The need for health economi cs BY SAHAR AHME D DE WE DAR ASSISTANT PRO FE SSO R O F PUBLIC HE ALTH ASU
Economi cs, Health and Health Eco no mi cs Whatiseconomics?
Whatisn’teconomics? Whatis“Health”?
Whatis“Health Economics”?
Usesofhealth economicsin disease measurements Usesofhealth economicsin health care evaluation
Economi c Defini ti on.
The Economi cs i s the sci ence thatdeals wi th the conseq uences ofresources scarci ty. The discipline ofeconomicsdeals wi th use of scarce resources to sati sfy human wants and needs howbestto use the resourcesavailable. Economicsisa soci al sci ence thatstudieshow individualsand organizationsin society engage in
the producti on di stri buti on and consumpti on ofgoods and servi ces.
Types OfEconomi cs Microeconomics:-Isthe study ofeconomic behavior ofindividual decision making unitssuch as: Consumers resource ownersand businessf irmsin afree – enterprise economy.
We can measure thatby some studies such asmarket, pilotand feasibility studies.
Types OfEconomi cs Macroeconomics:- isthe study ofaggregate economic activities, such as: 1. The economy level ofoutputs; ď‚Ą We can measure t hatby some variablessuch as; GDP, Rate ofdepression, Rate ofslackness ..ets. ď‚Ą Real GDPist he marketvalue ofall final goods and servicesproduced in the domestic economy during aone yearperiod measured with constantprices.
Types OfEconomi cs Macroeconomicsisthe study ofaggregate economic activities, such as: 2. Level o fnati o nal i nco me; We can measure t hatby some variables such asN .I. N ational income (N .I) isthe income earned by the factorsofproduction. Income earned oft he sold orconsumed GDP.
Types OfEconomi cs
Macroeconomicsisthe study ofaggregate economic activities, such as: 3. Level o femployment;
We can measure thatby some variablessuch as the rate ofunemployment. The Rate ofUnemploymentisthe percentof the total laborforce which isunemployed.
Types OfEconomi cs
Macroeconomicsisthe study ofaggregate economic activities, such as: 4. General pri ce level;
We can measure thatby some variablessuch as Inflation or Deflation Rate ets. Inflation isthe annual rate ofincrease in aprice index. Deflation isthe annual rate ofdecrease in the price level.
Pro ducti o n functi on Medi ati ng factors
Inputs (Resources )
Outputs (Goods or servi ces)
Economic Analysisin Health Care by Morris, Devlin and Parkin © 2007 John Wiley & SonsLtd
Three Major Tasks OfEconomi cs i . Descri pti ve Eco no mi cs;
Refersto the identification, definition, and measurementofphenomena. Concerned with determi ni ng the nature ofthe phenomena aswell asobtaining estimatesoftheir magnitudes. No explanati on.
Three Majo r Tasks OfEconomi cs. i i . Explanato ry Eco no mi cs;
Involvesexplai ni ng and predi cti ng certain phenomena. Conducting an analysisin a cause-effectformat. Performed with the aid ofmodelsthatclassify various
causal factorsin asystematic framework (e.g. the health statusand the price ofthe medical services).
Three Majo r Tasks OfEconomi cs. i i i . Evaluati on;
Involvesjudging orranki ng alternati ve phenomenaaccording to some standard. An acceptable standard mustbe obtai ned. Based on thisstandard, alternative waysof using scarce resourcesare then ranked. In choosing the standard, one majorcriterion isacceptabi li ty.
Health economi cs ď‚— isabranch ofeconomicsconcerned with issues
related to efficiency, effectiveness, value and behaviorin the production and consumption ofhealth and health care.
ď‚— In broad terms, health economistsstudy the
functioning ofthe health care systemsaswell as health-affecting behaviorssuch assmoking.
Whatdi fferentiates health care are? Health economicsdealswith aspecific portion of“the� economic problem, thatconcerned with health and health care. 1. The very personal and often urgentneeds the servi ce meets. 2. deali ng wi th pai n and sufferi ng and wi th li fe and death deci si on. 3. access to the servi ce i s often consi dered to be a basi c human ri ghti rrespecti ve ofabi li ty to pay.
Whatdi fferentiates health care are; The many treatmentsare unproven.Encouragi ng the move towards evi dence based medi ci ne where deci si ons aboutmedi cal i nterventi ons wi ll be more firmly based on research evi dence abouttheireffectiveness. 5. Itisnotthe consumer who demands the treatmentbutthe doctoracting asthe agentofthe patientwhich rise special problemsIn demand and resource allocation studies. 4.
