SAN PABLO COLLEGES COLLEGE OF NURSING SAN PABLO CITY HEALTH ECONOMICS

Health and medical care is now as one of the countrys basic needs, ranking after food, clothing and shelter. Being a necessity, it is already considered as a good that is to be consumed whether or not it is within the purchasing capacity of an ordinary consumer. Health economics encompasses the medical care industry, it is concerned with the economic aspects of health problem that deals with the determination of the type, quality, quantity and prices of the resources, quantity and quality of resources allocated to the health area; the medical care industrys efficiency; loses due to illness, disability and premature death and possible economics of scale. In the planning and management of a health system, major decisions have to be made. The criterion used in decision-making is usually a combination of value and efficiency criteria. Definitions of Economics Economics comes from the Greek word oikonomia meaning the management of the household or the state. Economics is the study of human relationship, between ends and scarce means and their alternative uses. It deals with the processes of production exchange, distribution and consumption of goods and services. Fundamental Concepts of Economics Goods refers to anything that satisfies human needs that includes material objects like food, clothing, furniture, and other physical goods but also services of immaterial goods, like the service of the Doctors, Lawyers, Teachers, or those of servants. All these satisfy any of our want.

Utility material goods and services have qualities that satisfy human wants. The quality of good that satisfy our wants is called utility. The utility of good to a person depends upon how it satisfies his wants. Wealth Wealth defined as those things that are useful scarce material and transferable. Production production is defined as the creation of utilities. It is the process of adding utility to economic good. There are five kinds of utility derived from production, namely, form utility, place utility, time utility, possession utility and service utility. The merchant is also engaged in production. He makes things more useful by transferring the ownership of goods from producers to consumers. Consumption Consumption is defined as the utilization of goods for the direct satisfaction of wants. Income The income of an individual consists of money received or of goods services resulting from his productive activities. Income maybe classified as nominal income or real income. The nominal income of and individual is the money he receives during a given period. His real income consists of material goods and services that the money income can buy. Economic System refers to the economic and social institution that is regarded as one. These institutions when grouped together commonly constitute a unit of the economy such as consumers, producers and others. Households are consumers, business firms are producers and also users of the products of their firms, government may be both producer and consumer when it uses materials and employs human resources in various government projects. Economic Sectors Households are consumers who buy the products of industry. They also provide some of the inputs needed by the firm such as land, labor and capital. Business firms producer these are the producers of goods and services. The Philippine has a mixture of domestic (Filipino owned) and foreign (non

Filipinos) many of the domestic firms are privately owned while some are government owned. Government the government sector consists of various levels, namely, the national and local governments, the legislative and department. The local government is further subdivided into provincial, municipal and barrio units. Rest of the world or foreign sector refers to the trade with other societies the foreign or rest of the world unit. The foreign sector is usually treated separately because of the unique characteristics or consumption and production possibilities in the different countries of the world. Types of Economic System Traditional Economy a family produces a thing that it consumes decisions on what, how or whom to produce are made by referring to the traditional manners of doing things. The Command Economy the means of production are owned by the government. Its decisions are arrived out by planners of government men who dictate what, how, and for whom to produce. The Market Economy the system depends on the prices set by the conditions of demand and supply. The price of goods is the guiding factor for producers to know what and how much to produce. Mixed Economy the Philippines is a mixed economy since it applies a mixture of forms of decision making. Function of Economic System 1. An economic system must determine the needs to be served by production. 2. To allocate the productive resources-land, labor, capital and direction among the variety of goods and services to be produced. 3. To distribute among the members of society the total wealth produced. 4. To make provisions for economic growth. General Economic Resources

1. 2.

3.

4. 5.

Land Labor labor is the exertion of human efforts to make an income. Labor means the exertion not only of manual but also of mental effort. There is no activity in which man does not use both physical and mental facilities. Capital refers to the man-made goods in the production of goods and services. Capital does not only mean money, it also includes buildings, machinery, raw materials, and other physical necessities that are used in the production. Savings refer to the part of a persons income which not spent on consumption. Entrepreneur Technology Three Components of Economics

Alternative choices when one makes a choice, there is always an alternative that has to be given up The choices of their cost in making the choice, you give up the chance of the other and would have to face the cost of your whether it is much higher or lower. Effects of choices in the future so the choice you decide to pick will give you either monetary reward or success or failure.

Supply and Demand The demand curve is a graphical representation of the demand schedule. It shoes the relationship between the prices and quantity of needs that consumers are willing to pay. The supply curve an upward sloping curve it shows the relationship of a good price and the quantity that producers are willing to sell of a lower price (P1) the quantity produced. And sell is lower (Q1) at a higher price (P2) the quantity produced and sell is higher (Q2). The law of upward sloping supply when the price of the commodity increased (all other thing being equally) producers tend to produce and sell more of the said commodity when the price is decreased.

Factors that affect the Supply of a certain Goods are the following: Own price of the product: a higher own price of a certain product gives better profits, producers of the product. When producing and selling a certain product give businesses more profits, produces will produce more. Production cost: products have costs, and the lower costs relative to the prices, the better the profits. Thus, businesses try very hard to find ways to bring down the production costs of their products. Prices of production substitutes: Market organization: the market organization participates is largely affects the supply of products. Types 1. 2. 3. Monopoly: is a market structure in which a commodity is supplied by a single firm. This is exemplified by meralco/PLDT Oligopoly: it is a market state of imperfect competition, in which small competitors dominate the industry. Perfect competition: a market in perfect competition is the best for consumers and has the following characteristics: a. the number of sellers and buyers are very large. b. the products offered by sellers are almost the same Monopolistic competition: this is a market in between oligopoly and perfect competition. It is a market structure in which there are many sellers who are applying goods that are close but are not perfect substitutes.

where

the

business

4.

