adminstration master

1. Basic and key concepts related
to health care economics
 Prepared by :
 Nada Elsayed
 Nadira
 Alaa Elsayed
 Naif Al-sobhy
 Supervision by :
 Prof.Dr. Abeer Seada

2. Objectives
By the end of the discussion, every participant will be able to :
•Use the concept of health economics.
•Define key terms in health economics.
•Define and apply the number of fundamental economic concepts.
•Explain what health economics is.
•Realize why nurses needs to study the health economics
•Identify the health sector responsibilities in the point of view of health economics.
•Discuss the principles of health economics.
•Differentiate among economics sub-discipline.
•Explain why economics is applicable to health and health care

3. Outlines
I. Introduction
II. Key terms (health – health services – health sector – goods – health caremarket
 – resources – efficiency – utility - marginal analysis – opportunity cost
 –demand –supply)
I. What is the economics and health economics.
II. Categorizing the discipline of economics
 -Microeconomics and macroeconomics
 -Positive and normative economics
I. Principles of health economics.
II. why nurses need to study the health economics.
III. The health sector responsibilities in the health economics
IV. References

4. Introduction
 Against a background of increasing demands on limited resources,
healtheconomics is exerting an influence on decision making at all
levels of health care. Health economics seeks to facilitate decision
making by offering an explicit decision-making framework based on
the principle ofefficiency. practitioners need to understand its basic
principles and how it can impact on clinical decision making.

5. Key Terms
 Health:
 Health is a state of complete physical, mental and social well-beingand not merely the
absence of disease or infirmity.
 Health services
 a service that provides medical treatment and care to the public or to a particular group. consist
of medical professionals, organizations, who provide medical care. its cover all services. These
services are centered around making health care accessible, high quality, and patient-centered.
 Health sector:
 The healthcare sector consists of businesses that provide medical services,manufacture medical
equipment or drugs, provide medical insurance, or otherwise facilitate the provision of healthcare to
patients.

6. Key Terms
 Resources
 Defined as all materials, personnel, facilities, funds, and anything else that canbe used for
providing health care.

 Efficiency
 Obtaining the greatest health benefit from interventions using the availableresources, or
achieving a given health benefit in a way that minimizes costs/resource use.

 Utility:
 Amount of satisfaction that an individual receives from a product or service
 Utility values are critical for determining why different goods have differentcosts and levels
of demand. Products with higher utility usually have more demand, meaning they can
command higher prices.

7. Key Terms
 Marginal analysis:
 The examination of the costs and benefits of certain activities. Marginal analysis can show the
cost of additional production until you reach the break- even point, where the costs the
company incurs and the income it receives fromproduction is equal.
 (Companies use marginal analysis as a decision-making tool tohelp them maximize
their potential profits)
 Opportunity cost
 The value or benefit given up by engaging in that activity, relative to engagingin an
alternative activity.

 Ex: additional resources that factor into opportunity cost include time spent by
friends or family members participating in the patient's care and non-medical costs
such as travel expenses or lost wages or take apartment near to hospital and private
nurse

8. What is the economics and health economics?
 Economic
A social science concerned chiefly with description and analysisof
the production, distribution, and consumption of goods and services
 Health economics:
Is a branch of economics used to promote healthy life and outcomes
through concerned with issues related to efficiency, effectiveness,
valueand behavior in the production and consumption of health and
healthcare.

9. Branches Or Classification Of Economics:
There are mainly classified as follows.
 1-Positive VS Normative economics.
 2-Macroeconomics VS Microeconomics

10. Positive VS Normative economics.
Positive Economics:
 It is a branch of economic which explain what a science that describes the
factsand behavior in economy.
 EX: A businessman while making decisions use profit maximization as
thecriterion.
Normative Economics:
 This branch of economics incorporates value judgments of economics.
It tells what the economics should be like what it ought to be.

11. Macroeconomics VS Microeconomics
Macroeconomics:
 Macroeconomics is the study of aggregate economic activities,
such as theeconomy level of output, general price level.
Macroeconomics Health Care Market:
 The macroeconomics health market is the entire countries
health care systemincluding the way it performs in terms of
profit, loss and efficiency.

12. Macroeconomics VS Microeconomics
Microeconomics:
 Microeconomics is the study of economic behavior of individual
decision-making units such as consumers resource owner and business
firms in a free enterpriseeconomy.
 This can be measured by conducting market surveys, pilot and feasibility
studies.
 It is the social science that studies the implications or individual human
action,specifically about how these decisions affect the utilization and
distribution of scare resources.
 Macroeconomics generally focused on country wide or global
economics,Microeconomics studies individual households or firms.
Health Microeconomics:
 Health microeconomics is concerned with how individuals choose,
minimize costsor maximize profit or utilities with in a given health care
system with in a set of rules price.

13. Why nurses need to study the health economics?
1) Helps nurse to understand the world around, people, businesses,
markets and governments ..
2) Helps the nurse to be aware ways of economics better respond to the
threats and opportunities that emerge when things change.
3) Helps the nurse make sense of the often convoluted, paradoxical,and
invisible pervasive ways
4) Provide nurse with a stronger scientific basis for influencing policy
decisions that impact the nurse workforce and the quality of nursing
care
5) Help nurse apply economic theories in decision making for efficient use
of available
6) Resources for maximizing health benefits
7) Provides a framework to the nurse by use it to promote healthy lifestyles
and positive health outcomes.

