Health Economics: Introduction and Overview Flashcards
What is the difference between a normative stance and a positive stance with regards to economic analyses?
- A normative stance indicates which allocation decision should be followed if certain objectives are to be achieved.
- A positive stance provides information on the likely costs and benefits associated with a particular alternative course of action.
Define opportunity cost.
The value of the consequences forgone by choosing to deploy resources in one way rather than in their best alternative use.
What is the ‘technical’ definition of efficiency?
Producing output in the best way possible, without wasting scarce resources.
What is the ‘allocative’ definition of efficiency?
Producing the pattern of output that best satisfies the pattern of consumers’ wants and needs.
What is the key objective of economic analyses with regards to healthcare?
To promote the efficient use of health care uses.
Define economic evaluation.
A comparative analysis of alternative courses of action in terms of both costs and consequences.
List 2 main types of economic evaluation in health economics.
1 - Cost effectiveness analyses.
2 - Cost utility analyses.
What is the difference between a cost effectiveness analysis and a cost utility analysis?
- A cost effectiveness analysis has ‘natural’ units, such as lives saved or increased survival, whereas a cost utility analysis does not.
- A cost utility analysis can consider more than one outcome (usually survival and QALYs), whereas a cost effectiveness analysis has one single outcome.
What is an incremental approach to economic evaluation?
An incremental economic evaluation answers the following question:
What is the difference in costs and consequences of option A compared to B?
Define marginal benefit.
The increase in benefit as a result of increasing production by one additional unit.
Define marginal cost.
Give an example of marginal cost.
- The increase in cost as a result of increasing production by one additional unit.
- E.g. to detect another cancer after the 6th test (where usually 99% of the cancers have already been identified) the marginal cost is $47m, as it becomes increasingly difficult to detect any more.
Define incremental cost.
The difference in marginal cost between two different programmes that share the same outcome.
How are the results of cost effectiveness analyses presented?
In terms of cost per unit effect.
What type of efficiency question do cost effectiveness analyses address?
Technical efficiency questions.
How is a decision ruled in cost effectiveness analyses?
By using an ICER (incremental cost effectiveness ratio).
