Discuss about the Health Economics for Equity.
Equity, efficiency and effectiveness are the three key terms that had been intricately associated with health economics (Culyer, 2014). With the present generation being more cautious and careful about their health, needs and demands for healthcare have increased. This has resulted in a situation of resource wastage which resulted many needy patients to return from healthcare centers empty-handed. Patients with low socio economic background are the ones with most financial constraints and are the one who are mostly affected (Docteur & Oxley, 2004). To ponder more light on the issue, one must have a detailed knowledge about the key terms and how these terms are used by economists to refer to the current situation.
As emphasize on literature review, it seems that there is no simple way of defining the concept of equity. Guinness and Wiseman (2011) refers it as a policy objective which tries to do fair allocation of resources. According to World Health Organization 2017, equity is “principle of being fair to all, with reference to a defined and recognized set of values (WHO, 2015)” More specifically it explains, everyone must have an equal opportunity to achieve full health and at reasonable cost. It should not be based on personal characteristics such as sex, ethnicity, location and social and economic status (Braveman & Gruskin, 2003). Equity can be in different seven aspects such as equity of expenditure & input per capita, equal access for need, use of equal resources, equal treatment and equal health outcome (Price et al., 2014).
To provide universal coverage health, OECD countries are providing universal insurance coverage and taking steps to remove financial barrier and ensures the adequate supply and address social disparity (Philipson, 2015). To follow this approach, Australian health department through Medicare health insurance have tried to provide health care to all. On the other hand, some countries found that comprehensive health insurance is not enough to provide equal health services to all due to shortage of health workers, infrastructure and cultural difference and so on (Docteur & Oxley, 2004). Australia also focuses on indigenous people for better health outcome. It is fact that government always focus on private insurance for addressing different health problems (Guinness & Wiseman, 2011). In OECD countries, private health insurance has small share of total health funding but it covers 30% population in these countries and play a significant roles, primary coverage for specific population to support the public systems but some opponents observed that private health insurance is not capable to provide equitable services because of social inequity (Colombo & Tapay, 2004).In Australia, equity and access of primary health care is significantly very low in rural and remote areas as compared to urban areas. Low socio-economic status, poor education rate and low income contribute to poor health (AIHW. 2008b).
The recent trends of the spreading of health awareness among the entire nation of Australia have in turn resulted in a positive aspect of health care. People have become more cautioned about their healthcare and do not tend to take risks with any occurrence of ill health (Colombo & Tapay, 2004). Therefore, growing demands in health care has been seen in the recent era which had in turn created another major issue for the healthcare providers. Decision makers have failed miserably to reconcile the growing demand of healthcare services with that of the funds allotted to them (Auerbach et al., 2013). This had emerged as a new challenge for policymakers, economists as well as for the hospital authorities. Herein one can find the usage of the term of efficiency.
Efficiency is defined as the correct way of measurement that monitors whether the resources that are allocated and available to the healthcare sectors are being utilized efficiently in order to get the best value for the money (Ferraz, 2015). It should be aimed by every sector in the healthcare industry that they should be able to achieve a higher efficiency from the scarce resources that are available to them without compromising the quality of the care provided (Baicker & Robbins, 2015). Scientists have defined efficiency as the relation between the resources input like costs which can be in the form of labor, capital or equipments and that of either intermediate outputs like numbers of patients who have been treated, waiting time and others. There is also a relationship with that of the final health outcome like lives saved, life years gained, quality adjusted life years (QALYs) and others (Baio & Dawid, 2015). All these act as components that help in the correct measurement of effectiveness in the healthcare services provided.
Recent studies have suggested that there are many instances where it is found that the higher cost providers do not provide higher quality care intentionally. This shows that the system requires potential for improvement in order to stop exploiting the financial resources of patients and their family members (Andrews & Van de Walle, 2013). Efficiency in this domain would require provision of absolute high quality care in the minimum of available resources without any exploitation of the healthcare resources and also preventing financial exploitations of patients and careers (Baicker & Robbins, 2015).
In many instances, it is seen that older patients are often provided with medications that are inappropriate for them and as a result they require to be admitted to hospital that result in draining of excess money (Docteur & Oxley, 2004). Not only older patients, a huge number of other cohorts are also observed to have received the order of hospitalization or they tend to force the providers to seek treatment (Docteur & Oxley, 2004). However a bigger issue of debate arises here about the terms of healthcare needs and healthcare demands. There are many admissions where good outpatient care and early intervention in home or dispensaries can prevent the need for costly hospital treatments (Braveman & Gruskin, 2003). These can save resources of both the hospitals and personal finance and as a result efficiency can be maintained by providing this saved resources to the needy patient for whom healthcare service is an emergency requirement (Philipson, 2015).
