2013).  There was complete chaos in terms of focus of the health care service providers, vision and mission of the healthcare organizations. Hence, the management or the managers had failed to lead the situation which would acquire a better outcome or at least maintain the standard of service promised to the public. It became a challenge to meet the rising demands of healthcare as the motivation had decreased and the consequences started affecting the healthcare negatively. It is evident that there is a need for support from both the local managers as well as the public health authorities to smoothly run the system. However, the economic crisis had driven the problem in many smaller facets which have led to problems in bigger issue associated with the healthcare service provision at the local level (Andersen, et al., 2011). In fact, the local manager would need many other efficient individuals to implement the strategies and approach to the development of healthcare services.

The first challenge faced by the healthcare managers was to keep the workers or the employees working at local level motivated. It has been true for both government-run healthcare as well as private healthcare initiatives.  The economic depression had lowered the scope of growth as well as remuneration which the individuals were used to earning. As a result, there was rising unemployment, asset prices had dropped, inflation was on verge of rising and people seeking healthcare services were forced to spend the least possible for the situation. Hence, it was hard for the managers to keep the employees at the local level healthcare service motivated to provide efficient and effective services (Zimlichman, et al., 2013). The general business cycle was disturbed due to the economic crisis. Most of the healthcare companies were unable to find the profit-making situation which would have saved their companies from closing the doors. In fact, rising price of healthcare policies had forced people to allow the least amount of money for the healthcare. Hence, the local healthcare delivery services were out of business or contracted their expansion of previous services. On the other side, the Government was losing money as National income was depreciating and allotment of the funds for healthcare services was reduced drastically. It affected the healthcare employees who had reduction in payment, unemployed or work for no pays (ABC, 2019). The managers were forced to cut short the employees or lay off employees to save the costs of execution of healthcare services. The downsizing was a forced situation rather than a planned option. Hence, the managers had a hard time finding motivated employees who would work at the local level with energy and motivation.

The other problem which the managers faced were a reduction of the consumers in terms of health service at local situation. As there was decrease in pay, downsizing, reduction of equity prices, it limited the consumers’ capacity to spend even on the essentials like healthcare. People at the local level had cut their expenses in healthcare to focus on other daily necessities like food. As a result, the private healthcare companies or the service providers were unable to draw the profit which would allow them to work with wider services. Hence, the managers faced a lack of funding, limited resources, and manpower (Andersen, et al., 2011). The managers were forced to retract the local services which were utilized by the people for healthcare concern. Lack of adequate options and backup, the managers were restrained from implementing strategic approaches to keep the service running and locals receiving their services.


Though healthcare was an essential service, people were forced to reduce the expenses allotted for acquiring the regular and efficient services. It was a domino effect from where employees became unemployed, and per capita income of the people had reduced drastically. There was no denying fact that reduction in income or ability to spend had highly affected the entire system. The managers were reluctant to reduce the workforce and work with limited allocation for the healthcare services (Raghupathi & Raghupathi, 2014). It is because the employees were experiencing a lack of motivation and a proper value which could have been acquired from working. The entire situation had burdened the managers who were unable to acquire the avenues which would be able to save the business as well as ensure effective service to the people. Furthermore, the managers failed to implement the services as there was a drastic lack of people, manpower and the individuals who needed the healthcare services. The common people had reduced their allocation of income towards the health sector to carry out daily livelihoods. Hence, the managers were badly affected by the financial recession in terms of managing and controlling healthcare service at local level in an effective manner.


  • ABC, 2019. Australian Bureau of Statistic. [Online]  Available at: [Accessed 15 January 2019].
  • Andersen, R. M., Rice, T. H. & Kominski, G. F., 2011. Changing the US health care system: Key issues in health services policy and management. New York: John Wiley & Sons.
  • Australian Medical Association, 2019. Australian Medical Association. [Online] Available at: [Accessed 15 January 2019].
  • Carman, K. L. et al., 2013. Patient and family engagement: a framework for understanding the elements and developing interventions and policies. Health Affairs, pp. 223-231.
  • Dyrbye, L. N. & Shanafelt, T. D., 2011. Physician burnout: a potential threat to successful health care reform. Jama, pp. 2009-2010.
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    Available at: [Accessed 15 January 2019].
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