Cost of Healthcare

Cost of Healthcare

Introduction

• Principle of Health: Health is a fundamental human right and a social goal.
• The principle of health emphasizes equity, accessibility, affordability, quality, and sustainability of healthcare services.
• It guides the economic and policy framework in healthcare by ensuring:
1. Health services should be available to all without discrimination.
2. Resources must be allocated based on need and priority.
3. Preventive, promotive, curative, and rehabilitative care must be integrated.
4. Balance between efficiency (cost control) and equity (fair distribution).

Concept of Cost in Healthcare

• Definition: Cost in healthcare refers to the monetary value of resources (human, material, financial, and time) used for producing and delivering health services.
• Key Features:
• Healthcare costs are often unpredictable and variable.
• They involve both direct (hospital bills, medicines) and indirect (loss of productivity, absenteeism) costs.
• The rising cost of healthcare is a global concern due to technological advancements, aging populations, and increased demand.

Types of Cost

1. Direct Costs:
• Expenditures directly related to treatment and care.
• Examples: hospital charges, physician fees, medicines, diagnostic tests.
2. Indirect Costs:
• Losses related to illness but not directly paid for healthcare.
• Examples: loss of wages, absenteeism, reduced productivity.
3. Intangible Costs:
• Non-financial costs such as pain, suffering, anxiety, reduced quality of life.
4. Fixed Costs:
• Costs that do not change with patient load.
• Example: hospital building, equipment, salaries.
5. Variable Costs:
• Costs that change with the level of service provided.
• Example: drugs, syringes, food for patients.
6. Opportunity Cost:
• The value of the next best alternative foregone.
• Example: resources spent on one program could have been used for another.

Costs of Production in Healthcare

• Refers to expenses incurred in producing health services.
• Components:
1. Capital Costs – land, buildings, equipment.
2. Labor Costs – doctors, nurses, technicians.
3. Operational Costs – drugs, consumables, utilities.
4. Maintenance Costs – repair, depreciation.
• In healthcare, costs of production are high due to specialized workforce, advanced technology, and continuous demand.

Economic Evaluation in Healthcare

Economic evaluation helps in choosing between healthcare interventions by comparing costs and outcomes.

1. Cost-Benefit Analysis (CBA)

• Definition: Comparison of costs and benefits of an intervention, both expressed in monetary terms.
• Use: Helps decide whether a program is worth investing in.
• Example: Vaccination program – cost of vaccines vs. money saved from avoided illness.

2. Cost-Effectiveness Analysis (CEA)

• Definition: Compares cost with health outcomes (not in money but in natural units such as life years saved, cases prevented).
• Use: Useful when benefits cannot be monetized.
• Example: Cost per life saved by TB control program vs. HIV control program.

3. Cost-Utility Analysis (CUA)

• A form of CEA where outcomes are measured in terms of QALYs or DALYs.
• Helps compare interventions across diseases.

QALY (Quality-Adjusted Life Years)

• Definition: A measure combining both quantity (years of life) and quality of life gained from healthcare intervention.
• 1 QALY = 1 year of life in perfect health.
• Example: If a treatment gives 2 years of life but with 50% quality, then it equals 1 QALY.

DALY (Disability-Adjusted Life Years)

• Definition: A measure of the overall disease burden, expressed as the number of years lost due to ill-health, disability, or premature death.
• DALY = Years of Life Lost (YLL) + Years Lost due to Disability (YLD).
• Used by WHO to compare disease burden globally.
• Example: High DALY in India due to TB, malnutrition, and maternal health problems.

Causes of Health Problems in India

1. Poverty and Inequality.
2. Overpopulation.
3. Malnutrition.
4. Poor sanitation and unsafe drinking water.
5. Inadequate health infrastructure and workforce.
6. High out-of-pocket expenditure.
7. Low health literacy.
8. Burden of communicable and non-communicable diseases.
9. Environmental pollution.
10. Urban-rural disparity in healthcare access.

Millennium Development Goals (MDGs) (2000–2015)

• Relevant Health-related MDGs:
1. Eradicate extreme poverty and hunger.
2. Reduce child mortality.
3. Improve maternal health.
4. Combat HIV/AIDS, malaria, and other diseases.
5. Ensure environmental sustainability.

Solutions to Health Problems in India

1. Strengthening primary healthcare and rural health services.
2. Expanding public health financing and reducing out-of-pocket expenditure.
3. Enhancing health education and awareness.
4. Universal Health Coverage (UHC) and insurance schemes.
5. Improving sanitation, clean water, and nutrition programs.
6. Public-private partnerships.
7. Technological innovations – telemedicine, e-health.
8. Strengthening disease surveillance systems.

Government Policies in Health Care (India)

• National Health Policy 1983, 2002, 2017.
• National Rural Health Mission (NRHM, 2005) → now National Health Mission (NHM, 2013).
• Ayushman Bharat (2018) – Health and Wellness Centres, PMJAY insurance.
• National Programs: TB, HIV/AIDS, Malaria, Immunization.
• Janani Suraksha Yojana (JSY), POSHAN Abhiyaan, etc.

Health Planning in India

• Based on Bhore Committee (1946), which recommended primary health centers.
• Planned through Five-Year Plans (till 2017).
• Now integrated into NITI Aayog’s vision documents.
• Focus on universal access, equity, financial protection, and efficiency.

Environmental Health

• Definition: Branch of public health concerned with how environmental factors (air, water, soil, climate, radiation, chemicals) affect human health.
• Issues in India: Air pollution, water pollution, solid waste, hazardous waste, occupational health hazards, climate change.
• Solutions: Clean energy, waste management, pollution control policies, occupational health safety.

Primary Health Care – Principles (Alma-Ata, 1978)

1. Equitable distribution.
2. Community participation.
3. Inter-sectoral coordination (education, agriculture, sanitation, etc.).
4. Appropriate technology (low-cost, effective solutions).
5. Focus on prevention and promotion rather than just cure.

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