article on health economics

8/14/2019 Article on Health Economics

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AN ECONOMIC ANALYSIS OF HEART DISEASE TREATMENT IN

PRIVATE HOSPITAL WITH SPECIAL REFERENCE TO

METROPOLITAN CITY OF CHENNAI

Dr. Tmt. V. Renuka Devi*

Tmt. Sindhu T. S**

Abstract

Private Hospital Treatments of Heart Disease is little costlier for the

divergent standard of people in Chennai, their daily attitude will differ from

person to person like too much of tension in both working places and their

homes, food habits, resting times, lack of physical activities, and other

habits, etc: at last it leads to cardiac problems. Middle income people are

facing the Socio-Economic Burden to get their treatments in Private

Hospitals, Medicines per month of this disease are little costly, Expenses of

diagnosing the Heart diseases through ECG, CT scans, Echocardiograph,

Angiogram, etc. are little expensive it comes around Rs. 50,000, the main

burden of the disease are faced by the person is at the time of Surgery and

Sometimes it leads to change the financial capacity of the patient.

Most of the Peoples income are changed After their Surgery

(Especially Bypass Surgery), they choose Alternative Jobs or Voluntary

Retirement to reduce their Workload. 60% of people are comparatively

earning lesser amount than pre-surgery, rest of the peoples are the

employees with low hurdle to do their work.

The treatment of heart Disease is a constant process till the end of theirlife, Patients have to consult their physicians every month, monthly

medicine charges, Once in three months check-up, this cost approximately

comes around Rs. 12,000. Automatically it affects the Economic

Background of the patient and their Family.


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* Reader and Head , Department of Economics, Ethiraj college for

women, Chennai.

** M.Phil Research Scholar, Department of Economics, Ethiraj College

for Women


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AN ECONOMIC ANALYSIS OF HEART DISEASE TREATMENT IN

PRIVATE HOSPITAL WITH SPECIAL REFERENCE TO

METROPOLITAN CITY OF CHENNAI

Dr. Tmt. V. Renuka Devi*

Tmt. Sindhu T. S**

Health Economics

Health Economics has been explained by various authors in

different ways. A general survey of some of the definitions suggest that

health economics is the discipline that determines the price and the quantity

of limited financial and nonfinancial resources devoted to the care of the

sick and promotion of health. It covers the medical industry as a whole and

extends to such fields as the economic analysis of the cost of diseases,

benefits of health programs and returns from investment in medical

education, training and research.

The aim of economics applied to health field or health

economics is to quantify overtime the resources used in health service

delivery and to organize, allocate and manage them in such a way that they

are used for health purposes with maximum efficiency in preventive,

curative and rehabilitative health services, so as to achieve maximal

individual and national productivity.

* Reader and Head , Department of Economics, Ethiraj college for

women, Chennai

.** M.Phil Research Scholar, Department of Economics, Ethiraj College

for Women


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Health Economic View of Demand and Supply

In the Health care delivery system has taken as a market

were the supply and Demand has made as in the ordinary market. Here

Medical institutions and providers are taken as the supply side, where as the

patients or consumers are on the demand side

According to Indian health care delivery system, it is providing free of

cost in the Government hospitals, most of the people are avoiding to take the

health delivery for their major diseases like heart disease and cancer because

of poor quality of treatment, Slow Process of treatment, irresponsive

Attenders, patients satisfaction derived from the treatment of government

hospital deteriorates and diverts them towards private hospital

Most of the middle income groups are approaching the

private hospitals for better treatment , better environment, infrastructural

facilities and hospitality. In The treatment given by the private hospitals are

fully satisfied by the demanders, where as the cost for the treatment is very

costly to them, it makes them really burdened. So many peoples sell their

land and jewels, opting loans from banks and relatives. Some of the people

standard of living has changed ,their childrens educations are affected.

After their treatment they have to spend the money for monthly medicines/

drugs, rent for their houses, Electricity charges, household expenses, school

or college fees ,childrens dresses, stationery expenses, health check-up

costs , doctors consultation fee, repayment of loans,and other expenses etc;

it is an additional expenses for them to face their day to day life.


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Whether the price of the treatment increase or decrease, the

peoples demand will not come down, price inelasticity of demand is

happening in this health care delivery ,especially in the heart treatments.

In Economic View

Health care delivery system is a market

Patients are the consumer or the demander (Demand)

Hospital and their institutions are the supplier (Supply

DEMAND OF HEART DISEASE TREATMENT

Demand for health care service is very different from the demand for other

economic goods.

In Economic goods consumer will be aware of the product,

where as consumer in the health care service is dependent

upon the producer for getting information about the quality

of the product or the treatment.

