What is Health Economics?
Health economics tackles this problem of scarcity of resources and the implicit requirement to make choices that will maximise the benefit accrued from their consumption (Goodacre, 2002)
How does Health link to Economics?
Healthcare is intrinsically linked to economics as it a major component of spending, investment, and employment
Decisions regarding funding/provisions/distribution for healthcare move in motion with the state of the economy … responses to healthcare are increasingly informed by economic ideas/analysis
- UK: 9.7% of GDP is spent on healthcare
- In England alone, the budget for health and social careis £139.3 billion in 2019/20
- Directly employed staff in the NHS account for around 1 in 25 of the working age population (Appleby, 2012)
Definition of Health Economics?
Application of economic theory, models and empirical techniques to the analysis of decision making by people, health care providers and governments with respect to health and health care
What type of good is healthcare?
Economic good: goods/services that are scarce relative to society’s wants for them
- Resources used to produce healthcare services [labour, capital, raw materials] are finite … if society wants more resourced directed to healthcare, it must divert away from other uses
What are the 2 features of economic evaluation?
(Drummond et al., 2015)
- Deals with inputs/outputs of alternative actions
- Inputs: costs … value of extra resources involved in providing a treatment/intervention (loss to other patients)
- Production function: current and new treatment
- Outputs: consequences … value of health gain for this patient group
2.Concerns itself with choices … resources are limited and our consequent inability to produce all desired outputs, necessitates that choices will be made in all area of human activity
Why do we need economic evaluation?
(Drummond et al., 2015)
- Identify clearly the relevant alternatives to existing activities
- Make choices and decisions about how our resources are used
- Identify and make explicit the criteria (social values) that are applied when decisions are made on others’ behalf
- Identity the perspective/viewpoint assumed in analysis
- Provide useful information to patients and clinicians when making choices about healthcare
- To increase the explicitness and accountability in decision-making
What is the NHS?
The NHS in the UK is publicly financed providing universal health care that is primarily free at the point of access
Built on the concept of providing universal health coverage
Estb. in 1948
Each of England, Northern Ireland, Scotland and Wales, whilst adhering to the principle of free health care for all, has its own health care system
- NHS England (>80% of the total budget)
For our purposes – with regard to decisions regarding health / healthcare in the UK, this largely means advising on how to meet goals of NHS.
- Most notably: maximise population health
What is NICE’s role?
National Institute for Health and Care Excellence is an executive non-departmental public body of the Department of Health in the United Kingdom, which publishes guidelines in four areas:
- the use of health technologies within the National Health Service (NHS) (such as the use of new and existing medicines, treatments and procedures)
- clinical practice (guidance on the appropriate treatment and care of people with specific diseases and conditions)
- guidance for public sector workers on health promotion and ill-health avoidance
- guidance for social care services and users
Assumptions made in Economic Evaluation of Healthcare?
- Fixed healthcare budget from which we want to produce as much health as possible
- Allocating resources to one healthcare intervention means fewer resources available to other interventions (opportunity costs) – ∴ healthcare is excludable and rivalrous
- Committing more resources to health means less resources available elsewhere – such as for education, or for private consumption
