1 min read
The rules of polite small talk dictate that one should always introduce oneself, ask how the other person is doing, and more often than not, ask what the other person’s occupation is. As a health economist, my response is often met with the question: what is health economics? Shocking question to those of us who have spent years immersing ourselves in the topic – after all, Health Economics has changed the game in healthcare.
First, a short introduction to explain what health economics actually is. Health economics is a branch of economics, focusing on how people make decisions regarding health and how to optimally allocate limited health resources. A typical example of what a health economist might do is look at how the size of a copayment influences how often people visit their GP. In the context of rising healthcare expenditures, health economics has become a popular tool to make evidence-based decisions regarding health policy. With limited resources, one has to make sure that every dollar spent provides the maximum possible benefit in return.
The fact that health economics is not only concerned with costs, but with how those costs bring about benefits to the healthcare system, means there has been a gradual shift in mindset from cost-based healthcare (making investment choices depending on relative cost) to value-based healthcare (making investment choices depending on the value you get in return for relative cost).
For instance, say a hospital is looking to procure new hospital beds. The cheapest beds on the market are not necessarily the best value for the hospital. Although the initial expense might be lower, common complications with hospital beds are nurse burden, pressure injuries and falls, all of which entail enormous costs. If the hospital were to go for a more expensive bed, but which can reduce these issues, the hospital would likely save money in the longer term.
It’s no longer about cutting costs; it’s about making sure you get the maximum benefit out of every dollar. That is how Health Economics has changed the game in healthcare.