HEALTH ECONOMICS

Question 1

What is health economics?

Answer 1

The study of how scarce resources are allocated for the care of sickness and the promotion, maintenance and improvement of health

using resources efficiently to improve the population’s health.

Question 2

What is rationing?

Answer 2

The fair distribution of resources that are scarce

Question 3

Why is health economics important?

Answer 3

Healthcare resources are limited to we need health economics to understand how to allocate them
It can help us design healthcare systems that are more efficient and effective
Provide insight into how health policies and regulations impact the healthcare industry and population health
Crucial for addressing global health challenges e.g. burden of infectious diseases
Help incentivise innovation by understanding how new technologies and treatments can be developed and distributed efficiently

Question 4

What is supply?

Answer 4

The quantity of goods or services that producers are willing and able to offer for sale e.g the amount of hospital beds

Question 5

What is demand?

Answer 5

Quantity of goods or services that consumers are willing and able to buy e.g. demand of knee replacement surgeries increasing due to an aging population

Question 6

What is opportunity cost?

Answer 6

The potential benefits that you miss out on when choosing one alternative over another

For example, in healthcare, a hospital may choose to invest in new medical equipment for treating cancer patients. However, the opportunity cost of this investment is the value of the next best alternative use of those resources, such as investing in new equipment for treating heart disease patients. The hospital must weigh the benefits of investing in cancer treatment versus investing in heart disease treatment and determine which option provides the greatest benefit for the resources used.

Question 7

What is law of supply and demand?

Answer 7

if the supply of goods or services outstrips demand, prices will fall. If demand exceeds supply, prices will rise. In a free market, the equilibrium price is the price at which the supply exactly matches the demand.

For example, If the demand for a particular healthcare service, such as knee replacement surgeries, increases due to an aging population or a rise in obesity-related conditions, the price of the service may increase due to limited supply. As the demand for knee replacement surgeries increases, the supply of orthopedic surgeons and hospital beds may become limited, leading to higher prices for the surgery.

Question 8

What is cost effectiveness ratio?

Answer 8

Ratio of costs to outcomes

Question 9

What is the incremental cost effectiveness ratio?

Answer 9

A summary measure representing the economic value of an intervention compared with the alternative
The difference of the total costdivided by the difference in outcomes to give a ratio of ‘extra cost per extra unit of health effect’

Question 10

What are patient reported outcome measures?

Answer 10

assessments of a patient’s health status or health-related quality of life based on the patient’s own perception and experiences. PROMs are usually self-reported questionnaires
They assess the quality of care from the patients perspective e.g. SF36, would they return, were they satisfied

Question 11

What are QALYs?

Answer 11

Quality Adjusted life years
These provide a summary measure of morbidity and mortality
Life expectancy is weighted by a factor indicating health related quality of life
The weights are anchored at 1 (perfect health) and 0 (a health state considered to be as bad as death)
It’s a summary outcome measure used to quantify the effectiveness of a particular intervention

Question 12

What are disability adjusted life years?

Answer 12

One DALY represents the loss of the equivalent of 1 year of full healthy
They are are sum of the years of life lost due to premature mortality and the years lived with disability due to prevalent cases of the disease or health condition in a population

Question 13

What are microeconomic models in health economics?

Answer 13

Microeconomic models focus on the decisions made by individuals or firms within a healthcare market. These models are used to evaluate the behavior of patients, healthcare providers, and insurers, and to understand how changes in healthcare policies and incentives affect these stakeholders. Examples of microeconomic models include demand and supply models, cost-benefit analysis, and cost-effectiveness analysis.

Question 14

What are macroeconomic models in health economics?

Answer 14

Macroeconomic models focus on the overall healthcare system and its relationship to the broader economy. These models are used to evaluate the impact of healthcare policies on economic outcomes such as employment, inflation, and Gross Domestic Product (GDP). Macroeconomic models are often used to inform policy decisions at the national or regional level.

Question 15

What is cost-effectiveness analysis?

Answer 15

Compares the costs of different healthcare interventions to see which one is the most effective in achieving a specific outcome (e.g. number of lives saved)
E.g. comparing the cost per QALY of 2 different drugs for treating breast cancer
It produced a cost per unit effectiveness

Different to cost-utility as it uses specific health outcome measures

Question 16

What is cost-benefit analysis?