Technical efficiency can be achieved when the healthcare sectors are providing more outputs from a definite set of inputs or by producing a set amount of output using the minimum number of inputs (Malik, 2013). We can define this with an example. If a healthcare organization can deliver service to 25 people with 2 doctors and 4 nurses, then serving 20 patients with the same number of doctors and nurses keeping other patient waiting is technical inefficiency (Colombo & Tapay, 2004). Economic efficiency mainly is derived from the cost effectiveness perspective and can be defined as the production of the most output for a given cost or the production of a set of amount of output at the minimalistic possible cost (Culyer, 2014). If one ponders over the previous example, technical efficiency can be achieved by providing 2 doctors and 4 nurses to treat 25 patients or 4 doctors and 2 nurses to treat the same number of patients (Colombo & Tapay, 2004). Technical efficiency is not affected here but economic efficiency is affected because 4 doctors in place of 2 doctors would require more financial drain by the organization and therefore cannot fulfill economic efficiency.
By the term effectiveness, one can mean the extent to which goals, objectives and planned outcomes are achieved with the application of a well planned strategy, activity, intervention or initiative (Baicker & Robbins, 2015). The main objective for this was to achieve the desired outcome in the treatment under ordinary circumstances. There are certain components that help to define the term effectiveness in a much better way. The term effectiveness is often considered by different stakeholders with different values and therefore the differences between effective and ineffective care is also found to vary among different individuals (Auerbach et al., 2013). Different components that had remained intricately associated with the concept of effectiveness is definitions of medical necessity, assessing the term appropriateness, evidence based medicine and its application and also value based care (Danzon et al., 2015). Effectiveness of a healthcare service provided refers to the outcome of the services provided which are of the proven value and have no important tradeoffs. By the sentence, it is meant that benefits of the service provided must outweigh the risks that remain associated with all the patients with specific medical needs (Baio & Dawid, 2015). For example if someone wants to apply beta blockers to a present, its effectiveness should be judged. This application should be backed by well articulated medical theory and strong evidence of efficacy which could be the result from valid cohort studies and clinical trials (Steel et al., 2016).
Clinical effectiveness of an intervention, strategy, medication and other applications always remain backed up with different types of researches that are conducted by scientists usually carrying out single or multiple experiments and trials which may bring out expected results in the first go or may require a number of experiments which may still show conflicting results (Sanders et al., 2016). Application of such evidence based strategies and interventions prove more effectiveness when followed for the treatment of a patient.
The cost effective analysis helps to assess the benefit in the terms of health outcomes which may be in the form of improved symptoms and survival (Baio & Dawid, 2015). This can be very well explained by the example. The cost effectiveness of a project was analyzed. A study was conducted for assuming the effectiveness of in-vitro fertilization of women with that of a mild approach (Malik, 2013). The cost associated of the approach was compared with the net outcome of the project in the form of the love births that resulted from the cumulative pregnancies in the project.
Scientists have thereby defined the term cost effectiveness as the ratio that exists between the cost and expenditure of the therapeutic or preventive intervention to that of the relevant measure of its effect and outcomes (Malmivaara, 2014). Cost is mainly allocated in the form of dollar or pounds. The measure or effects is however is dependent on the intervention that is being considered by the concerned authority (Neumann, 2016).
Before establishing the interactive networks of the three important components of equity, effectiveness and efficiency one must try putting each of the concepts on a similar platform. This would in turn be helpful in establishing the webbed network that exists between them (Neumann, 2016). Effectiveness mainly focuses on the outcomes which are intended and desired that had been provided by health services. It is mainly measured by the different levels of improvement and health preservation. The outcomes include not only the outcomes related with health like disease symptoms, physical and mental functioning, mortality, and life expectancy but also impact of health outcomes like economic productivity, quality of life, and well-being (Andrews & Van de Walle, 2013). However when evaluating efficiency, concerned analysts determine this concept of health service delivery in terms of input or output. When considered as output, evaluation is made on production efficiency and when considering input the focus is on allocate efficiency which mainly depends on the concept of cost and effectiveness of a given service with that of other related service (Philipson, 2015). Equity however remains concerned with distribution of fairness in the provision of health services and health status among subgroups of population.
