Health economics

Economics is the study of decision making under scarcity. The key assumption is that resources are finite, but our wants and desires are effectively infinite. Economics is therefore the study of how choices are made to allocate those resources to best satisfy our wants, to maximise the welfare of individuals and society. Health Economics applies these principles to the health care sector.

The field of health economics covers a broad range of topics, from the measurement and valuation of health itself to the demand and supply of health care, the choices individuals make over their own health, the market for health insurance and the organisation and delivery of health care services at both a micro (e.g. hospital) and macro (whole systems) level.

A key field of study within health economics is economic evaluation, a comparison of two or more interventions in terms of both their costs and consequences. Estimating the added cost associated with an intervention or policy gives an indication as to the resources required to be pulled from elsewhere within the health sector, and thus the foregone benefit (or ‘opportunity cost’) of that intervention or policy. Comparing this with the added health benefit allows a judgement as to whether it will lead to a net improvement in health to the population, and thus be deemed ‘cost effective’.

Current work

Health Economics is a rapidly growing field within CCHSR. Current work includes:

  • a pilot project exploring the return on investment from ‘bioscience’ clusters, such as in the city of Cambridge
  • economic evaluations alongside several major randomised controlled trials in collaboration with other research units, for example:
    • the early detection and treatment of diabetes (the ADDITION study)
    • physical activity (Very Brief Interventions to increase physical activity in primary care, the GoActive study to increase physical activity in adolescents)
    • healthy feeding programmes to prevent excess weight gain during infancy (the BabyMilk trial)
    • vitamin D supplementation in patients with renal failure (SIMPLIFIED)
  • a study of the costs and consequences of longer repeat prescription lengths for patients with chronic conditions
  • a study of the costs and consequences of telephone triage in primary care (TeleFirst)
  • decision modelling of alternative screening strategies for detection of malignant melanoma in the community (MelaTools)
  • a cost analysis of introducing a real-time feedback system to improve the patient experience in primary care (the IMPROVE programme grant)