CAP Lecture 1 (1)

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Health Economics for Prescribers Lecture 1: Economics, Health and Health Economics

Health Economics for Prescribers

Richard Smith (MED)[email protected]

David Wright (CAP)[email protected]

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Learning outcomes

On completion of the unit the student will beable to:

y

Critically appraise pharmaco-econ

omic evaluation

sy Prepare a business case for the introduction and

evaluation of a novel pharmaceutical service designedto improve pharmaceutical care within the NHS;considering local health needs & inequalities,government targets and government strategies forhealth and pharmacy

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Delivery

Workshops & Lectures

No directed study

Expectation of significant reading aroundtopic

Reading list provided on Blackboard is

exhaustive

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Topics

Pharmacoeconomics

Healthcare organisation

Managing the pharmaceutical budget

Procurement & influencing skills

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Assessment

Critical appraisal of pharmaco-economic evaluationy Open book

y Unseen paper

y Use previously seen and tested checklist Business case development (1,500 words)

y Coursework

y Based on PCT where born

y Local health needs assessment

y Description, including costs, of new pharmaceutical servicey Designed to meet government targets for health

y Proposed pharmaco-economic evaluation

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Lecture 1: Economics, Health and

Health Economics

What is economics?

What isnt economics?

What is Health? What is Health Economics?

Key Economic Concepts

y Opportunity cost

y Efficiency

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Economics is about

Limited resources

Unlimited wants

Choosingbetweenwhich wants we canafford given ourresource budget

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Economics is about choice

Budget

Good AGood B

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Concept 1: opportunity cost

The value of forgone benefit which couldbe obtained from a resource in its next-

best alternative use.

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Example of opportunity cost

Possible Health Expenditure in a Year

Paediatric Care(No ChildrenTreated in 000s)

Care of Elderly(No of ElderlyTreated in 000s)

Opportunity Costof TreatingChildren in Termsof Elderly Patients

Forgone0

12345

30

282418100

0

26122030

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Implications of opportunity cost

Deciding to do A implies deciding nottodo B (i.e. value of benefits from A>B).

Cost can be incurred without financialexpenditure.

Value not necessarily determined by themarket.

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Economists view of the world...

Pessimist: bottle empty

Optimist: bottle full

Economist: bottle wasted

inefficient!

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Concept 2: efficiency

Efficiency = maximising benefit forresources used

Technical = meeting a given objectiveEfficiency at least cost (resources)

Allocative = producing the pattern ofEfficiency output (supply) that

matches the pattern ofconsumer want (demand)

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Efficiency and the market

Quantity

Price/Cost

Demand

Supply

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Efficiency and the market

Quantity

Price/Cost

A

Demand

Supply

QA

EquilibriumPrice PA

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Topic versus discipline

Topic = area of study

Discipline = conceptual apparatus

Health economics is the discipline ofeconomics applied to the topic of health.

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Some misconceptions

Economics is

y concerned with money

y the same as accountancyy only practised by economists

y objective

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Economics and money

Economics is concerned withy costs (resource use)

y benefitsy choice

y efficiency

Money isy store of value

y means of exchange

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Economics and accountancy

Economics is concerned with

y costs (resource use)

y benefitsy choice

y efficiency

Accountancy is concerned with

y monitoring financial transactions

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The practice of economics

Economics is concerned with

y costs (resource use)

y

ben

efitsy choice

y efficiency

Everyoney weighs the relative benefits of each course of action

and choose the action which maximises well-being

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Economics and objectivity

All decisions are based on subjective valuejudgements (or judgements of subjective

value!)

Economics makes these explicit

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What is health?

World Health Organisation:y Health is a state of complete physical,

men

tal an

d social well-bein

g Health Economics is often Health

Care Economics

Usually health in health economic

(evaluation) is health status according tosome measure

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Health status example: EQ-5D

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Applying economics to health (care)

Descriptive = quantification

Predictive = identify impact ofchange

Evaluative = relative preferenceover situations

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Health economics map

B. What influencesHealth? (other than

health care)

E. Market Analysis

A. What is Health?What is its value?

D. Supply of

Health Care

G. Planning, budgeting,

regulation mechanisms

H. Micro-Economic Appraisal

C. Demand for

Health Care

F. Macro-

Economic

Appraisal

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A: Value of health

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health care)

E. Market Analysis


D. Supply of

Health Care




C. Demand for

Health Care

F. Macro-

Economic

Appraisal

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B: Demand for health (Grossman)

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health care)

E. Market Analysis


D. Supply of

Health Care




C. Demand for

Health Care

F. Macro-

Economic

Appraisal

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C/D/E: Supplier-induced demand

Quantity

Price/Cost

D1

S

D2

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health care)

E. Market Analysis


D. Supply of

Health Care




C. Demand for

Health Care

F. Macro-

Economic

Appraisal

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F: WHO ranking of health systems

(top 20)

1 France

2 Italy

3 San Marino

4 Andorra

5 Malta

6 Singapore

7 Spain8 Oman

9 Austria

10 Japan

11 Norway

12 Portugal

13 Monaco

14 Greece

15 Iceland

16 Luxembourg

17 Netherlands18 UK

19 Ireland

20 Switzerlan

d

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health care)

E. Market Analysis


D. Supply of

Health Care




C. Demand for

Health Care

F. Macro-

Economic

Appraisal

CAP Lecture 1 (1)

Documents

Transcript of CAP Lecture 1 (1)