14. Why nurses need to study the health economics?
1) Help nurse to actively in leading efforts to improve patient care and
reduce cost
2) Allow nurse to know new trends and economic terms
3) To serve patients and apply quality and safety in the practice setting
4) Helps the nurse to monitoring financial performance
5)
Help nurse to actively in leading efforts to improve patient care and
reduce cost
6) Allow nurse to know new trends and economic terms
7) To serve patients and apply quality and safety in the practice setting
8) Helps the nurse to monitoring financial performance

16. Key Terms
Demand:
an economic concept that relates to
a consumer's desire to purchase
goods and services and willingness
to pay a specific price for them
Supply:
refers to the quantity of a particular
product or service that suppliers
offer to consumers at a specified
price ...

17. Principles of health economics:
1) The notion of scarcity.
2) Demand and supply.
3) Distinction between need and demand.
4) Opportunity cost.
5) Discounting.
6) Time horizons.
7) Margins.
8) Efficiency.
9) Equity.

18. 1. The notion of
scarcity.
 Scarcity is one of the key concepts of
economics.
 It means that the demand for a good or service
is greater than the availability of the good or
service.
 Therefore, scarcity can limit the choices
available to the consumers who ultimately
make up the economy.

19. 2.Demand and
supply.
 Demand for healthcare refer to the amount and type of
healthcare the consumer requires and is willing to
purchase.
 The Market demand depends on:
 1-The number of consumers in market.
 2-consumer preferences.
 3-consumer income.
 4-The piece of substitute commodity.
 5- The piece of a complementary commodity.

20. The market
supply depends
on:
 The number and /or size of producer.
 The technology.
 The price of a factor of production.
 The price of other commodities used in
production.

21. 3.Distinction
between need and
want and demand
 Needs: Human needs are the basic requirements
and include food clothing and shelter.
 Wants – Wants are largely dependent on the needs
of humans themselves.
 Demands: are wants for specific products backed
by ability to pay.
 The basic difference between wants and demands
is desire.

22. EX:
 A customer may desire some thing, but he may not be able to
fulfill his desire many people want a luxury car or a weekend
break in Dubai, but only a few people are willing and able to buy
one. In business terms, companies must measure not only how
many people want their product but also how many would
actually be willing and able to buy it.

23. 4.Opportunity
cost.
 Refers to the value of what you have to
give up in order to choose something else.
 Ex: When the government spends $15
billion on interest for the national debt,
the opportunity cost is the program the
money might have been spent on, like
education or healthcare.

24. 5.Discounting.
 Discounting, the practice of weighting future
gains and losses less heavily than those that
occur in the present, is a common practice in
the economic evaluation of health and other
goods.
 The impact of discounting depends on the
timing of cost and health outcomes and
therefor the type of health care is evaluated.

25. 6.Time horizons.
 The time horizon used for an economic
evaluation is the duration over which health
outcomes and costs are calculated. The choice
of time horizon is an important decision for
economic modeling depends on the nature of
the disease and intervention under
consideration and the purpose of the analysis.
 Time horizons is the length of time over which
an investment is made or held before its
liquidated.

26. 7.Margins.
 The margin: refers to the consequences of changes
in the scale of service provision. The marginal
cost/benefit is the change in cost/benefit arising
from (strictly a one unit) increase or decrease in
service provision.
 Marginal analysis means that the effects of
changes in the use of resources are examined
according to how they differ from current use.
Analysis is focused on, for example, how much
costs and benefits are increased or decreased due
to a change in resource use, rather than the
absolute levels of costs and benefits that exist
after the change.

27. 8.Efficiency.
 The term "efficiency" refers to the peak level of
performance that uses the least amount of inputs to
achieve the highest amount of output. Efficiency requires
reducing the number of unnecessary resources used to
produce a given output, including personal time and
energy.
 In health economics efficiency refers to either obtaining
the greatest health benefit from interventions using the
available resources, or achieving a given health benefit
in a way that minimizes costs/resource use. A distinction
is often made between technical efficiency and allocative
efficiency.

28. 9.Equity.
 The term “equity” refers to fairness and justice and
is distinguished from equality: Whereas equality
means providing the same to all, equity means
recognizing that we do not all start from the same
place and must acknowledge and make adjustments
to imbalances.
 When used in healthcare, equity in health refers
to the fairness in the distribution of health across
individuals. It may also refer to the distribution of
health care (for example, expenditure, utilization or
access to care), from which equity in health is
assumed to be derived.

29. The health sector responsibilities in the health care economics
 Create Abridge : To link human capital accumulation and economic growth
 Achieving economic object: by investing in health system
 Improve population health:
Direct effect (Which positively support health economic objectives)
Indirect effect
 Long run improvements tied to economic growth
Enhancements in public health infrastructure ( Sanitation- Cleanness of
water and supply)
Better nutrition
More effective medical technology (Antibiotics- Vaccines)

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