Answer 16

Compares the costs and benefits of healthcare interventions in monetary terms
Estimated monetary value on benefits of intervention - estimated cost of intervention
E.g. compares the cost of a new drug with the monetary value of lives saved by the drug

Question 17

What are cost-utility analysis?

Answer 17

one type of economic evaluation that can help you compare the costs and effects of alternative interventions. CUA measures health effects in terms of both quantity (life years) and quality of life. These are combined into a single measure of health: quality-adjusted life years (QALYs).

Cost of intervention / number of QALYs gained = cost per QALY

Question 18

What are the pros and cons of cost-benefit analysis?

Answer 18

Pros - can include non-health benefits, decisions are transparent as costs and effects are measured in the same unit, can inform resource allocation decisions across different healthcare settings

Cons - can be complex and requires a high level of technical expertise, subject to uncertainty and bias, one dimensional (addresses quantities or quality, not both)

Question 19

What are the pros and cons of cost-effectiveness analysis?

Answer 19

Pros - clinical outcomes are straightforward to measure
Cons - cannot inform broader resource allocation decisions across different diseases as health benefits will often be measured in different units

Question 20

What are the pros and cons of cost-utility analysis?

Answer 20

Pros - QALYs show health benefits in both quantity and quality, allows comparison across different health interventions by using a common unit of effect, can inform resource allocation decisions across different healthcare settings
Cons - QOL measures tend to be more subjective than clinical measures, generic health-related quality of life instruments can be less accurate at capturing subtle health effects, does not capture non-health effects

Question 21

What is cost minimisation analysis?

Answer 21

Compares the costs of different interventions that have equivalent clinical outcomes. I.e. it assumes the interventions have the same effectiveness and is only concerned with identifying the least expensive option

Question 22

What is the concept of elasticity in health economics?

Answer 22

The responsiveness of demand or supply to changes in price or income

Question 23

What is the Triple Aim?

Answer 23

A concept to improve population health and patient experience whilst decreasing the costs of care

• improving the health of populations
• enhancing pt experience of care
• reducing the cost of healthcare services

Question 24

Which economic evaluation tool is best suited for comparing two or more interventions that have different effectiveness outcomes?

Answer 24

Cost effectiveness analysis (as it allows for comparison of costs and outcomes in a common metric e.g. cost per life saved)

Question 25

What is the difference between a cost-benefit analysis and a cost-utility analysis, and when would you use each tool?

Answer 25

Cost-benefit - compares the costs and benefits of an intervention in monetary terms
Cost-utility - uses QALYS to measure effectiveness of an intervention

Cost-benefit - used when there are non-health benefits or costs that can be measured in monetary terms
Cost-utility - when benefits of an intervention are primarily related to health outcomes

Question 26

What is a threshold analysis?

Answer 26

Used to determine the level of effectiveness/cost at which an intervention becomes cost-effective
Used to identify the minimum level of effectiveness required for a new intervention to be considered cost-effective compared to an existing intervention

Question 27

What are the limitations of using QALYs as an outcome measure?

Answer 27

Subjective
Difficulty of measuring quality of life
Potential for bias in the weights assigned to different health states

Question 28

When might a cost-minimization analysis be more appropriate than a cost-effectiveness analysis?

Answer 28

When 2 or more interventions are equally effective but have different costs

Question 29

What is sensitivity analysis and how can it be used to assess the robustness of economic evaluations?

Answer 29

It examines how changes in key assumptions/parameters affect the results of the analusis
Helps identify the most important drivers of cost-effectiveness and helps decision makers understand the level of uncertainty associated with the results of the analysis

Question 30

What is the difference between microeconomic evaluation and macroeconomic evaluation and when would you use each approach?

Answer 30

A microeconomic evaluation focuses on the costs and benefits of a specific healthcare intervention (supply and demand) = bottom up approach
A macroeconomic evaluation considers the broader economic impact of the intervention on society as a whole = top down approach
A microeconomic evaluation is typically used to inform decisions about the allocation of resources within a healthcare system, while a macroeconomic evaluation is used to inform decisions about broader public policy issues.