All these components play very important roles in analyzing the achievement of health services functioning and policy aims. If one wants to establish how the interaction exists between the components, it can be stated as that the improvement of the effectiveness of the healthcare services at the same time of holding the resources constant provides opportunities for the increment of efficiency (Price et al., 2014). Again increased efficiency helps in the creation of opportunities that result in improved effectiveness and equity.
However a number of conflicts may also arise when tacking the components on the same platform. If one wants to expand the limits of effectiveness by the allocation of additional resources for improving the healthcare services, it may compromise efficiency (Steel et al., 2016). This mainly happens when the cost of the resources are high in relation to the effectiveness. Another aspect also needs to be focused here. When a person maximizes effectiveness and efficiency by distribution of the resources to persons who would gain most health, equity is compromised (Malmivaara, 2014). This is unfair in respect of the procedural or substantive equity as this might lead to an uneven distribution of health services and health status coming under the policies.
Conclusion:
One can easily find out that an extensive relation exists between different components of health economics. The concerned authorities, healthcare sectors, policy makers and others must discuss and plan different systems effectively so that the components may perform in harmony when evaluating the economics in the healthcare sectors. This would ultimately help in solving the problems of resource management and help in sustainable maintenance of resources in healthcare.
References
Andrews, R., & Van de Walle, S. (2013). New public management and citizens’ perceptions of local service efficiency, responsiveness, equity and effectiveness. Public Management Review, 15(5), 762-783.
Auerbach, A. J., Chetty, R., Feldstein, M., & Saez, E. (Eds.). (2013). Handbook of public economics (Vol. 5). Newnes.
Australian Government productivity commission. (2015). Efficiency in health. Retrieved from:https://www.pc.gov.au/research/completed/efficiency-health/efficiency-health.pdf
Baicker, K., & Robbins, J. A. (2015). Medicare payments and system-level health-care use: the spillover effects of Medicare managed care. American journal of health economics.
Baio, G., & Dawid, A. P. (2015). Probabilistic sensitivity analysis in health economics. Statistical methods in medical research, 24(6), 615-634.
Braveman, P & Gruskin, S. (2003). Defining equity in Health. Journal of epidemiology community health. Retrieved from: doi:10.1136/jech.57.4.254
Colombo, F & Tapay, N.(2004). Private health insurance in OECD Countries: the benefits and costs for individuals and health systems.
Culyer, A. J. (2014). Encyclopedia of health economics. Newnes.
Danzon, P., Towse, A., & Mestre?Ferrandiz, J. (2015). Value?Based Differential Pricing: Efficient Prices for Drugs in a Global Context. Health economics, 24(3), 294-301.
Docteur, E & Oxley, H. (2004). The OECD Health Project: Towards high performing health systems: policy studies. Chapter 1. Page 19-86
Ferraz, M. B. (2015). Health economics, equity, and efficiency: are we almost there?. ClinicoEconomics and outcomes research: CEOR, 7, 119.
Griffith University. (2017). Teacher’s notes: Economic Ideologies. Retrieved from: Griffith portal.
Guinness, L., & Wiseman, V. (2011). Introduction to Health Economics. 2nd edition. McGraw Hill Open University Press. Page 251
Malik, A. (2013). An innovation in the undergraduate medical curriculum: integrating a course on health economics longitudinally.
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Neumann, P. (2016, October). PANEL: RECOMMENDATIONS OF THE SECOND PANEL ON COST-EFFECTIVENESS IN HEALTH AND MEDICINE. In 38th Annual North American Meeting of the Society for Medical Decision Making. Smdm.
Philipson, T. J. (2015). Paying for cost-effective health care: Does it violate both static-and dynamic efficiency?. Nordic Journal of Health Economics.
Price, R. A., Elliott, M. N., Zaslavsky, A. M., Hays, R. D., Lehrman, W. G., Rybowski, L., … & Cleary, P. D. (2014). Examining the role of patient experience surveys in measuring health care quality. Medical Care Research and Review, 71(5), 522-554.
Sanders, G. D., Neumann, P. J., Basu, A., Brock, D. W., Feeny, D., Krahn, M., … & Salomon, J. A. (2016). Recommendations for conduct, methodological practices, and reporting of cost-effectiveness analyses: second panel on cost-effectiveness in health and medicine. Jama, 316(10), 1093-1103.
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