Health economics

• Business


  Activity of making, buying, selling or supplying goods/services for profit
• Entrepreneurship


  Activity of making, buying, selling or supplying goods/services for profit...but with a purpose of making a difference. Goal is to change a perspective by addressing a problem
• Health economics


  A branch of economics concerned with issues related to efficiency, effectiveness, value and behaviour in the production and consumption of health and healthcare
• Role of Health Economics

  • Allocation of resources between various health activities
  • Quality of resources used in healthcare
  • The efficiency with which the resources are allocated & used for healthcare purpose
  • The effects of comprehensive health services on individual and society
  • Covers the medical industry as a whole and also extends the economic analysis to costing of disease, benefits of a health programmes and returns from investments
  • How best the limited resources be used on preventive, curative and rehabilitative services to maximise the health status of a community
  • How to promote the efficiency of the health sector
• Areas of health economics

  • Cost of health care: Cost of healthcare include all those services or facilities to promote human well being
  • Health problem: The study of health economics also concentrates on health as an important economic indicator of economic development. It deals with the correlation between health industry and economic development
• Demand


  Desire accompanied by ability to pay and willingness to pay for a product or service in a market> Must be elastic or inelastic
• Elastic demand


  Change in price leads to a large change in demand
• Inelastic demand


  Change in price leads to a small or even no demand change
• Market


  An economic environment where buyers and sellers of goods and services interact for purchase and sale for mutual benefit. Market is extended forms local to international and covers almost all the goods (both private and public goods) and services which are consumed directly or indirectly
• Elements of Health Economics

  • Microeconomics: How individuals make decisions in responses to changes in incentives, prices, resources and/or methods of production within a given health care system
  • Macroeconomics: Study of aggregate national income and expenditure, aggregate demand and consumption, aggregate investment level in both private and government sectors
• Factors that Determine the Price and Quantity of Health Care

  • Total cost: Money the Govt. spends on health care facilities, costs of identifying & treating diseases, costs of equipments, costs of building & other facilities, treatment charges etc.
  • Fixed cost: Do not increase due to increase in various functions or activities. Eg; cost of building, cost of x ray machine etc.
  • Variable cost: Vary with the amount of service rendered. Eg;cost of x ray films according to no. of x rays taken
  • Opportunity cost: Loss to the community due to failure to use the available resources/ technologies or institutions in the best possible way
• Two Explanations for Why Health Care in the United States Is More Expensive Than in Europe

  Supply and demand offers two possible explanations: demand in the United States is high, or supply in the United States is limited
• Health Entrepreneurship


  • Healthcare entrepreneurship occurs when healthcare-minded professionals create new businesses, often through developing services, tools or ideas. Successful business ventures typically meet or supplement a current unfilled need in the marketplace or identify a previously unseen problem and potential solution
  • Examples: Telemedicine and remote monitoring, Home health services, Security and Data Integrity, Start-ups
• GNP


  Gross income generated within the country and income received from abroad
• GDP


  Gross income generated within the country excluding the money from abroad
• Microeconomics


  How individuals make decisions in responses to changes in incentives, prices, resources and/or methods of production within a given health care system
• Macroeconomics


  Study of aggregate national income and expenditure, aggregate demand and consumption, aggregate investment level in both private and government sectors
• Poverty Line


  The level of income needed to meet the minimum standard of living
• Per Capita Income


  The income per person
• Fixed Cost


  Do not increase due to increase in various functions or activities. Eg; cost of building, cost of x ray machine etc.
• Variable Cost


  Vary with the amount of service rendered. Eg;cost of x ray films according to no. of x rays taken
• Oppoprtunity Cost


  Loss to the community due to failure to use the available resources/ technologies or institutions in the best possible way
• Total Cost


  Money the Govt. spends on health care facilities, costs of identifying & treating diseases, costs of equipments, costs of building & other facilities, treatment charges etc.
• Market


  An economic environment where buyers and sellers of goods and service's interact for purchase and sale for mutual benefit.