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Lecture to the Health Economics module of the Diploma of Clinical Research Coordinators by Omar Hasan Kasule Sr Professor of Epidemiology and Bioethics August 9, 2020 11.00-12.00
1.0 THE USES OF ECONOMIC ANALYSIS
• Rising expenditures in health care have forced economic analyses to understand the behavior of the medical care market and to find ways of controlling costs.
• Problems of quality and access persist despite increasing expenditure.
• Hospital expenditure is the biggest component of health care expenditure yet epidemiological data over the past century shows that preventive, socio-economic, environmental, and lifestyle factors have had a bigger impact on health than curative medicine.
• Why is hospital expenditure rising?: more utilization of health care services, use of higher quality and therefore more expensive services, and increase in the price of services.
2.0 THE PURPOSE OF ECONOMIC ANALYSIS IS TO EVALUATE PROJECTS AND MAKE DECISIONS
• There are 4 basic types of economic evaluation in public health: cost minimization, cost-benefit analysis, cost-effectiveness analysis, and cost-utility.
• Cost minimization is the easiest of the economic evaluations because it uses monetary units directly to make a decision. It is the choice of the least costly of 2 or more interventions that have the same effectiveness or outcome.
• Cost-benefit analysis is an economic appraisal that addresses allocative efficiency. It compares marginal benefit to marginal cost.
• Cost-effectiveness analysis addresses meeting given objectives at least cost. CEA minimizes costs and is the first stage of CBA. Interpretation must take into account general background data such as population, total employment, and gross domestic product.
3.0 ASSUMPTIONS OF ECONOMIC ANALYSIS
• Free/perfect competition
• Rational & sovereign consumer behavior
• Abstraction
• Marginal analysis
4.0 CONTROVERSIES OF ECONOMIC ANALYSIS IN HEALTH
• Scarcity vs maldistribution
• Health as a commodity
• Consumer sovereignty
• Dimperfect market: problem of the supplier-induced demand, what is price in health? Restricted competition
• Government intervention