2. Introduction:
We live in a world where resources are limited. Therefore, health economics plays a role in
informing decision-makers (patients, caregivers, and physicians) on which health treatments,
medications or interventions to support, and from which areas to disinvest, in order to maximize
the patient’s benefit. Once healthcare decision-makers have accepted the need for choice, they
must inform that choice by prioritizing competing interventions through the analysis of their
costs and benefits. Health economics reflects a universal desire to obtain maximum value for
money by ensuring not just the clinical effectiveness, but also the cost-effectiveness of healthcare
interventions.
Objectives:
Health economics research has two major objectives: a) to compare the relative values of
alternative therapies; and b) to improve the patient’s health through informed decision-making.
Economic evaluations are often formulated in terms of a choice between competing
interventions. In an economic evaluation, the choice of a perspective (or a point of view from
which a study is designed) has an important effect on the cost components to be included in
the evaluation.
In addition to understanding the perspective, a number of approaches are
available to compare the costs and impact on health outcomes, those are the
followings:
Cost Minimization Analysis:
This approach compares the costs of alternative forms of treatment or
management that produce equivalent health outcomes
• Cost-benefit analysis:
In cost–benefit analysis the benefit is measured as the associated economic
benefit of an intervention, and hence both costs and benefits are expressed
in monetary values. Cost benefit analysis are commonly used by public
health policy makers at local, state and national levels, as well as by
hospital authorities while introducing new interventions and while making
competing decisions about which interventions to introduce to maximize
the benefit to patients
3. • Cost-effectiveness analysis:
Cost-effectiveness analysis is a ratio of the difference in costs to the
difference in effectiveness of the interventions under consideration.
• Cost-utility analysis:
Cost–utility analysis is a form of evaluation that focuses particular attention on the
quality of the health outcome produced or averted by health programs or treatments
Conclusion:
In summary, economic evaluations are used to assist in setting priorities, making resource
allocation decisions and designing services when there are competing health interventions and
limited resources. They assist physicians, patients, care givers, health program managers and
policy makers to make decisions about the most appropriate mix of strategies and the best way to
allocate scarce resources. Finally, economic evaluations provide evidence-based information to
assist key stakeholders determine and understand the value of a product to maximize market
uptake.
Reference:
Michael F. Drummond, Bernie O’Brien, Greg L.Stoddart, et.al. Methods for the Economic
Evaluation of Health Care Programmes.