Basi c pri nci ples ofthe health care servi ces
One ofthe basic principlesofthe public health care systemsisthattreatmentshould be provided on the base ofneed rather than on the base ofthat funds are available. And on the base ofthateq ui ty should be one ofthe objecti ves ofthe servi ce. The purpose ofhealth care isto produce an i mprovementi n health, the maintenance ofgood health and orareduction in suffering.
Basi c pri nci ples o fthe health care servi ces
Health care servicescan be boughtand sold, while health cannot.Health difficultto define and even more difficultto measure . According to the world health organization {WHO} good health is“a state ofcomplete physi cal and mental well-bei ng and notmerely the absence ofdi sease or i nfirmi ty”. Poorhealth in an individual will have an i mpacton and may pose threats to others.
Factors thatdi stingui sh health economi cs from other areas ď‚— include extensive governmentintervention,
intractable uncertainty ,several dimensions, asymmetric information, barriers, externalitiesand the presence ofathird party agent.In healthcare, the third party agentisthe physician, who makespurchasing decisions(e.g., whetherto orderalab test, prescribe amedication, perform asurgery, etc.) while being insulated from the price ofthe productorservice.
Economi cs i s about… Limited resources Unlimited “wants” Choosi ng between
which ‘wants’ we can ‘afford’ given our resource ‘budget’
o ppo rtuni ty co st • “ The value offorgone benefitwhich could be obtained from aresource in itsnext-bestalternative use”. Pg ‘A’
Pg ‘B’
Budget
• The aim isto choose activitieswhere benefitsoutweigh opportunity cost. 20
effici ency Effici ency
= maximising benefitfor resourcesused
Techni cal
=
Allocati ve
=
Effici ency
Effici ency
meeting agiven objective atleastcost(resources)
producing the pattern of output(supply) that matchesthe pattern of consumerwant(demand)
So me mi sconcepti ons Economicsis… concerned wit h money t he same asaccountancy only pract ised by economists object ive
The ‘practice’ ofeconomi cs Economicsisconcerned with… cost s(resource use) benef its choi ce ef ficiency Everyone… weighst he relative benefitsofeach course ofaction and choose the action which maximiseswell-being
Health economi cs ‘map’ H. Mi cro -Eco no mi c Apprai sal
B. Whati nfluences Health? (o ther than health care )
C. Demand for Health Care
G. Planni ng, budgeti ng, regulati on mechani sms
E. Market Analysi s
A. Whati s Health? Whati s i t’s value?
D. Supply of Health Care
F. MacroEconomi c Apprai sal
Health economi cs and health measurements researches (burden ofdi sease)
Hi sto ry o fHealth measurements 1940s-1950s- Studiesofmortality, survival. Limited
medical technology. Scantliterature.
1960s-1990s– Shif tto afocuson health status,
functional status, Detailed medical assessment, Medical technology . 1990s-present-Furthershif tto pati entreported outcomes (PROs), shiftto multidimensional (subjective). Depth ofconceptislacking in 90sbutbeginsto shift somewhatin the newcentury.
Categori es ofPati entOutcomes Pati entOutcomes Assessment Sources and Examples
Cli ni ci an-Reported
Physi ologi cal
Caregi verReported
For example,
For example,
For example,
Global i mpressi ons Observati ons & tests offuncti on
FEV1 HbA1c Tumor si ze
Dependency Functi onal status
Source: Acquadro et al. Value in Health 2003;5:522-531
Pati entReported
Functi onal status Well-bei ng Symptoms HRQL Sati sfaction wi th TX Treatment adherence Uti li ty/preferenc e-based measures
Measures ofHealth Mortality-based measures
death rates, life expectancies, etc.
All the familiarstuff
MeasuresofHealth – aquick typology Mortality-based measures
death rates, life expectancies, etc.
Morbidity-based measures
indicators
Indicators: ›
Single, countable things Prevalence ofdisease C-section rates % population who exercise
MeasuresofHealth – aquick typology Mortality-based measures deat h rates, life expectancies, etc. Morbidity-based measures indicat ors healt h statusmeasures disease-, organ-specif ic
Health StatusMeasures Disease-, organ-specific....
