Health economics is the application of economic principles, models and techniques to decision-making in healthcare (Culyer 2005, Morris et al. 2005). Healthcare costs are on the increase globally, rising faster than the rate of inflation in developed countries and consuming a large proportion of the total economy (Meltzer 2001). Traditionally, healthcare professionals have focused on clinical effectiveness of intervention and diagnostic methods.
The demand for health care has been on the increase worldwide (Persad et al. 2009). The increase in demand for healthcare and associated costs may be due to increased demand for good health (Dewer 2010), ageing population (Shortell et al. 2010), lifestyles (Tang et al. 2012), infectious and communicable diseases (Daar et al. 2007), and improvement in technologies and interventions (Tang et al. 2012). Moreover, there are higher expectations of people on health care (Tang et al. 2012).
Austerity is a problem affecting healthcare funding in many countries. In response to this, governments are reducing their funding commitment to health care (Porter 2013). For example, the overall healthcare spending in the UK National Health Service (NHS) from 2010–2015 is limited to a 0·4% increase (Department of Health 2010). In addition, the NHS has been mandated to make a £20 billion (approximately 4% per annum) efficiency savings over this period (Prowle 2011).
Healthcare professionals are becoming more involved in implementation of national policies through the Technology Appraisal programmes such as the National Institute for Health and Care Excellence (NICE) in the United Kingdom. Many healthcare programmes are struggling with decommissioning, and decision-makers are under pressure to consider priorities around investment and de-investment (Robinson et al. 2012). Therefore, economic evaluations are becoming an increasingly important aspect of policy-making on the use of new technologies and interventions for healthcare programmes faced with increased budget constraints (Robinson et al. 2012). As a result, there is pressure to reduce healthcare expenditures among other competing needs, due to limited resources. However, the knowledge of health economics among healthcare professionals is still very limited.
The work of health economist informs decision-making in health care, and as a result, health economics topics are now being integrated into undergraduate curriculum in medicine (Sweeney & Watts 2009, Gray & Lorgelly 2010). Health economics has also been introduced as part of postgraduate medical education (Meltzer 2001, Musgrove 2001, Kernick 2003). It is believed that medical students will respond positively to health economics being a component of undergraduate medical curriculum as it provided them with good understanding of basic economic principles and better prepared them for clinical practice (Sweeney & Watts 2009).
Every decision made by policy-makers, managers, administrators and healthcare professionals are economic decisions. Therefore, it is important for managers and healthcare professionals to have some understanding of health economics so that they will be in a position to take decisions that will be in the overall best interest of their patients. Additionally, the knowledge of health economics will enable managers and healthcare professionals to use the limited resources that are available to them.
It is believed that health care is an economic activity that is based on basic economic principles (Bonča & Tajnikar 2008). The knowledge of health economics should provide healthcare professionals with the necessary skills to work as an active and important part of the healthcare organisations (Bonča & Tajnikar 2008). Therefore, understanding the basic economic principles will enable healthcare professionals to adjust their professional work and ethics within the environment in which they operate (Bonča & Tajnikar 2008). Understanding the basic economic principles that apply to health care may also increase workforce mobility and improve the allocative ability of labour, thereby improving efficiency in health care (Bonča & Tajnikar 2008). Hence, the application of economic principles can help healthcare professionals to actualise the overall vision of health systems to deliver equitable, high-quality, safe, efficient, accessible and cost-effective service.
As healthcare professionals are becoming more involved in national policy implementation, and with current economic climate, where clinicians are charged with the responsibility of achieving more with limited resources, the knowledge of health economics will become even more important. This will enable them to be fully involved in debates about resource allocation to meet the healthcare needs of their local populations (Douglas & Normand 2005). As a result, the knowledge of the principles of economics and basic health economics is important for healthcare professionals at various levels of their education (Bonča & Tajnikar 2008).
This could be at undergraduate and postgraduate levels; hence, topics on health economics should be included in the curriculum of undergraduate education programmes in healthcare professions such as physiotherapy, nursing, occupational therapy and speech therapy. In addition, any programm that prepares students for careers in management and leadership roles in health care should include health economics topics. Therefore, health economics should be an important component of postgraduate programmes for healthcare managers who are responsible for policy decisions. Such programmes may incl-ude Advanced Masters and Professional Doctorate in Health.