In Economic goods consumer are the king to decide what

to buy and where to buy in other part consumer choice is

decided by the producer or the physicians.

Consumer is treated as a king in the economic goods

whereas in the health care delivery, sometimes consumers

are ignored (Because of limited No. of Beds).

Variations of Price will fluctuate based on consumers

demand whereas Health care demand will not fluctuate

according to any change in Price.(Health Care is Necessity)


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Factors of Health Demand

Income of the purchaser

Price of health services

Price of complementary services (Ayurveda, homeopathyetc.,)

Goodwill or assurance of the health care services.

Functions of Health Care Demand

Health care demand function D= fm (Hs, A, P)

D- health care demand.

m- quality of medical care demand.

Hs health status (wish).

A- Individual perception of the need.

P- price of the medical care to the consumer (they Charge

different price).

Price of a health status:

General demand is different from medical demand

because general demand is consumable there is no time gap,

medical demand is the demand when they have sick only they will

demand. When the price of health services increase or decrease

the demand will not vary, if they have heart disease only they will


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demand health services, product is available only if they get

appointment from the physician or surgeon.

Entry of the market:

Only the medical professionals ,licensing

requirements, paramedical, laboratory clinics ,etc can only enter

this market , they are known as the producers of health care

services, health professionals are the monopoly sellers they fix the

price of their own whether the price increases or decreases the patient has to demand for their betterment of health. The

Demanders enter only when their necessity of health care is

required.


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FIGURE: 1 PRICE INELASTICITY DEMAND OF HEART

DISEASE TREATMENT IN PRIVATE HOSPITAL

Y

O D X

Diagrammatic Explanation:

In the diagram OX axis represent heart disease treatment in the

private

Hospitals.

OY axis represent the price or cost of the treatment.

DD1 refers the Demand curve for the heart disease treatment.

P1

P

P2Price

Demand of Heart Disease treatment in Private hospital

D1(Demand)


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This diagram shows that when the price of heart disease Treatment is

Rs.3,00,000 (P) the demand will be the same, whether If the price has

declined to Rs.2,80,000 (P1), or when the price of the treatment has

augmented upto Rs.5,00,000 (P2) . Consumers psychological

assurance or goodwill of the private hospital treatment are the major

factor for this rigid demand.

It refers to a situation when the quantity demanded remains

unchanged irrespective of any rise or fall in the price of a commodity.

The demand is perfectly inelastic, the elasticity of demand is zero.

(E=0). Perfectly inelastic demand curve DD1 it is a vertical line parallel to the

Y- axis, in this figure Treatment demanded is OD both at the price of

Rs. 3,00,000/- and Rs.5,00,000/-.

It shows that when the Price increase or Decrease Demand of the

Health Care Services of private hospitals remain the same, Here Demand

Determines Necessity Part Of their life.

SUPPLY SIDE OF THE HEART DISEASE TREATMENT

Hospitals and their dependants are the supply side of the health care

service market, whereas in the private hospitals their capital investments

are very high as most of the machineries are imported for diagnosis and

heart treatments, which nearly costs crores of rupees and they have to spend

for their maintenance charges, specialized facilities such as intensive care

units, angiography suites and operating rooms, electricity , building

expenses, costly drugs, doctors, nurses, attenders and other staffs salaries

are be paid by the private hospitals.


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private hospitals act as the business, it motivates both the profit and

welfare of the people, they make the patient comfortable with quality of

treatments, environment, infrastructural facilities, good hospitality,

immediate treatments, good response to the patients,etc Hence people started

comparing the government hospitals with private hospitals and

automatically goodwill goes to the private hospitals. so people are willing to

get their treatment from these institutions, medical Institutions charged their

expenses from the patients. Surgery cost is about Rs.3,00,000 to Rs.8,00,000

(it varies depending on the class), and is one of the costliest surgery in the

world.

High income groups manage to pay the fees with savings and other

arrangements, whereas the middle income groups are facing the great burden

to pay the amount what they are charged.

COST OF HEART DISEASE DIAGNOSING MACHINES

S.No

Machines for diagnosis Cost of the machine

(Rs)

1 Echocardiograph 3D

colour

1. 25 crores

2 Nucleous scan 1. 75 crores

3 ECG 2. 5 lakhs

4 Angiogram 3. 5 crores5 Holter monitor 4 .5 lakhs

6 Thread mill 12 .5 lakhs

Tota

l

6. 69 crores


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Source: Primary data of one of the leading private hospitals in Chennai.

