Post on 05-Apr-2018
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HEALTH
ECONOMICS
Dr. NASSER AL JARALLAH
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HEALTH ECONOMICS1) INTRODUCTION TO ECONOMICS.
2) THE BASIC ECONOMIC
QUESTIONS.3) BASIC ECONOMIC CONCEPTS.
4) EFFICIENCY.
5) DEMAND AND SUPPLY ANALYSIS.
6) THE DETERMINATION OF PRICE.
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HEALTH ECONOMICS5) THE ECONOMIC ANALYSIS OF
PRODUCTION.
6) THE ECONOMIC ANALYSIS OFCOSTS.
9) MARGINAL ANALYSIS.
10) MARKET STRUCTURES.
11) THE FIRM AND ITS OBJECTIVES.
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HEALTH ECONOMICS12) MEASUREMENT AND VALUATION
IN HEALTH CARE.
13) FINANCIAL ANALYSIS ANDECONOMIC APPRAISAL.
14) FINANCING HEALTH CARE.
15) SAUDI NATIONAL HEALTH
SYSTEM.
16) STUDENT PROJECTS.
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1.a. Economic Definition.
The Economics is the science that deals with the
consequences of resources scarcity.
The discipline of economics deals with use of scarce
resources to satisfy human wants and needs how
best to use the resources available.
Economics is a social science that studies how
individuals and organizations in society engage in the production
distribution and
consumption of goods and services.
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1.b. Three Major Tasks Of Economics.
i. Descriptive Economics;
Refers to the identification, definition,
and measurement of phenomena.
Concerned with determining the nature
of the phenomena as well as obtaining
estimates of their magnitudes. No explanation.
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ii. Explanatory Economics; Involves explaining and predicting certain
phenomena. Conducting an analysis in a cause-effect
format.
Performed with the aid of models thatclassify various causal factors in a
systematic framework (e.g. the health status
and the price of the medical services).
1.b. Three Major Tasks Of Economics.
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iii. Evaluation; Involves judging or ranking alternative
phenomena according to some standard. An acceptable standard must be obtained.
Based on this standard, alternative ways of
using scarce resources are then ranked. In choosing the standard, one major
criterion is acceptability.
1.b. Three Major Tasks Of Economics.
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1. Economic Variables;
Examples ( prices, costs, incomes, and
quantities of commodities)
Can be measured along a scale.
Once appropriate unites of measurement
have been chosen ( Riyals, visits, days).
1.c.Tools Used In Economic Analysis
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1.c.Tools Used In Economic Analysis
2. Relationships between economic
variables;
Relationship show how one variableschanges in relation to another variable.
The relationships can be specified in a
causal or non-causal manner. Causal relationships if ., then.
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1.c.Tools Used In Economic Analysis
3. Graphical representation of
relationships;
Step function is solid line relatesdiagrammatically to only specified
values.
We can draw a continuous curve joiningall the points specified in the
relationship.
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1.c.Tools Used In Economic Analysis
4. The direction of the relationships;
Positive relationship.
Opposite or negative relationship.
Non-relation or constant relationship in
Y.
Non-relation or constant relationship in
X.
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0
2
4
6
8
10
12
1 2 3 4
constant
positivenegative
constant
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1.c.Tools Used In Economic Analysis
5. The slope of the relationships;
6. The position of the relationship;
7. The shape of the relationships;
8. The nature of economic propositions;
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1.d. Types Of Economics
Economics offers an overall
viewpoint about toward
understanding many problems, all
of which relate to scarcity in one
form or another.Economics can be Macroeconomics
or Microeconomics.
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1.d. Types Of Economics
A. Macroeconomics is the study of aggregateeconomic activities, such as:
1. The economy level of outputs; We can measure that by some variables
such as; GDP, Rate of depression, Rate ofslackness ..ets.
Real GDP is the market value of all finalgoods and services produced in thedomestic economy during a one year periodmeasured with constant prices.
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1.d. Types Of Economics
Macroeconomics is the study of aggregateeconomic activities, such as:
2. Level of national income; We can measure that by some
variables such as N.I.
National income (N.I) is the incomeearned by the factors of production.
Income earned of the sold or consumed
GDP.
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1.d. Types Of Economics
Macroeconomics is the study of
aggregate economic activities, such as:
3. Levelofemployment; We can measure that by some variables
such as the rate of unemployment.
The Rate of Unemployment is thepercent of the total labor force which is
unemployed.
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1.d. Types Of Economics
Macroeconomics is the study of
aggregate economic activities, such as:
4. General price level; We can measure that by some variables
such as Inflation or Deflation Rate ets.
Inflation is the annual rate of increase in aprice index.
Deflation is the annual rate of decrease in
the price level.
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1.d. Types Of Economics
B. Microeconomics the study of economicbehavior of individual decision making unitssuch as:
Consumers resource owners and business firms in a free enterprise
economy. We can measure that by some studies
such as market , pilot and feasibility
studies.
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2.BASIC ECONOMIC QUISTIONS.
2.a. Economic Problem.
2.b. Health Care And Health.
2.c. The Demand For Health Care.2.d. The Production Of Health.
2.e. The Demand For Health Care.
2.f. Requirements Of Health Services.2.g. Health Care And Economics.
2.h. Economics And Management.
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2.a. Economic Problem
Economic problem based on that
because of limited productive
capabilities, there is a need to makedecision about:
what to produce,
how to produce and
the distribution of out put.
