The Importance of Evaluation in Health Economics and the Four Types of Economic Analysis

Evaluation in Health Economics
Student’s Name
Institution
Abstract
Resources in the healthcare industry are critical, and there is a need to make an optimal decision on how they are used effectively while maximizing their output. Health economics is concerned with the optimization of resources in healthcare. Economic evaluation, which is a significant facet of health economics, plays an important role in ensuring that the executives in the industry make informed decisions. The major types of economic analysis that are practical in the healthcare industry include cost-minimization analysis, cost-benefit analysis, cost-effectiveness analysis, and cost-utility analysis. Although they serve different purposes, the bottom line for all the types of analysis is to relate the consequences of health programmers and procedures to cost. A significant shift in the policy design in healthcare has also been witnessed in the recent past, with the most decisions being informed by economic analysis. Policies that conflict with the advice of economic evaluation often comes under heavy criticism by health economists. Technology has also had a fair share in the impact of health economics, with the emergence of new analysis techniques, courtesy of technological advancement. This paper examines the role of evaluation in health economics.
Evaluation in Health Economics
Introduction
The activities in a healthcare facility can be perfectly modeled to emulate that of demand and supply. A more practical way is to consider the need for good health as a consumer want and a healthcare facility as the product. It is, therefore, correct to recognize the healthcare industry as a business. Besides, the money matters surrounding the purchase of pharmaceuticals, employees’ salaries, and the most recent medical insurance that has attracted the attention of investors has sealed the economic footprint of the healthcare industry. In this regard, the need for business-minded and economically savvy personnel is paramount, and health economics functions to satisfy this need. Underneath the broad subject of health economics is another important aspect, economic evaluation, which helps in the regulation of the financial intervention in a healthcare institution by establishing the relationship of the outcomes with a common denominator, cost ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"sj2oLjqf","properties":{"formattedCitation":"(Phelps, 2016)","plainCitation":"(Phelps, 2016)","noteIndex":0},"citationItems":[{"id":1245,"uris":["http://zotero.org/users/local/IBolxqVE/items/AWGI8CJU"],"uri":["http://zotero.org/users/local/IBolxqVE/items/AWGI8CJU"],"itemData":{"id":1245,"type":"book","publisher":"Routledge","source":"Google Scholar","title":"Health economics","author":[{"family":"Phelps","given":"Charles E."}],"issued":{"date-parts":[["2016"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Phelps, 2016). The economic evaluations can be classified into four main categories: cost-minimization analysis, cost-benefit analysis, cost-effectiveness analysis, and cost-utility analysis.
Importance of Economic Evaluation in Healthcare
From a general perspective, economic evaluation plays an important role...