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Health Economics Notes Compress
Health Economics Notes Compress
Economics
Definition:
1.Economics is the science that deals with production, distribution and consumption of
commodities. - J.B Say
2. The study of how individuals and societies choose to allocate scarce productive resources
among competing alternative uses and to distribute the products from uses among members of
the society. - World bank
1. Micro economics : which deals with individual agents such as households and business
2. Macro economics : which considers the economy as a whole in that it considers aggregate
supply and demand for money, capital and commodities.
Health economics
Definition:
Health economics is a social system that studies the supply and demand of health care resources
and the effect of health services on population.
Health economics is a branch of economics concerned with issues related to scarcity in the health
markets.
To promote efficiency and equity in the health care sector by providing analytical
techniques to decision makers or health planners.
To provide way of thinking about health and use of health care resources.
To provide a process for recognizing the scarcity and the need to make choices in health
care sector.
To maximize the social benefits from health producing resources.
Cost containment strategies and improving the affordability of health services:
Competition : Competition renders more players in the market, thereby forcing them to
cut short the prices. But there should be regulatory systems by the government to control
the competition and to keep the prices stable.
Price control : There exist certain government restrictions on the prices that can be
charged for goods and services. There are two forms of price control;
a price ceiling- maximum price that can be charged
a price floor- a minimum price that can be charged
Managed care : Managed care includes a variety of techniques intended to reduce the cost
of providing health care benefits and improve quality of care. The techniques include
A set of designated doctors and health care facilities known as provider network.
Explicit standards to select providers
Formal utilization review and quality improvement programs
An emphasis on preventive care
Financial incentives to encourage enrollees to use care efficiently.
Use of generic drugs: A generic drug is any drug marketed under its chemical name
without advertising. Generic drugs are subject to regulations of Governments of
countries where they are dispensed. Need for clinical trials for drugs are reduced and cost
of advertising / promotion of drug can also be saved.
Health promotion and illness prevention : Health promotion and illness prevention
strategies can effectively reduce the cost of health care. More importance to preventive
care is being provided. Control programs for diseases, immunizations, MCH activities,
safe water supply , school health programs, various social security measures etc can
effectively control the disease burden in the community and there by cut short the costs.
Demand
Demand means the desire to buy or consume something. In economics demand refers not only to
desire but also ability and willingness to buy goods or services.
Definition:
The ability and willingness of a buyer to pay a price for a specific quantity of goods or services.
Types of demand :
The term supply refers to anything which is offered for sale. In economics , supply of a product
during a given period of time means the quantities of goods which are offered for sale at
particular times. Supply is always referred to in relation price and time. Supply expands with ris
in price and contracts with fall in price.
Definition :
The amount of a product that producers and firms are willing to sell at a given price when all
other factors are held constant.
The supply of a commodity depends not only on the price of the commodity but also on many
other factors. They are as follows.
1. Cost of production: Cost means the expenses incurred by the producer on various factors
of production like rent, wages and capital. The cost of production determines the supply.
If there is a change in cost of production, we can also expect variation in supply.
2. The level of technology: The supply of a product depends upon the technology used in
production. Advancement in science and technology influences the production process in
a firm.
3. Government policies : Government policies in respect to particular product or service
also determine the supply.
4. Other factors : Other factors like weather conditions, floods and droughts, epidemics,
wars also cause fluctuation in the supply of goods.
Cost is the price paid or required for acquiring, producing or maintaining something. This
includes money, time or energy expenditure.