Cosmetic Surgery has been steadily growing over the past few years. As technology continue to advance and social media continue to spread across the country, the demand for cosmetic surgery continue to increase in number. According to American Society of Plastic Surgeons, “the annual plastic surgery procedural statistics were 15.9 million surgical and minimally-invasive cosmetic procedures performed in the United States in 2015, a 2 percent increase over 2014.” (2016). Patient’s preference in body image have expanded and advanced medical technology have allowed patient’s the opportunity to choose different body areas to focus on. The pressure of social trends has influenced many consumers to seek the most minimally invasive procedures that targets specific areas of their body that satisfies their desired look. Moreover, there are consumers who suffer health conditions such as obesity or oversized breasts that prevent them from proper exercise who seek fat reduction procedures. As long as this trend continues, so does the demand for cosmetic surgery and it does not seem it will go away anytime soon. Nevertheless, as demand for cosmetic surgery rises, so does competition.
Demand Curve and Insurance Implications
As a new healthcare manager for Cosmetic Surgery Center, it’s important to observe the sensitivity of demand for cosmetic procedures in order to properly address any implications that might come across. The demand curve for cosmetic surgery presents itself as an upward slope curve meaning that as the price for services increases so does the demand. This means that the demand curve for cosmetic surgery shifts because the changed relationship between price and quantity affects the law of demand. The demand curve shifts to the right because the quantity of cosmetic procedures demanded are larger at every price. In order for patients to acquire the body image they desire, they seek for the highest quality in procedure. According to Alsarraf, “As the price increases, rather than substituting the next best good or service that is available at a lower price to maximize monetary utility, many consumers of certain luxury goods in fact maximize their utility by electing to pay more to support their belief that they have purchased the best. This perception may be based on actual benefits, such as better surgical results or technical skills, or simply on the perceived status and prestige that is associated with that good or service.” (2002). Based on many past botch experiences, consumers tend to overlook cheaper prices in procedure. The elasticity of demand explains the consumers sensitivity in price change when it comes to plastic surgery which takes a large percentage of their income. Thus, many cosmetic surgery centers have improved their level of services and boosted the competition by adopting the latest trending procedures and technology on the market.
The biggest implication towards cosmetic surgery is the consumers who choose to use their insurance coverage for particular procedures. Now depending on what type of insurance coverage you have, it all varies to what procedure is covered and how much of it is covered. According to Araugo, “Unfortunately, cosmetic surgery is not one of the things covered in most health insurance plans due to the fact that it is optional and not usually considered as necessary to maintain quality of life or body functioning.” (2016). Most insurance companies have guidelines as to what is considered as reconstructive or cosmetic that they adhere to. For consumers who purposely seek cosmetic procedures done most likely ends up paying out of pocket. For those consumers who are having problems related to their health and is necessary for them to have the procedure done is ultimately considered by their insurance company. In order to receive reimbursement, procedures done must be considered reconstructive per the insurance company’s policy. The big problem is that reimbursement rates are dramatically lower due to the Affordable Care Act, which would cause an influx in revenue stream. According to UMUC, “Health Insurance Reduces the Elasticity of Demand for Health Care, and the demand becomes inelastic.” (2017). To make up for this contrast, most cosmetic surgery centers accept major credit cards and offer payment plans and third-party lenders that will financially help consumers afford a particular type of procedure.
Substitutions and Impact on Demand
There a few factors that can truly and potentially impact the demand curve of cosmetic surgery. There are three reasons involved when it comes to law of demand, “diminishing marginal utility, income effect, and substitution effect.” (Mayer,2010). When it comes to cosmetic surgery, there are possible factors that can affect the law of demand. For example, diminishing marginal utility occurs when cosmetic procedures done repetitively on a patient’s body and their image is altered to a point where it is either disproportionate or not meeting expectations. In turn, the value of procedures are less and demand decreases. Another example, when a consumer’s income is limited, so is their budget for cosmetic surgery. Most consumers will most likely be inclined to invest in cosmetic surgeries that offer discounts. Another example would involve substitution effects. Substitution effects can occur when alternative procedures or methods are available to the consumer who prefer not to pay a large amount of money. According to UMUC, “Demand for a product will be “relatively elastic” (more sensitive to price) if there are a large number of substitutes for the product” (2017). Instead, consumers will most likely refer to exercise, non-surgical cosmetic procedure, or skin-care products to treat the targeted body part. The demand for cosmetic surgery will most likely present a downward slope shifting to the left. Most especially as the economy faces financial struggles, younger people tend to go the most natural and organic route possible. Though it may be time challenging, the effort to utilize these methods are much more rewarding, valuable, and affordable. But in our times today, celebrities and wealthy aging adults are inclined to purchase these services without hesitation.
Shift in Demand Curve
Factors that may shift the demand curve for cosmetic surgery could apply to substitute or complementary goods or a fall in income. If these factors were utilized, the demand for cosmetic surgery will most likely present a downward slope shifting to the left. As the younger generation continue to be exposed to more information and available sources, they are more likely to choose different alternatives for desired look they want. Many younger people are now focused on social media and are influenced by the pressure of society’s expected image. They drive towards fitness, diet, and makeup. On the other hand, there are the working adults who may recently have a deduction in income and can barely afford to pay rent, bills, and food. According to UMUC, this may portray as, “Share of Consumer’s Budget: The larger the share of a good is of a consumer’s budget (like food), the more sensitive (elastic) the consumer will be to changes in price.” (2017). When the marginal benefit does not exceed the marginal cost, it would be inefficient for cosmetic surgery centers to provide additional procedures.
Conclusion
In conclusion, Cosmetic surgery center is a growing field in the health care industry. Especially as technology continue to advance and people are more involved in social media exposure, expectations are at its highest. The aging population is ever growing rapidly and the demand for plastic surgery is rising. Though there are affordable and safer alternatives for cosmetic surgery, advanced medical technology has made it possible for patients to experience minimal to non-invasive procedures that will treat their problem at a more cost-efficient and cost-effective manner. The demand curve for cosmetic surgery will continue to present as an upward slope due to the increasing competition in the field that possess the latest procedure and technology.