Health Economics

The Element examines the economic perspectives on improving quality and safety in healthcare, highlighting the need for different approaches to stimulate improvement. It emphasizes the importance of economic evaluation of improvement efforts, using cost-effectiveness analysis to compare benefits and costs.

Format: Hardback
Length: 42 pages
Publication date: 18 January 2024
Publisher: Cambridge University Press

This Element examines economic perspectives on improving quality and safety in healthcare. While economists generally acknowledge competition as a crucial driver of improvement, its application in healthcare presents complexities. This is partly due to the limited number of organizations providing certain services and the difficulty for individuals to assess healthcare quality accurately, as well as the limited ability to directly pay the full price for services. Consequently, different approaches are required to stimulate improvement. The authors explore examples from the care home, primary care, and hospital sectors, emphasizing the importance of conducting economic evaluations of improvement efforts. They argue that improvement activities should only be pursued if the potential benefits exceed the costs of implementation and operation. Through the use of examples, the authors illustrate the economic approach to comparing the benefits and costs of improvement efforts by employing cost-effectiveness analysis. This title is also available as Open Access on Cambridge Core.

The healthcare sector faces significant challenges in improving quality and safety, driven by the need to provide high-quality services while managing limited resources. Economic perspectives play a crucial role in shaping these efforts, recognizing the importance of competition as a driver of innovation and improvement. However, the healthcare industry differs from other sectors in several ways, making it challenging to apply traditional economic principles.

One of the key challenges in healthcare is the limited number of organizations providing certain services. This can lead to monopolistic practices and limited competition, which can hinder the pursuit of quality improvement. In addition, healthcare services are often complex and require specialized knowledge and equipment, making it difficult for consumers to judge the quality of care. As a result, patients may be reluctant to switch providers or seek alternative treatments, even if they are dissatisfied with the quality of care.

Another challenge in healthcare is the lack of transparency in pricing and reimbursement. Patients may be unaware of the full cost of healthcare services, including hidden fees and administrative costs. This can create incentives for providers to prioritize profits over patient care, leading to suboptimal outcomes. Additionally, the reimbursement system for healthcare services can be complex and subject to fluctuations, making it difficult for providers to predict their financial performance and invest in quality improvement.

To address these challenges, economists have developed various approaches to improving quality and safety in healthcare. One approach is to promote competition in the healthcare market by encouraging the entry of new providers and promoting price transparency. This can help to increase the quality of care by encouraging providers to compete on the basis. Additionally, promoting price transparency can help to reduce the financial burden on patients and encourage them to seek out high-quality care at a lower cost.

Another approach is to use economic incentives to encourage providers to invest in quality improvement. For example, providers may be rewarded for meeting certain quality metrics or for improving patient outcomes. This can help to incentivize providers to invest in the latest technology, training, and equipment, as well as to improve their management practices and patient communication.

Economic evaluation is also an important tool for measuring the effectiveness of quality improvement efforts. Cost-effectiveness analysis, in particular, can help to compare the costs and benefits of different interventions and determine which ones are most cost-effective. This can help policymakers and healthcare providers make informed decisions about how to allocate resources and prioritize quality improvement efforts.

In conclusion, the healthcare sector faces significant challenges in improving quality and safety, driven by the need to provide high-quality services while managing limited resources. Economic perspectives play a crucial role in shaping these efforts, recognizing the importance of competition as a driver of innovation and improvement. However, the healthcare industry differs from other sectors in several ways, making it challenging to apply traditional economic principles. By promoting competition, promoting price transparency, using economic incentives, and conducting economic evaluation, policymakers and healthcare providers can work together to improve the quality and safety of healthcare services.

ISBN-13: 9781009454209