MSS28 Health And Wealth Opportunity Cost And Productivity In Low Back Pain Flashcards
Characteristics of health care sector
- complex, complicated structure
- ***asymmetric information and uncertainties
- unique institutional characteristics - adoption of competitive economic practices
- ***barriers of entry, licensing and certification
- ***manpower, costs of training
- health policies and regulations
- organization and practices of the health insurance industry
Health economics
Study of allocation of resources to and within health economy
- Use of models, economic theories and assumptions in rational decision making
- Valuation of health + health services
- Scarcity of societal resources
- Costs and benefits analysis
- Resource allocation
- Marginal analysis
- Strategic planning
- Health insurance
***Healthcare Financing
Sources of money:
- Tax revenue
- General revenues
- Capital investments
- Patient charges
- Voluntary health insurance
- Social insurance contribution
- Private insurance
Paying for healthcare
Households:
- General taxation
- Social insurance
- Private insurance
- User charges / copayments (out-of-pocket)
–> Healthcare budget –>
Providers:
- Capitation payments
- Salaries
- Fee per item of service
- DRG (diagnosis-related group: determine how much to pay the hospital for each “product” since patients within same group expected to use the same level of hospital resources)
***Basic ideological perspectives, political philosophies regarding health policy
- Libertarian (自由主義):
- **Market forces (demand versus supply)
- Individually oriented policies
- User charges (extensive copayments and deductibles)
- Efficiency benefits
- Consumer directed
- **No welfare/health care rights
- Charities assist the poor - Collectivists (集體主義):
- Health care is equity (**social responsibility)
- Response to market failures in health care provision
- Better **regulation of providers
- Robust ***consumer protection - Utilitarians (效益主義):
- **Social utility consideration
- Preventing/curing disease/disability that contribute to aggregate welfare
- Can enhance **productivity of the workforce - Liberal Egalitarians (平等主義):
- Social justice - equalism
- Rights to **equality of opportunity
- Aim to keep people functioning as close to normal as possible
- Use **individual responsibility as a criterion for distribution of scarce resources
Organisation of care delivery
Need for care: Healthy (not seeking care) --> Primary --> Secondary --> Tertiary (↑ money for care)
Financing paradox
More health care expenditure on less need ecology
***Microeconomic tools for health economics
- Scarcity
- Opportunity costs
- Need-Demand-Supply
- Market mechanisms
Healthcare resources
2 types:
- Tangible: hospitals, equipment, drugs
- Intangible: staff expertise, time, doctor-patient relationship
Scarcity
Resources are valuable but scarce i.e. limited
–> use them for one purpose we cannot use the same resources for another purpose
Opportunity costs
When we use resources in one way we cannot use them in another way
–> Sacrificing some benefits
Need-Demand-Supply
Should overlap as much as possible
- some cases may not have demand / need / supply
e. g. Vaccination
- have need
- have supply
- but not desired due to SE
Plastic surgery
- have demand
- have supply
- but no need
- -> may then sacrifice some resources for something not needed
Spondylolisthesis (displacement of one vertebra compared to another)
- Need: patient need less invasive treatment
- Supply created: clinical researchers developed a new method
- Demand: a lot from doctors, patients and families
Market mechanisms
Supply and demand analysis:
- Economic model for ***price determination in a competitive market
- Results in an ***economic equilibrium for price and quantity transacted
- Demand-increasing / decreasing events tend to raise/lower equilibrium price
- Supply-increasing / decreasing events tend to lower/raise equilibrium price
Variables affecting demand and supply
- income
- other prices
- insurance
- tastes
- technological change
- input change (supply)
- prices of production
- size of industry
- regulations
Consumer theory:
- Utility (what consumer prefer)
- Budget constraints (what consumer can afford)
Price elasticity:
- Responsiveness in quantity demanded to changes in price
***Specificity of health care market in market mechanisms
- Uncertainty
