INTRODUCTION

Health Service Management and Policy

(COMH 501)

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Overview

• Schedule – May 19 – May 23

– 09:00 – 12:00 Am

– May 23, 2:00 Exam

• Assessment and grading – Grades: A-F

– Continuous assessment, Daily quiz (50%)

– Final exam (50%)

•

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• Concept of Health and Determinants

• Primary health care and health policy and system in Ethiopia

• Health service management

• Health economics

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Concept of Health and Determinants

Alemayehu Desalegne

Addis Ababa University School of Public Health

May 2014

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Session Objective

• Definition and properties of the production function

• Review historical trend of health production function

• The definition of Health: the Impact of Medical Services on Health

• What other factors impact the health of a population?

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Life Expectancy at Birth 1900-2000

Why life expectancy

increased from 47 in 1900 to 77 in

2000?

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Trend in Mortality

Why mortality rate decreased?

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Why has declined mortality?

• Big medicine theory

– Antibiotics for infectious diseases

– High-tech treatments for cardiovascular disease

• Economic growth theory

– Nutrition allows one to withstand disease

• Public health theory

– Better sewers, cleaner water and air

• The long reach of early life factors

– Maternal nutrition in utero and fetal development 8

0

100

200

300

Dea

ths

per

100,

000

1900 1920 1940 1960 1980 2000year

Influenza and Pneumonia Deaths per 100,000

Big Medicine: Antibiotics

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The development of

antibiotics helped,

but it came very late

in the process.

Economic growth & nutrition

• Measures of nutrition:

– Collected lots of data on weights and heights over time

– Height (nutrition as a child, especially up to age 3)

– Weight (nutrition as an adult)

– Taller people live longer

– People at the appropriate weight live longer

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Economic Growth Explanation

• This was a time of exploration and many new foods were introduced into people diets.

• Agriculture was advancing, new crops, crop rotation, seed production ….

• Standards of living were increasing as a result of trade so people had the money to buy more food.

• Better nutrition results in stronger immune system

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The Public Health Revolution

• Modern health practices date from the early 20th century (post germ theory)

– Macro Public Health: sanitation; clean water; pasteurized milk

– Micro Public Health: bathing and hand washing

• Epidemiological studies: specific public health interventions improve health

• Gap in child mortality by class emerges after public health information is available

– Upper classes had more information?

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What is health • Health is a multifaceted concept and not easily

measurable.

• Health is a state of complete physical, mental… well-being and not merely the absence of disease or infirmity (WHO, 1948)

• Human capital: value of learning, experience and ability embodied in workers which increases productivity and income.

– Asset: accumulates and depreciates

• Individual or households can improve their health through use of health care, diet …

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Measures of Health Status cont…

• In the absence of a comprehensive or absolute measurement of health,

– 1) life expectancy;

– 2) disease prevalence;

– 3) frequency of preventable deaths (crude, specific and standardized rates, avoidable deaths, etc.); and

– 4) availability of medical services; serve as health indicators.

• Judgments regarding the health of a particular population are usually performed by a comparison with other populations or by studying trends in the health indicators level of a population.

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What is health care?

• Definition: The prevention, treatment, and

management of illness and the preservation of mental

and physical well-being through the services offered

by the medical and allied health professions.

• Health care can be traded on the market but health

cannot.

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Health Production Function • The purpose of any firm is to turn inputs into outputs

• The production function is a mathematical representation that shows the maximum quantity of output a firm can produce given the quantities of inputs that it might employ.

• The relationship between the input of a single variable and the output of the product.

• Mathematical mapping function Q = f ( X, Y, …)

• Technical relation between inputs and outputs

• Describes the relationship or flows of inputs and flows of outputs over a specified period

• Output is a function of inputs

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• Standard production function: Q = f(L,K)

• Let:

– Q represent the output of a particular good during a period, K represent capital use, L represent labor input, and M represent raw materials, the following equation represents a production function.

Q= f(K, L, M,…)

• Grossman (1972) developed a theoretical health production function; H is a function of Economic (Y), Social (s) and environmental (V) variables

• Where output is usual some measure of health status (HS).

– HS=f(inputs to health); -------What could the inputs be?

– HS=f(health care, environment, education, lifestyle, genetic factors, income)

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Assessing the Productivity of Medical Firms

• Short run : k is fixed, while n is variable

• At low level of n, k is abundant. Each increase in n when combined with capital greater services.

• Potential synergy effect

• Further increase in n may have an effect on the service, but a decreasing rate - law of diminishing marginal productivity.

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Marginal Product of an input: change in output in response to a one- unit increase in that input.

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Health Care Inputs (HI)

Health Status (HS)

1 2 4 3 5 6

A

B

A>B : as you increase the number of health care inputs, the effects on total health status decrease.

Marginal contribution of additional medical

expenditures on health is relatively small

Marginal Product

• The marginal product of an input is the additional output that can be produced by adding one more unit of a particular input while holding all other inputs constant

• Example:

– The marginal product of labor (MPL) is the extra output obtained by employing one more unit of labor while holding the level of capital equipment constant.