Created to be sensitive to changes in symptomsorfunctional impairment due to aparticulardisease process
Some physician-reported, others patient-reported Satisfaction with Treatment Treatmentadherence Utility/preference-based measurements
MeasuresofHealth – aquick typology Mortality-based measures deat h rates, life expectancies, etc. Morbidity-based measures indicat ors healt h statusmeasures disease-, organ-specif ic QOL “generic”
Generic Health StatusMeasures Mostfamous: SF-36 health profile One questionnaire with many questions Several questionsabouteach of8 different domainsofhealth multiple scalesto coverbroad scope of health, nottied to one disease ororgan system
Scoring:
Separate scoresforeach subscale or health concept PF, RP, BP, GH, VT, SF, RE, MH PCS
MCS
Outcomes from Di fferentPerspectives Clinical Perspective
PatientPerspective › Subject ive health status › Qualit y oflife › Sat isfaction Societal Perspective › Ut ilization › Cost
DataPyramid forPopulation Health Full evaluation
HRQoL Indexes
preference-weighted aggregate scores summarizing overall health
Generic Health StatusProfiles Vectorofhealth statusdomain scales
Disease-specific Scales
Do notnecessarily coverall health domains
explanation
Multitude ofhealth indicators
Economistsviewofthe world… Pessimist: bottle ½ empty Optimist: bottle ½ full Economist: bottle ½ WASTED!!
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Whi ch category has the largestshare ofhealth care expendi tures? Hospi tal Care Physi ci an Care Prescri pti on Drugs
The demand and supply Pri c e
Supply
P Demand Q
Number o f pro cedures per mo nth
Uti li sati o n: Uno bserve o bserved d unmet met wants Economic Anademands lysisin Health Care by Morris, Devlin and Parkin Š
2007 John Wiley & SonsLtd
The Si x“D’s” ofOutcomes Research Death
Disease
Disability
Discomf ort
Dissatisf action
Dollars
Assessmento fhealth effects Overvi ew ofthe process:
Identi ficati on
Whi ch outcome measure i s employed depends on the objecti ve ofthe evaluati on. Thi s then determi nes the type ofevaluati on.
Measurement Measure effecti veness notefficacy. Measure (count) i n natural physi cal uni ts. Measure final noti ntermedi ate outcomes. 38
Valuing Human Life( examples) One can also estimate aV HL based on the
pricesthatpeople pay forsafety devicesthat reduce the risk ofdeath.
Price ofsmoke detectorsvs. reduction in fire fatality risks. Premium paid forareaswith lowairpollution vs. reduction in death from clean air. Price ofchildren’scarseatsvs.reduction in auto fatalitieswhen in use.
Requirementsofhealth services
1. Economy.
2. Ef fectiveness. 3. Ef ficiency.
4. V alue formoney {VFM}. 5. Equity.
6. Ethical issues.
Requirementsofhealth services 1. Economy;
We would like the servicesto be inexpensive. Somebody alwayspayseitherdirectly orindirectly.
2. Ef fectiveness;
We expectthe service to be effective we wanteach procedure to produce perceptible health gains{or reductionsin suffering}. The evidence based medicine beginning to influence health care providers.
Requirementsofhealth services 3. Ef ficiency; ď‚—
We expectourservicesto be efficient. Ifwe can deliveran equally effective service in different waysthen we would wantto choose the least expensive.
4. V alue formoney {VFM}; ď‚—
These three requirements, economy, effectivenessand efficiency, come underthe heading ofvalue formoney {VFM}.
Requirementsofhealth services 5. Equity;
Three broad waysofdefining equity in health care; A. Equality ofhealth statusattained. B. Equality ofuse ofhealth care {f orequal need}. C. Equality ofaccessto health care {f orequal need}. Horizontal equity the principal ofequal treatment forequal need. V ertical equity provision ofunequal treatmentfor unequal need.
Requirementsofhealth services
6. Ethical issues;
The behaviorofdoctorsand otherhealth care professional and may putthem into conflictwith those who manage resources. The doctorcould manipulate the situation for financial gain. The patientisprotected from these abusesby the doctor'sethical and professional codesofconduct.
Conclusion ď‚— Because resourcesare limited, health
economistsare concerned with determining whatmedical servicesto produce, howthey should be produced, and who should receive them
ď‚— Aswe will see in thiscourse, the toolsof
economicscan be applied to the health care sectorto derive valuable insightsaboutour health care system
Pointofdiscussion Can each group putahealth care problem in his
local community discussing 1- inputsofsuch problem 2- needed outcomes 3- f actors affecting
Thank you