Basics of Health Economics
BASICS
OF HEALTH ECONOMICS
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Introduction
·
Economics can be
defined as the study of how individuals and societies choose to allocate scarce
productive resources among alternative uses and subsequently to distribute the
product s from these uses among members of a society.
·
Health Economics is the
study of how
o
Health care
o
Health related services
o
Cost & benefits are distributed among
individuals and groups in society.
·
It helps to understand the relationship
between resources used and health outcomes achieved by alternative options.
·
The importance of economics in health is to
know that
o
How we can save our resources?
o
Are we doing the right thing?
o
What to do about the indirect cost of
healthcare services?
Concepts
of Health Economics
·
Concept of Efficiency
o
To get the most out of scarce resources
o
The main elements of this concept are
§ Do not waste resources
§ Produce each output at least cost
§ Produce the types & amounts of output which people
value the most
·
Concept of Equity
o
Equity stands for social justice or fairness
o
Absence of systematic disparities in health
between social groups
o
It can be Horizontal or Vertical
§ Horizontal
· Equal access to healthcare services for all people with
the same
o
Needs
o
Location
o
Gender
o
Race
§ Vertical
· Equal access to health services irrespective of income
·
Concept of Utility & Cost
o
Utility is the
economics for satisfaction obtained from purchasing a particular good or
service.
o
Cost originates from
constraints on our resources
·
Concept of Opportunity Cost
o
Value of the best alternative use to which
those resources could have been put, the value of the productive opportunities
forgone by the decision to use them in producing that commodity
o
Characteristics of
economic analysis
§ Evaluating and choosing among alternatives courses of
action, whether or not they are explicitly identified
§ Examines both the costs & consequences of the
alternatives
·
Concept of Marginal Cost & Benefit
o
Marginal refers
to the next unit
o
It is the cost of an output to be the
additional cost incurred in producing the last unit of that output
o
The Marginal
benefit is the additional benefit obtained by consuming the last unit of an
output
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