What is health economics?

Health Economics is the study of how scarce resources (e.g. labour, medicines, hospital bed-days etc…) are allocated among alternative uses for the care and treatment of illness and disease and the promotion, maintenance and improvement of health.

Why is health economics important?

With rapidly rising healthcare expenditures and limited healthcare resources, evidence that a new healthcare intervention (e.g. medicine, surgical procedure, rehabilitation technique) is more effective than usual practice is no longer the sole consideration when deciding whether an intervention will be provided by the healthcare system. Information is now also required on whether the new intervention will provide “good value for money”.

What sorts of questions does health economics address?

One of the main questions that health economics addresses is whether the additional health generated by a new intervention is worth the additional costs. To answer such a question health economists perform what is termed an “Economic Evaluation”. Examples of economic evaluations include:

• Gray A, Read S, McGale P, and Darby S (2009). Lung cancer deaths from indoor radon and the cost effectiveness and potential of policies to reduce them. BMJ, 338:a3110.
• Mihaylova B, Briggs A, Hlatky M, Armitage J, Parish S, Gray A, and Collins R (2009). Statin cost-effectiveness in the United States for people at different vascular risk levels. Circulation: Cardiovascular Quality and Outcomes, 2:65-72.
• Simon J, Gray A, Clarke P, Wade A, Neil A, and Farmer A (2008). Cost effectiveness of self monitoring of blood glucose in patients with non-insulin treated type 2 diabetes: economic evaluation of data from the DiGEM trial. BMJ, 336(7654):1177-80.
• Briggs A, Mihaylova B, Sculpher M, Hall A, Wolstenholme J, Simoons M, Deckers J, Ferrari R, Remme WJ, Bertrand M, and Fox K (2007). Cost effectiveness of perindopril in reducing cardiovascular events in patients with stable coronary artery disease using data from the EUROPA study. Heart, 93(9):1081-6.

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