The above table shows the price of various Diagnosing

Machineries. Most of the machineries are imported from foreign countries,

which totals to around Rs. 6,69,50,000 crores (with out taxes, duties and

maintenance charges) . These machines are bought through loans, so the

authority has to pay the interest to the banks.

Supply side also faces the burden for their investments of

machineries, equipments, building expenses, import drugs, monthly

maintenance charges, surgeons fees,etc so these expenses are charged from

the patients.

In this supply of health services act as a price elasticity ; Depending

upon the price increase the supply of health services also increase, they

provide better health care, hospitality, etc.,

FIGURE: 2 PRICE ELASTICITY SUPPLY OF HEART DISEASE

TREATMENT IN THE PRIVATE HOSPITAL

P2

P

P1

S

S1

S1 S S2

O

Price

Supply of Heart diseases Treatment in Private Hospital


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Diagrammatic Explanation

In the Diagram OX axis represent heart disease treatment in the

private hospitals

OY axis represent the cost or price of the treatment

SS refers supply curve of the Heart Disease Treatment.

The diagram shows that when the price of heart disease treatment

or surgery comes down from Rs. 3,00,000 (P) to Rs. 2,80,000 (P1)the supply of health care is comparatively lesser than before, when

the price of treatment increases up to Rs.8,00,000 (P2) the supply

will be higher. This changes will happen within the premises of

hospitals at the same time, depending upon the class.

Price elasticity of supply it refers to the situation when any change

in price, supply will differ according to change in the price.

Price elasticity of supply is when a small change in price leads

to a big change in supply. It is called the elastic supply. It can be explained

with the help of a diagram, The price of the treatment increase from general

ward patients to deluxe ward patients, the cost will vary between person to

person depending on the price the supply of health care service is also

increased.


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DEMAND AND SUPPLY OF HEART DISEASE TREATMENT

In the health service market, supplier of health

services are medical institutions and demanders are the patient , the demand

of this product will differ from Economic market, it is demanded when the

patient has a disease. Three fourths of the Middle income Groups approach

Private Hospitals because of the Quality of Treatment, at the same time they

are charged at a sky- scraping prices for their treatment. Here price is fixed

by the supplier, the supplier follows monopoly Price, they fix the price

according to the capacity of the patients. ( Operation charges will be the

same for all the patients, other health care facilities will vary depending on

the price)

FIGURE: 3 DEMAND AND SUPPLY OF HEART DISEASE

TREATMENT IN PRIVATE HOSPITAL

Quantity Demand and supply of Health Services

Y

O

S1

S

P

D1

XD

Price


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Diagrammatic Explanation:

OX axis represents Quantity of Heart Disease services

OY axis represents price of the Heart Disease Treatment

DD1 refers the Inelastic demand of Heart Disease Treatment

SS1 represents the Elastic supply of Heart care services.

P represents price of the Treatment.

The Diagram shows that when the price is increasing or decreasing

the supply will change accordingly, Demand and Supply will be in

equilibrium when the price is equal at the point P where the demand

and supply intersect. It clearly shows that the Demand will increase when the patients are in

need of health care, no matter whether the price increase or decrease.

So there is no relationship between price and Demand of Heart

Disease but the financial consequences relating to health care

expenses will carry on throughout their entire life.

Supply and price is closely related in the Health service Market.

Demand And Supply of treatment makes one Better-off and other

Worse-off, it determines the Price of the health Services. Demanders face

the Economic Burden of Getting the Service but a Supplier earns Profit to

Provide the Service.

COST-EFFECTIVE ANALYSES OF THE TREATMENT

Cost benefit analysis, in which both costs and benefits areexpressed in the same units (such as Rupees ), and cost- effectiveness

analysis, in which the costs are commonly expressed in monetary terms

while the effectiveness is expressed in terms of the health benefit.


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Effective of this heart disease treatments in private hospitals are

better one for the high income groups as well as the middle income groups.

According to developing country like India, peoples per capita income is

comparatively lesser with other countries, even the developed countries are

facing the burden for this heart disease treatment, then what will be the

condition of the developing ones with huge heart diseases.

Calculations Of Cost-Effective Treatment of Heart

Diseases

Cost new Cost old

Effect New- Effect Old

12,000-2,50,000 -2,38,000

15,000-12,000 = 3000

= -76.6

Source: Braunwald, Heart disease A Text Book of Cardiovascular

Medicine Indian Edition, 7th edition, Saunders An imprint of Elsevier, pg:

20

Post surgery Medical Expenses (cost new) = Rs. 12,000/-

Surgery Period Expenses (cost old) = Rs. 2,50,000/-

Pre surgery period Income of the patient (Effect old) = Rs. 15,00/-

Post- Surgery Period Income of the Patient (Effect new) = Rs. 12,000/-

Cost- Effective Treatment of Heart Disease is 76.6


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Practically Speaking Cost is effective for this heart disease treatment

in private hospitals, the outcome of the cost is satisfactory by the patients

and it gives them a new life, but the efficiency on physical activities come

down so the Calculated Cost Effective Treatment of Heart Disease Shows

Negative Points (-76.6). That is after the surgery, patients are unable to do

hard work physically and mentally. Most of the patients are shifted

alternative jobs which has less strain and 40% of the people are take

voluntarily retirement.

