Class presentation on Introductory Health Economics for students of Health economics and Hospital Management.

2. Self Introduction
Name Brigadier General Dr Zulfiquer Ahmed Amin
Organization Bangladesh Army
Present Unit Bangabhaban
Qualifications
MBBS Dhaka Medical College
PGD (Health Economics) Dhaka University
MPH (Hospital
Management)
Armed Forces Medical Institute (AFMI)
M Phil (Healthcare &
Hospital Management)
Armed Forces Medical Institute (AFMI)
Advance Training on Hospital
Administration
All India Institute of Medical Sciences (AIIMS), Delhi
PhD (Course) Bangladesh University of Professional (BUP)

3. Brig Gen Dr Zulfiquer Ahmed Amin
M Phil, MPH, PGD (Health Economics), MBBS (DMC), Fellow (AIIMS, Delhi)

5. Health in Economics Term
Health is a state which enable individual to lead socially and economically a productive life.
Economics emphasizes on scarcity of resources, where there are numerous demands for
commodities and services. Choices have to be made and scarce resources need to be
allocated which will bring best welfare for the society.

7. Economic is a social science which studies human behavior as a relationship between
multiple ends and scare resources which have alternative uses
What is Economics

9. Health economics is a branch of economics concerned with issues related to efficiency,
effectiveness, and value in the production and consumption of health and healthcare.
What is Health Economics?

10. Who Should Study HE
•Medical providers: Medical Administrators, Doctors, and nurses can evaluate new
treatments, technologies, and services to determine ways to deliver value-based care.
•Administrators: Learning the intricacies of health care economics can provide the
necessary context to choose the best alternative and new technologies on the most
efficient, cost-effective and equitable course of action
•Policymakers or Public Health Officials: Those who are in charge of policy decisions at the
local, state, or international levels.
•Business leaders:

11. 3 Factors are Important for Healthcare
• Cost
• Quality
• Access
All factors are dependent on resources. Efficient allocation of resources can improve healthcare
delivery.

12. Gross domestic product (GDP) is the monetary value of all finished goods and services made
within a country during a specific period.
Gross national product (GNP) refers to the total value of all the goods and services produced
by the residents and businesses of a country, irrespective of the location of production. GNP
takes into account the investments made by the businesses and residents of the country,
living both inside and outside the country.

13. The poverty line is the minimum amount of money a person needs to fulfill the basic
necessities of life, like shelter and food. Currently international poverty line is $2.15 per day.
Per capita income is a measure of the amount of money earned per person in a nation or
geographic region. It amounts to GDP divided by the number of population. Bangladesh has a
GDP per capita of USD 2,528 in 2023.
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.

15. Opportunity Cost
Opportunity costs represent the potential benefits that an individual, investor, or business
misses out on when choosing one alternative over another.

16. • Direct Cost:
Direct (Variable) costs are the expenses a business incurs directly to make a product or
service.
• Indirect Cost:
Indirect (Fixed) costs represent the expenses of doing business that are not readily identified
with a particular function or activity, but are necessary for conduct of activities. eg,
administrative salaries, office expenses, rent, security expenses, telephone expenses, and
utilities.

17. Externalities occur in an economy when the production or consumption of a specific good or
service impacts a third party that is not directly related to the production or consumption of
that good or service.
A negative externality occurs when a cost spills-over. A positive externality occurs when a
benefit spills-over.
Externalities:

18. Positive Externality: This occurs when the consumption or production of a good causes a
benefit to a third party.
A farmer who grows mustard plant provides a benefit to a beekeeper. The beekeeper gets a
good source of nectar to help make more honey.
Therefore with a positive externality the Social Benefit > Private Benefit.
Social Benefit = Private benefit + External benefit.

19. Negative Externality: Negative externalities occur when a transaction has a cost that neither
the buyer nor the seller are forced to pay. In the case of pollution—the traditional example
of a negative externality—a polluter makes decisions based only on the direct cost of and
profit opportunity from production and does not consider the indirect costs to those harmed
by the pollution.

