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Health is a state of complete
physical, mental and social well being
and not merely the absence of disease or
“Health" in health economic
(evaluation) is health status according to
It is the allocation of resources within the
health system in the economy, as well as
functioning of health care market.
Health economics is concerned with the
of health and health
care. It is the branch of economics concerned with the
application of to
associated with health and health care.
is the study of how scarce resources
are allocated among alternative uses for the care of
sickness and in the promotion, maintenance and
improvement of health, including the study of how
health care and health-related services, their costs
and benefits, and are itself distributed among
individuals and groups in society.
Production Of Health
Health care market
Economic Output Level
SCOPE OF HEALTH
SUPPLY OF HEALTH
EQUITY IN HEALTH
OUTCOMES AND IN
To formulate health
To establish the true costs of
delivering health care
To evaluate the relative costs and
benefits of particular policy
To estimate the effects of certain
Health resources are finite. A choice must be made
which resource to use for which activity
Economics is concerned with efficiency
Equity or fair distribution of resources
It provides a framework which aims at
maximizing benefits within available resources
• How to extract maximum benefits from health
industry with the least cost combination
• The use of application of material things like
medicines, surgical instruments, lab
equipments, drugs, vaccinations, family
• Health and medical care is considered as
• Health is a private or a public good
• Measurement of health is also considered in
• Stock of health
• Investment aspects of health
• Loss due to ill health
• Resource costs of different diseases, effects of
health and medical care provision
• Planning of health and medical care
• Choice of technology in health care
• Provision of equity in health outcomes and
• Economic aspects of relationship between health
status and productivity
• Financial aspects of health care services
• Economic decision making in health and medical
• Planning of health development and such other
THE DIRECTION OF THE
Economic evaluation is the comparative
analysis of alternative courses of action in
terms of both their costs and consequences in
order to assist policy decisions .
E & VALUE
MEASURE & VALUE
COMBINE COSTS &
Cost analysis is a resource tool for financial
management in hospital or department. It is an
economic evaluation technique that involves the
systematic collection, categorization, and
analysis of program or intervention costs, and
cost of illness.
• To assess the efficiency and effectiveness of function
and their cost implication.
• To improve the policy relevance and utility through
assessment, planning and avoidance of wasteful
expenditure in the hospital.
• To allow researchers to achieve cost minimization for
the programs under consideration.
• A tool for planning and cost projection
• To assess the efficiency of a programme
• To assess the priorities
• To assess equity
• Make explicit the analytic perspective
• Describe the anticipated benefits
• Specify the components of costs
• Discount to adjust for differential timing
• Perform a sensitivity analysis
• Calculate measurement of efficiency
Cost-benefit analysis is a practical way of
assessing the desirability of projects, where it is
important to take a long view (looking at the
repercussion in the future as well as in the near
future and a wide view in the sense of allowing
side effects of many decisions)it implies the
enumeration and evaluation of all the relevant
cost and benefits.
-Prest and Terkey
Cost Benefit Analysis (CBA) is an economic
evaluation technique that measures all the
positive (beneficial) and negative (costly)
consequences of an intervention or program
in monetary terms.
Calculate a payback
time for the venture
Add up and compare the
project's costs and benefits
Itemize any and
all intangible costs
Itemize the tangible costs
of the intended project
Define your CBA's
unit of cost
Cost-effectiveness analysis (CEA) is a form of
economic analysis that compares the relative costs
and outcomes (effects) of different courses of
action. Cost-effectiveness analysis is distinct
from cost–benefit analysis, which assigns a
monetary value to the measure of effect.
COST-EFFECTIVENESS ANALYSIS (CEA)
Refers to an economic evaluation tool.
Is a method used to measure and
compare the costs of different medical
Cost–utility analysis (CUA) is a form of
financial analysis used to guide procurement
decisions. The most common and well-known
application of this analysis is in pharmaco
economics, especially health technology
Anderson, H. J. (1990). Report: hospitals need moresophisticated planning efforts. Hospitals, 64, 50-51.
Staff. (1990, September). Statement of cash flows as afinancial management tool. Health Care
Bentivegna, P. I, & Colwell, T. G. (1990). Master planlays foundation for facility investments. Healthcare
Financial Management, 44, 44-50.
Charny, R. M. & Kazemek, E. A. (1990). Improving departmentquality. Healthcare Financial
Management, 44, 94.
Cirn, J. & Gellatly, D. L. (1988). Financial management.
In J. A. Miller (ed.), NAB Study Guide. (pp. 99-115).
Washington DC: National Association of Board of Examiners
Cleverly, W. O. (1986). Essentials of Health Care Finance(2nd ed.). Columbus: University of Ohio.