Comparing the cost effectiveness with the treatments, it

makes them feel very expensive for both the categories of income groups.

Here High income groups can be referred as A and Middle income groups

can be referred as B . Price of the treatments are fixed by the private

hospitals it varies depending upon the class of the private hospitals and their

patients willingness to pay (separate room and special care)

Small change in the cost of the treatment will adversely affect the

huge part of the financial condition of the middle income person that is

category B whereas in the high income groups their financial capacity is

affected at a low level. Comparatively, Category B is facing the Economic

burden for treating heart disease in the private hospitals than category A.

So Middle Income Groups are Facing the Economic Burden Of Treating

Heart Disease In the Private Hospitals.

To conclude cost effective of heart disease treatment in private

hospitals are accepted by the patients. It clearly shows that too much of

demand in private hospitals when the prices are increased or not, the

demand is same and on the other hand it is a burden to all section of the

people, it makes improvement in the physical part of the body but it brings

down the financial future development of the patients.


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ECONOMIC FLUCTUATIONS OF POST SURGERY PERIOD OF

THE PATIENT

37

28

11

26

0

5

10

15

20

25

30

35

40

Same

Salary

Declined

Income

Voluntary

Reti rement

Nil

Source: Primary Data

Inference:

The above Chart Clearly shows that 37% heart patients are

earning the Same salary after their surgery and treatment. (it include a both

surgery as well as medicines taker) For 28% People salaries have declined

after their Surgery. 11% Heart Patients have taken Voluntarily Retirement

From their Jobs, and 26% of heart Patients quit their jobs after their

Surgery .

It Concludes that After their Surgery Most of the people do not work

efficiently than Before. So Cost- Effective is comparatively lesser than

other Disease.

Conclusion


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Economic Burden of Heart Patients and Decline of

Patients income make fluctuations in the Percapita income of a group of

people, Contribution of GNP has declined by these heart Patients, so it

drastically changes the state as well as the countrys Economy.

To avoid this Economic Burden of Treating Heart Disease in the Private

Hospitals, Government has to provide Better Quality of Treatment in their

Hospitals, Every individual has to take the health Insurance scheme to avoid

the Monetary burden at the time of Hospital Expenses. These burdens can

be reduced by the medical insurance, but most of the people are not aware

of the med claim or medical insurance, it covered more than half of the

money spend for their treatment, it also reduced the economic burden of the

patients and their family.

BIBILIOGRAPHY

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1. Anderson, Hamison,Stamler, Mattila, Krumholz, Multiple Risk factor

Intervention, Trial 1997-2000

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3. Braunwald, Heart disease A Text Book of Cardiovascular Medicine

Indian Edition, 4th edition, Saunders An imprint of Elsevier.

4. Gupta. S. P, Statistical Methods2008, Sultan Chand and Sons

Publication


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8. Kop W.J.J.(August 1997) Psycho Som, Vol. 43(2)

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REPORTS

1. Global Report, Innovative Care For Chronic Conditions, Building

Blocks For Action

2. WHO, Preventing Chronic Diseases a Vital Investment

3. World Health Statistics(2006), World Health Organisation Report

WEBSITES

1. www.thecardioblog.com

2. www.lifeheart.com

3. www.pubmed.com

4. www.medicinenet.com

5. www.healthline.com

6. www.medkez.com

7. www.heart.bmj.com

8. www.thelancet.com9. www.google.com

10.www.hsph.harvard.edu.com

NEWS PAPER

1. Times Of India 4-7-2008 (Fri) pg: 4
http://www.thecardioblog.com/http://www.lifeheart.com/http://www.pubmed.com/http://www.medicinenet.com/http://www.healthline.com/http://www.medkez.com/http://www.heart.bmj.com/http://www.thelancet.com/http://www.google.com/http://www.hsph.harvard.edu.com/http://www.thecardioblog.com/http://www.lifeheart.com/http://www.pubmed.com/http://www.medicinenet.com/http://www.healthline.com/http://www.medkez.com/http://www.heart.bmj.com/http://www.thelancet.com/http://www.google.com/http://www.hsph.harvard.edu.com/


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