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2.a. Economic Problem
Factors of production are land,
laborcapital
They are the inputs necessary for the
production of good and services . The terms factors of production and
economic resources are interchangeable.
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2.a. Economic Problem
The problem is solved by different
ways.
Capitalism or Free Enterprise.
Socialism or Communism.
Islamic or Sharia.Discussion about each one.
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2.a. Economic Problem
Health economics deals with a specific portion of
the economic problem, that concerned with health
and health care.
What differentiates health care are;
1. The very personal and often urgent needs the
service meets.
2. dealing with pain and suffering and with life anddeath decision.
3. access to the service is often considered to be a
basic human right irrespective of ability to pay.
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2.a. Economic Problem
What differentiates health care are;
4. The many treatments are unproven.Encouraging the move towards evidence
based medicine where decisions aboutmedical interventions will be more firmlybased on research evidence about theireffectiveness .
5. It is not the consumer who demands thetreatment but the doctor acting as the agent ofthe patient which rise special problems In
demand and resource allocation studies.
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2.a. Economic Problem
The UK National health service both
purchasing and providing health care.
In 1989 separates the functions ofpurchasers and providers with the aim of
introducing greater incentives for
efficiency and greater choice for patientswith less government intervention.
Highly regulated with strict guidelines.
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2.b. Health Care And Health.
One of the basic principles of the public healthcare systems is that treatment should be
provided on the base of need. Rather than on the base of that funds are
available. And on the base of that equity should be one
of the objectives of the service. The purpose of health care is to produce an
improvement in health, the maintenance of
good health and or a reduction in suffering.
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2.b. Health Care And Health.
Health care services can be bought and sold,
while health cannot .Health difficult to define
and even more difficult to measure .
According to the world health organization
{WHO} good health is a state of complete
physical and mental well-being and not merely
the absence of disease or infirmity. Poor health in an individual will have an
impact on and may pose threats to others.
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2.c. The demand for health care The demand for health care services will
depend on the demand for health and on the
perception of the link between health care and
health.
One complication of trying to model or predict
this demand is that individuals value
apparently equal health states differently.
Most health care is carried out by families
within the home.
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2.c. The demand for health care
Health care systems may produce outputs
other than health (Comfort, Security, etc).
The demand for health care will also varyaccording to the age structure of the
population.
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The production of health
It is assumed that the individual seeks to
maximize life time utility.
Health care is only one input into theproduction of health.
Weather privately insured or dependent upon
public services, we seek a comprehensiveservice for examination and diagnosis.
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The demand for health care
We expect to be effective public and environmentalhealth services which will protect us from infectiousdiseases
A diverse and sometime conflicting set of interestsmay happened between;
1. Those who pay for health services.
2. Those who provide them.3. Those who shape them through strategic and
operational management.
4. Those who would like to benefit from them, if
necessary.
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Requirements of health services
1. Economy.
2. Effectiveness.3. Efficiency.
4. Value for money {VFM}.
5. Equity.
6. Ethical issues.
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Requirements of health services
1. Economy; We would like the services to be inexpensive.
Somebody always pays either directly or indirectly.
2. Effectiveness; We expect the service to be effective we want each
procedure to produce perceptible health gains {orreductions in suffering}.
The evidence based medicine beginning to influence
health care providers.
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Requirements of health services
6. Ethical issues; The behavior of doctors and other health
care professional and may put them intoconflict with those who manage resources.
The doctor could manipulate the situation for
financial gain. The patient is protected from these abuses
by the doctor's ethical and professionalcodes of conduct.
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Health care and economics
1. Which goods and services to
produce?
E.g. How many resources should
be allocated to the different
specialties?. Should cosmeticsurgery or infertility treatment be
provided at public expense?
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Health care and economics
2. How to produce the goods and
services?
E.g. Will the mentally ill be cared
for in small community based units
or in large hospitals?. Whatproportion of surgical procedures
will be carried out on a day care
basis?
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Health care and economics
3. Who receives the good and
services?
E.g. Should the state provide
health services only for the poor?
When funds are scare willpreference be given to patients of
fund holding practitioners?
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Basic economic questions
Whatever the methods of
finance organization and
delivery, health care systems
throughout the developed world
have been facing the sameproblems of ever increasing
demand and rising costs.
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Basic economic questions
This increasing pressure on
resources has had many sources
which include;1. Medical advances, such as organ
transplants and gene therapy, have
provided new treatments and
therefore created greater
expectations and new needs.
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Basic economic questions
2.As life expectancy
increase, more resourcesare required for medical
treatments andcontinuing care for the
elderly
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Basic economic questions
3.Changes in family
structure in thedeveloped world mean
that it is ever more likelythat the elderly will not be
cared for by their
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Basic economic questions
4.Populations in developed
countries have higherexpectation about levels
of health and havedemanded more and
better health care
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Economics and management
These days managersare required to beaccountable.
They have to be able toprovide justification fortheir decisions.
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Demand and Supply
In a market economy , output is distributedthrough a system of prices.
Each good and service produced is sold to
those who are willing and able to pay themarket price.
The market demand for a good or service is
presented as a schedule which relates thenumber of units (quantities) that will bepurchased at alternative prices, holdingconstant other variables that influence the
purchase decision.
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Demand and Supply
Change market supply is a shift of the market
supply curve that results from:
a change in the number and or size ofproducers.
a change in the technology a change in the
price of a factor of a production
a change in the price of other commodities
used in production.