- ***Expert knowledge
- patient do not have as much knowledge as doctors - ***Asymmetry of information
- more information –> more advantages –> ∴ need to be regulated - Provider’s moral hazard (even patient want provider do not give)
- Consumer’s moral hazard
- Government regulations
***Economic efficiency
Making optimal use of scarce resources to help satisfy changing needs and demands of patients/consumers
- -> highest-valued use
- -> Maximising the benefits from the use of resources
- -> Important for evaluation of alternatives
5 methods:
- Cost-Benefit analysis
- Cost-Effectiveness analysis
- Cost-Utility analysis, QALYs and DALYs
- ICER (incremental cost-effectiveness ratio)
- Valuing human life (not always highest-valued use)
Equity
- Fairness
- Hong Kong is committed to providing equitable healthcare
- an efficient way of spending resources may not be equitable (vice-versa)
- ***Balance between efficiency and equity: determined by decision-makers/society
Inverse care law
- Julian Tutor Hart
- Availability of good medical care tends to vary inversely with the need of the population served
- operates more completely where medical care is most exposed to market forces
- Inverse laws are commonplace, and arise because of inequality + lack of social justice
WHO on reaching universal health coverage through:
- ***Raising funds for health
- Reducing financial barriers to access through prepayment and subsequent ***pooling of funds over direct out-of-pocket payments
- Using funds in a way that ***promotes efficiency and equity
Cost analysis
Economic evaluation technique that involves the systematic collection, categorization and analysis of
- ***Costs of Program intervention
- ***Costs of illness (COI)
- -> Allow to identify the least costly method to obtain a certain level of output
- -> Attempts to evaluate the opportunity cost of a program intervention
Why is Cost Analysis important
- Provides a monetary estimate for the ***economic burden of disease
- Planning and cost ***projections (budget, funding)
- Provides information on health resources allocation
- Tracking expenses
- How health resources are distributed among various population (equity)
- Comparing cost from equally effective programs
When can we use Cost Analysis
Stand-alone evaluation method:
- for one program intervention only
- for comparison of two or more interventions that are equally effective
Together with effectiveness assessment techniques in:
- Cost-Effectiveness analysis
- Cost-Utility analysis
- ICER
Low back pain cost
- Private:
- hospital
- specialists
- GP - Public:
- tertiary hospital
- specialist
- GOPC - Chinese practitioner
- A/E
- Products / service:
- Imaging
- Conservative treatment
- Pain killers
- Stretching exercises
- Complementary and Alternative Medicine
- Surgeries
Cost of illness (low back pain)
Value of the resources that are expended or foregone as a result of health problem
- Direct: consultation cost, physiotherapy
- Indirect: cleaning staff, maintanence of theatre
- Tangible: treatment
- Intangible: expertise, patient-doctor relationship
Burden of disease
Mortality - Morbidity - DALY - YLD
- DALYs: the ***sum of years of healthy life lost to premature death and years lived with disability
- YLDs (years living with disability): ***years lived in less than ideal health: includes conditions that may last for only a few days / a lifetime
LBP cost
Globally:
- Highest YLD
- Health care utilisatio
- Increasing trend (aging)
- Increasing direct costs to medical system
- Increased indirect costs to medical system and society:
- -> Lower labor productivity
- -> Increased economic burden: more than 100 million workdays lost
Hong Kong: LBP one of the leading causes for YLDs and DALYs
China: 2nd leading course of YLD
Peak age category: 35-49 (most years lived in less than ideal health)
***Summary: Decide if a new intervention/diagnostic method for LBP should be subsidised by the public health resources
Principles and major economic concepts to consider:
- Healthcare financing, Scarcity, Healthcare resources, Healthcare policies
- Need-demand-supply, Opportunity cost, Equity, Efficiency
- Cost of illness
- Chronic, non-fatal illnesses can have a very high cost
- Complications / Ageing with unhealthy lifestyles will increase the cost - Disease burden: YLDs, DALYs
- Ethical principles