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Marginal Product of Health Care

• Marginal product that is relevant for policy makers:

– They want to know if I add one billion dollars to health care, how much will the health status of the population improve.

• The marginal product might be different for different types of groups, such as young, elderly, or poor.

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Marginal Product of Health Care cont…

Health Care Inputs

Marginal Product of Health Care

2 1 3 4 5

A

B

Marginal Product: Is the increment in health status caused by one extra

unit of Health Care, holding all other inputs constant?

MP is diminishing in size, demonstrating the law of diminishing marginal returns.

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Health Care: As INPUT vs OUTPUT!

Output: Medical care as an output of the medical services industry

o Medical care could be viewed as the “output” produced by physicians, hospitals, and other providers

Input: Medical care can be viewed as not a final output, but as one of many inputs which contribute to an increase in “health”

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Applications of a health production function Determining the allocation of resources

The relationship between inputs and outputs

What other specify alternative approaches for achieving the output.

Need to define output objectives by age, sex and location in order to determine which alternative approach will have the greatest effect on health status

Cost Benefit applications

Cost effectiveness applications

What combination is economically efficient

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INEQUITY AND THE SOCIAL DETERMINANTS OF HEALTH

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“Am I sick because I am poor?

or

Am I poor because I am sick?”

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• To Those Born Later by Bertolt Brecht

• Truly, I live in dark times! The guileless word is folly. A smooth forehead Suggests insensitivity. The man who laughs Has simply not yet had The terrible news. What kind of times are they, when A talk about trees is almost a crime Because it implies silence about so many horrors? That man there calmly crossing the street Is already perhaps beyond the reach of his friends Who are in need? It is true I still earn my keep But, believe me, that is only an accident. Nothing I do gives me the right to eat my fill. By chance I've been spared. (If my luck breaks, I am lost.) They say to me: Eat and drink! Be glad you have it! But how can I eat and drink if I snatch what I eat From the starving, and My glass of water belongs to one dying of thirst? And yet I eat and drink.

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It was the best of times, it was the worst of times, it was the

age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair

Charles Dickens, A Tale of Two Cities, English novelist (1812 - 1870)

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• The world’s 200 richest people more than doubled their net worth in the four years to 1998, to more than $1 trillion, equal to the annual income of the poorest 47% of the world’s population (more than 2.5 billion).

• The assets of the top three billionaires are more than the combined GNP of all least developed countries and their 600 million people.

– Human Development Report 1999, p 3

“It is [not] immediately obvious why there should be health differences between rich and poor areas of the same city. It is even less obvious, from casual inspection of the physical environment, why life expectancy for young black men in Harlem [New York] should be less than in Bangladesh…. Geographic variations in health within rich countries are substantial. White men in the 10 ‘healthiest’ counties in the United States have a life expectancy above 76.4 years. Black men in the 10 least healthy counties have a life expectancy of 61 years in Philadelphia, 60 in Baltimore and New York, and 57.9 in the District of Columbia. The 20 year gap in life expectancy between whites in the healthiest counties and blacks in the least healthy is as big as differences between countries at very different stages of economic development.”

[WHY?] • Michael Marmot, 2001, “Inequalities In Health,” NEJM, 345(2):134

• “It has been shown over and over again that [the] social and

cultural environment is a component in the etiology of nearly all diseases – and the outcome of treatment depends equally on how favorable that social [and cultural] environment is.”

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University of Leicester produces the first-ever 'world map of happiness' (27 July 2006) Happiness is ... being healthy, wealthy and wise

The 20 happiest countries 1. Denmark 2. Switzerland 3. Austria 4. Iceland 5. The Bahamas 6. Finland 7. Sweden 8. Bhutan 9. Brunei 10. Canada 11. Ireland 12. Luxembourg 13. Costa Rica 14. Malta 15. The Netherlands 16. Antigua and Barbuda 17. Malaysia 18. New Zealand 19. Norway 20. The Seychelles

Other notable results 23. USA 35. Germany 41. UK 62. France 82. China 90. Japan 125. India 167. Russia The three least happy countries were: 176. Democratic Republic of the Congo 177. Zimbabwe 178. Burundi (Self-perceptions)

Bhutan

• The only country so far with a national policy of happiness

The New Public Health

• “The new public health strives for a fairer, more just, healthier, kinder world and recognises that it is human action rather than physical constraint that prevents us achieving it.”

F. Baum,1998

A somewhat different approach to public health

• The socio-cultural (including economic and political) contexts in which people (have to) live their lives have significant influence on their health, and are reflected in, epidemiological patterns

• “Immediate” and “Fundamental” risk factors

• Why is it that health education and ‘correct’ knowledge may not bring about the desired health results?

Article 25 of UN Declaration of Human Rights

• Everyone has the right to a standard of living adequate for the

health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.

• Motherhood and childhood are entitled to special care and assistance. All children, whether born in or out of wedlock, shall enjoy the same social protection