20. Merit goods are goods or services that create positive externalities are considered to be
beneficial to individuals and society as a whole, but are often under-consumed in a free
market economy.
The public transportation system is a merit good, as it has positive effects such as reducing
traffic congestion and air pollution. To encourage greater use of public transportation, the
government could offer subsidies or other incentives to make it more attractive to consumers.

21. In economics, a public good (also referred to as a social good or collective good) is
a good that is both non-excludable and non-rivalrous. Use by one person neither prevents
access by other people, nor does it reduce availability to others.
For example, clean air is (for all practical purposes) a public good, because its use by one
individual does not (for all practical purposes) deplete the stock available to other
individuals, and there is no way to exclude an individual from consuming it, if it exists.

23. Differentiation between Needs, Want and Demand

26. Equality means each individual or group of people is given the same resources and
opportunities, regardless of their circumstances.

27. Efficiency is the ability to use the least possible resources, time, and money to achieve a
goal. Efficiency is 4 types:
-Allocative Efficiency
-Productive Efficiency
-Distributive Efficiency
-Technical Efficiency
Efficiency

28. Allocative Efficiency
Allocative Efficiency is the optimal distribution of goods in an economy that meets the
needs and demands of society and produces the highest consumer satisfaction relative to
the cost of inputs. In economics, allocative efficiency materializes at the intersection of the
supply and demand curves (Also called Pareto Efficiency). The level of output where
marginal cost is as close as possible to the marginal benefits.
Example of Allocative Efficiency
If a majority of office staff prefer navy blue suits, they will go to a clothing shop where
they are sure they will get that specific color and not any other color like white, yellow, or
red. For its part, the clothing store will stock more of the colors of suits that are most
preferred by office staff, rather than the unusual colors that are less popular. This is
because they need to dedicate more energy to the colors of suits that are most in-
demand. Doing so helps them earn higher profits while meeting the demand of the
majority of customers.

29. Distributive Efficiency
Distributive efficiency occurs when goods and services are consumed by those who need
them most. Distributive efficiency is concerned with an equitable distribution of resources
because of the law of diminishing marginal returns.
Example:
If a millionaire already has three cars, but gets a fourth car – this fourth car will only increase
his net utility by a small amount. If by contrast, someone on a low income can get their first
car, the marginal utility will be much higher. Therefore, to be distributively efficient, society
will need to ensure an equitable distribution of resources.

30. Production Efficiency
Productive efficiency is a situation where firms seek the best combination of inputs to lower
their costs of production. Once a company or market reaches productive efficiency, creating
any additional units would require reducing the production level of another product.
The Production Possibility Frontier (PPF) is a curve
on a graph that illustrates the possible quantities
that can be produced of two products if both
depend upon the same finite resource for their
manufacture.

31. Technical Efficiency
A firm is said to be technically efficient if a firm is producing the maximum output from the
minimum quantity of inputs, such as labour, capital, and technology.
For example, the number of patients that can be treated in an out-patient clinic depends on
the number of medical and nursing staff that are available and other inputs. If the most that
can be provided by one doctor and two nurses is 20 treatments each day, then it is
technically inefficient to provide 19 treatments using that number of staff or to provide 20
treatments using more staff. Technical efficiency requires no unemployment of resources.

32. Effectiveness
Effectiveness is the extent to which objectives are attained. Thus, the focus of effectiveness
is not on cost, but rather on targeting the correct tasks and completing them in a timely
manner.
In principle, efficiency is about ‘doing things right’ and effectiveness is about ‘doing the
right thing’.

34. Micro and Macro Economics
Microeconomics is the field of economics that looks at the economic behaviors of
individuals, households, and companies. Macroeconomics takes a wider view and looks at
the economies on a much larger scale—regional, national, continental, or even global.
Microeconomics focuses on supply and demand, and other forces that determine price level.
Macroeconomics looks at the economy as a whole, like GDP, inflation etc.