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Basics of health economics.pptx
- 1. Basics of health economics Presenter- Dr Naveen Shyam Department of community medicine, SNPH,MGIMS ,sevagram 1
- 3. Economics ?? Economics is the study of how individuals and societies choose to allocate scarce productive resources among competing alternative uses and to distribute the 'products among the members of a society 3
- 4. Health economics The study of how scarce productive resources are allocated among alternative uses for the care of sickness and the promotion, maintenance and improvement of health. Also, how health care and health-related services, their costs and benefits, and health itself, are distributed among individuals and groups in society. 4
- 5. Concept of equity and equality 5
- 6. What is equity? Equity in health can be defined as the absence of systematic disparities in health between social groups who have different levels of underlying social hierarchy. Equity is not the same as Equality. Equity implies a value judgment about a situation- i.e. it is about fairness equity makes value judgments on the basis of measurements of equality 6
- 7. Progress Model The Rockefeller Foundation has developed the Progress Model which shows some of these factors that can be implicated in health inequities: 7
- 8. Defining Efficiency get the 'most' out of scarce resources 8 Health services Determinants of health Determinants of well being primary care education consumer products hospital services income security programs transportation pharmaceuticals safe workplace
- 9. The Three Main components of Efficiency Do not waste resources; Produce each output at least cost; and Produce the types and amounts of output that people value most 9
- 10. Elements of efficiency Technical Efficiency Cost-effectiveness Efficiency Allocative Efficiency Pareto Efficiency Marginal Analysis 'doing things right' 'doing the right things' 10
- 11. The Nature of Demand When economists talk of 'demand' in the market place, they are talking about consumers who want something and are able and willing to pay for it the economist says that demand becomes effective when customers come forward and express their wants in a willingness and ability to pay. Thats what makes a market possible 11
- 12. The Demand Curve The starting point in analyzing demand is to construct a Demand Curve, which requires three things: 1. Quantify how much of a good or service people want and will demand at different prices; 2. Get real data from functioning markets and record how demanded quantities increase or decrease, as prices increase or decrease; and 3. Plot the data to make the actual Demand Curve. 12
- 13. Elasticity of Demand To better understand and characterize demand, economists want to know the rate at which the quantity of a good or service changes with a change in price. Does demand fall a lot when the price increases, a modest amount, very little, or not at all? If demand changes a lot when the price changes, we say that demand is relatively elastic. If demand changes only slightly when price increases, we say it is relatively inelastic. 13
- 14. Analysing Supply Clearly, the quantity of health consultations supplied in the market varies directly (or positively) with price. The higher the price per health consultation, the more providers will supply. 14
- 15. Shifters Demand Shifters Number of Consumers Price of Substitutes Supply shifters Number of Suppliers Costs of Inputs New Technologies 15
- 16. Supply of Health Services Many countries have a wide variety of the supply of health services throughout different areas of the country. Usually the supply of health services in urban areas is better than in rural areas 16
- 17. Bringing Supply and Demand Together 17
- 18. Efficient Allocation of Societys Resources Step 1: MC = MU Step 2: MC = P = MU 18
- 19. The Market Concept The nine conditions for competitive markets are as follows 19
- 20. Submarket , supply , demand with health 20
- 21. Components of Economic Evaluation Cost-Effectiveness Analysis Cost-Utility Analysis Cost-Benefit Analysis 21
- 25. When to use Cost-effectiveness analysis ? Cost-effectiveness analysis is only suitable to compare programs that have the same outcomes and where there is a clearly dominant outcome of primary interest. In comparing different kinds of life saving programs (e.g. kidney dialysis and transplantation, emergency air ambulance system, trauma care), by using lives saved, or more likely, life years gained as the common measure of effect. However, even this is problematic if any of the programs have an effect on quality of life as well as quantity of life. 25
- 26. When to use which technique? 26
- 27. Components of Economic Evaluation The resources consumed by the program (costs) fall into three sectors: (1) The health care sector (2) Patient and family and (3) Other sectors The consequences consist of two main categories: (1) Resources saved in each of the three sectors discussed above and (2) Health effects. 27
- 28. Overall understanding of health economy evaluation 28
- 29. WILLINGNESSTOPAY (WTP) method used to convert health changes to their equivalent dollar amounts WTP questions can be asked in a number of different ways and these have different implications for the analysis 1. WTP questions can be asked regarding only the actual health change achieved 2. WTP questions can be asked for the whole program (Global WTP),encompassing how much they are willing to pay to achieve all of the consequences 29
- 30. Informational asymmetry; agency issues; supplier induced demand 30
- 31. Monopolies and incomplete/unsustainable markets Sometimes there are only a few suppliers of some health interventions. In this case they can dictate prices at which services or goods are provided and this creates a problem for the affordability and accessibility of health care 31
- 32. Role of Government Regulations Taxes and subsides Public provision Public Information Campaigns 32
- 33. How much are we spending? An important policy concern for health systems is the extent to which the level and type of health spending reflects the health needs of the population The Burden of Disease can be viewed as the gap between current health status and an ideal situation in which everyone lives until an old age free of disease and disability. 33
- 35. Cases studies Developing evidence to support introduction of a point of care NAAT for chlamydia and gonorrhea in the UK Family finances and disability: the cost of raising children with disabilities Economic Analysis of Health Projects: A Case Study in Cambodia 35
- 36. Economic Analysis of Health Projects: A Case Study in Cambodia A. Least Cost Analysis Determine the social cost of capital in real terms Using the social cost of capital, discount the stream of economic costs over the life of the project alternatives to arrive at net present values Calculate the equalizing discount rate of the two lowest cost alternatives Determine the least cost alternative and make recommendations B. Calculation of the Economic Internal Rate of Return 1. Economic Benefit Assumptions 2. Economic Cost Assumptions 3. The Economic Internal Rate of Return C. Preliminary Assessment of the Incidence of Benefits 36
- 37. Supplier the doctors problem In most countries, physicians are licensed by a professional association or by the government after completing a long course of study. The long duration of the training and the licensing puts a barrier at the entry point in the market. Prospective new doctors must prove that they are fully qualified before they can enter the market. 37
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