Lecture 5.1: Health Economics and Economic Evaluation Flashcards
What is Health Economics?
It is the study of how scarce resources are allocated among alternative uses for the care of sickness and the promotion, maintenance and improvement of health
What are Resources?
They are basic inputs to production – time, abilities, capital, natural resources
What is Scarcity?
Means that there are not enough resources to satisfy all demands and needs. It has 2 sides – the infinite nature of human wants and the finite nature of the resources available
What is Economics?
It is the study of how individuals and societies choose to allocate scarce resources among competing alternative uses, and how to distribute the products from these resources
How Can We Allocate Resources? (2)
- State as sole provider
- Free market
When was the NHS set up?
1948
Reimbursement of Doctors: Capitation
- Periodic, fixed payment per patient
- GPs rewarded for having a greater number of patients
in their lists
Reimbursement of Doctors: Salaries
- Fixed amount of money at the end of the period
- e.g. Consultants
Reimbursement of Doctors: Fee For Service
- After performing a procedure, physician receives a set
amount of money - e.g. consultants in USA
Aim of NHS
“Securing the provision of comprehensive, high quality care for all those who need it, regardless of their ability to pay or where they live”
Systematic Methods for Rationing Healthcare Resources (7)
- Need
- Discrimination (e.g. by age, smokers …)
- Personal merit and social esteem
- Lottery
- Ability to pay (free market approach)
- Choose lowest cost treatments
- Choose treatments that are effective (Evidence based
medicine) - Cost-effectiveness (Economics based medicine)
What is Economic Evaluation?
“The comparative analysis of alternative courses of action in terms of both their costs and their consequences”
What is the outcome of cost-minimisation?
Equal effectiveness and safety of interventions
What is the outcome of cost-effectiveness?
Natural units (e.g. life years, cases detected)
What is the outcome of cost-utility?
Quality Adjusted Life Years (longevity and quality of life)
What is the outcome of cost-benefit?
Monetary valuation of outcomes
Measuring Health Outcomes: Natural Units (4)
- Cases detected (breast cancer screening)
- Cases prevented (cholesterol level lowering drugs)
- Symptom-free days (asthmatreatment)
- Life years gained (LYG)
Measuring Health Outcomes: Quality Adjusted Life Years (2)
- Considers impact on length and quality of life
- Comparable across interventions
Measuring Health Outcomes: Disability Adjusted Life Year (DALY)
- One DALY represents the loss of the equivalent of one
year of full health - DALYs for a disease or health condition are the sum of
the years of life lost to due to premature mortality
(YLLs) and the years lived with a disability (YLDs)
How are QALYs constructed/calculated?
- Periods of time in less than full health are weighted on
an interval scale of 0-1 (0=death,1=full health) - This is the ‘utility’ value
- These weights are then multiplied by the duration of
time spent in the health state to obtain QALYs - Utility (u) x time in years (t) = QALY
What is Opportunity Cost?
The potential benefits which are sacrificed when resources are committed to one purpose rather than another
