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Introduction To Health Economics
Introduction To Health Economics
Introduction to Health
Economics
By
Dr Esan, O.T.
* At the end of this class, students should be able to:
* Discuss the role of economics in health
* Differentiate between economics and health economics
* Mention the effects of good health on the economy and the effect of
good economy on health
* Discuss in detail the important concepts in economics as they relate
to health
*Objectives
* Introduction
* Definitions of economics and health economics
* Effects of good health on economy and vice
versa
* The important concepts in health economics
*Outline
* Where would one naturally see an economist and why?
* In the business world
* because they often talk about money, profit, production costs
and markets.
* Whereas, in the hospital, the more familiar terms are drugs,
nursing, caring, treatment, investigations and managing the
differences between life and death.
*Introduction
*Introduction cont.
* In principle, Economics is about
* making choices,
* efficient use of resources.
* growth and development
* For any country to experience growth and development, there
must be
* an improvement in the rates of survival, quality of life and equitable
access to effective health services.
* Also health resources are limited and scarce while health needs
are unlimited
* Hence, economics is needed for the allocation of resources amongst
competing demands
* Definitions
* Economics is defined as:
* “the study of how scarce productive resources are allocated among
competing alternative uses and subsequently to distribute these
products among members of the society.”
* Health Economics is defined as:
* The application of the discipline of economics in health care
* the study of how scarce productive resources are allocated among
alternative uses for the care of sickness, the promotion, maintenance
and improvement of health.
* the study of how health care and health related services, their costs
and benefits and health itself are distributed among individuals and
groups in the society.”
* As a health economists
* In the face of scarce resources, you are faced with answering the
following questions:
* Which health goods and services need to be produced?
* How do you produce them?
* Who do you produce for?
* How can you be fair to all concerned in the production and the
distribution of the health goods and services produced?
* It Helps to meet the increasing demand and competing
demands in the health sector in the face of limited
resources.
* Perishable-
* If a service is not utilized in a day, for example a theater space not
used to conduct surgeries in a day, the capacity of that surgical
theater for that day is lost so also the revenue that should have been
generated.
* Inconsistency-
* Several procedures or days may be needed to address even similar
cases.
* For instance, the time and process of fracture fixation may vary from
one patient to another.
* Or the time taken to manage a case of malaria may vary from one
individual to another
* Characteristics of goods and services cont.
* Heterogeneity-
* Several categories of health care providers and other support staff are
involved in the final delivery of services to a consumer.
* This also includes the gatemen, the cleaners and so on.
* Consumer participation/ Patient participation-
* The consumers or patients are involved all through the delivery of the
service.
* They interact with their health care provider all through the process
and their opinions are important in the provision of quality services
and goods.
* Goods and services produced must be of
GOOD QUALITY
* Quality must be in three dimensions
* Structural quality:
* the locating or siting of the health services
* the proper organization of the processes of providing service.
* It must be convenient for the people.
* There should be a systematic flow in the process of obtaining the service.
* Process quality:
* This speaks to the actions and reactions of the health care providers
themselves.
* How is their attitude towards their clients? Are they empathic,
* Do they take time to provide complete information to their clients?
* Outcome quality-
* What is the impact of the services and goods provided to the clients/
consumers/ patients. Were they satisfied?
*Choices
* Making of choices is the process of selecting one out of a number
of alternatives.
* Choice arises as a result of numerous human wants in the face of
scarce resources to satisfy these wants.
* All societies must make choices as to how to allocate whatever
resources available to them for the production of their health
services
* Make choices on how to distribute these health services that have
been produced equitably.
* Choice making cont.
* Requires a volunteer
* The teacher gives volunteer a material and allows him or her to
choose who he gives it to in the class.
* He or she should later explain what determines his or her choice.
* Other members of the class will then determine if the criteria
guiding his or her choice were fair enough or not and if not, they
are to offer alternative options.
*
Factors that influence Choice
*Cost
* Direct cost- Costs borne by the health care system, community,
family, individual in directly addressing a health problem or disease
* Payment for treatment or services
* Indirect costs- Productivity losses caused by the problem or disease
borne by the individual, family, employee or society
* Inability to play the role of the breadwinner anymore
* Inability to offer the services at work anymore
* Intangible costs- Costs that exists but are difficult to express,
describe, understand or measure
* Grief, pain, suffering, loss of leisure time
* Opportunity Cost-
*Types of costs
* Opportunity cost/ Alternative forgone