Health Economics is the method of examining how much value for money any particular type of healthcare provision delivers. Given the finite resources available to healthcare systems, health economics can help to inform and improve the allocation of those resources to deliver the best return; in short, how to provide cost effective healthcare. Health economics is a valuable approach to informed decision making about what healthcare providers should buy and what prices are acceptable.
However, health economics can never be an exact science. There are a great number of parameters that need to be considered; it is not as simple as looking at the cost of a particular health technology and deciding whether or not it is too expensive. Any true assessment of healthcare needs to look not only at the cost, but at the benefits delivered, to the patient, the healthcare system, to society and to the wider economy.
For example, someone undergoing a joint replacement using minimally invasive surgery may require more expensive instruments and advanced techniques than a more invasive approach. However, if as a result of the minimally invasive approach, the patient is discharged from hospital earlier and can return to work quicker, then a number of economic benefits can arise. Less in-patient time is a direct saving, as is less specialist care and reduced risk of infection or complications. The ability to return to work early provides an economic benefit too and there are also subjective benefits, such as improved quality of life.
Health Technology Assessment is increasingly favoured as the best way to make economic appraisals. Such assessments examine the elements of cost, efficacy, and patient benefits along with how it compares to other technologies available. Whilst these are valid parameters, they must be balanced with a holistic appraisal of the benefits delivered; otherwise the true value of innovative technologies will not be fully recognised and taken into account.