Market Equilibrium a. comes at a price and quantity where the supply and demand force are in balance. b. at such a price and quantity, the amount that buyers wish to buy is just equal to the amount that sellers wish to sell. c. price and quantity tend to stay the same, as long as other things remain equally will something operates to change supply and demand.

The demand curve

Pp2 P1

D Q1 Q2 Quantity

The demand curve, downloading sloping curve, shows the relationship of price of a good + quantity demand. At a lower price (P1) quantity demanded is higher (Q2). At a higher price (P2) quantity demanded is lower. Factors that affect the demand curve Own price of the product: a higher own price of a product decreases the demand but such a lower price increases the demand Average income: as the average income of people and households increases the demand of specific goods. This is because when people have higher income they have more money to spend for buying things. Population and demographics as the population increases more people will use commodity. Prices of related goods: related goods can either be substitute products or complimenting products. Substitute products are commodities that decrease the use of another product when more of the other is used. Complimentary products have in the same direction. Lower gasoline prices will tend to increase the demand for both gasoline and cars. Greater use of one will lead to more use of the other and vice versa. More use of cars will increase

the use of gasoline. More expensive gasoline will tend to lead the less use of both gasoline and car. Taste of buyers: influence buying decisions but is more difficult to assess. Tasks likely differ from person to person. The Demand Shift The Demand Shift

Price

(-)

(+)

Quantity The demand shifts. Shift to the right indicates a positive (+) or an increase in actual demand for a commodity. Shift to the left indicates a negative (-) shift or decrease in the actual demand for a commodity.

Health Economics Health economics can be defined as broadly as the application of the theories, concepts and techniques of economics to the health care sector. It is thus concerned with such manner as: a. b. c. d. e. The allocation of resources between varies health promoting activities. quantity of resources used in health are delivered to improve health. organization and finding of health organizations. efficiency of the allocation and use of resources for health. assessing the effects of preventive, curative and rehabilitative health services on individual and society. Relationship of Health and Economics
Improvement in Health Status

More resources Allocated for health productivity

improvement in worker

Contributes to better economy

THE CONCEPT OF HEALTH Definition of Health Health is derived from the Old English word for heal (hael) which means whole, signaling that health concerns the whole person and his or her integrity, soundness, or well-being. Has two common meaning of health: 1. Negative definition of health health is the absence of diseases or illness. 2. Positive definition of health health is a state of complete physical, mental, and social well being, not merely the absence of disease or infirmity (WHO 1946). Holistic health means taking account of the separate influences and interaction of different dimensions.

ENVIRONMENTAL SOCIETAL PHYSICAL MENTAL

EMOTIONAL

SOCIAL

SPIRITUAL SEXUAL

Dimensions of Health The inner circle represents individual dimensions of health. Physical health concerns the body, e.g. fitness, and not being ill.

Mental health refers to a positive sense of purpose and an underlying belief in ones own health, e.g. feeling good, feeling able to cope. Emotional health concerns the ability to express feelings, and to develop and sustain relationship, e.g. feeling loved. Social health concerns the sense of having support available from family friends, e.g. having friends to talk to, being involved in the activities with other people. Spiritual health is the recognition and ability to put into practice moral and religious principle pr beliefs. Sexual health is the acceptance and ability to achieve a satisfactory expression of ones sexuality. The two outer circles are broader dimensions of health, which affect the individual. Societal Health refers to the link between health and the way to a society is structured Includes the basic infrastructure necessary for health (e.g. shelter, peace, food, and income), and the degree of integration or division within society. Environmental health refers to the physical environment in which people live, and includes things such as housing, transport, sanitation, and pure water facilities and pollution. How health is objectively measured? Health is measured according to objective factors including: Health measures

There are measures of the health status of people, including vital statistics such as height and weight, and dental status (decayed, missing and filled teeth, DMF, index). Floud (1989) argues that the average height of the population maybe taken as a measure of health, as it represents a proxy for nutritional status and therefore welfare. In the same way, Townsend et al (1987) use the percentage of low birth weight babies as an indicator of health. Health Behavior Indicators

Increasingly common are measurements of peoples behavior, which are then used as a measure for health, (e.g. the number of people smoking, drinking alcohol, using drugs, taking regular exercise, eating a healthy diet, practicing safe sex or planned fertility, any may be used to described different population, and to make comparisons between regarding relative health status. These lifestyle measures are sometimes narrowed down to more specific behavior in relation to health services (e.g. the percentage of children immunized against childhood illnesses, or the percentages of women screened for cervical and breast cancer), may be used to described the health status of a population. Environmental Indicators

Measurements of the physical environment include air and water quality, and housing type and density. These measures are routinely collected by the environmental health departments of local authorities. Socio-economic indicators

The social environment may also be measured of its healthiness. Wealth is commonly used measurement assess social environment. It is being suggested that countries with a more equitable distribution of wealth enjoy better health and that countries with very unequal distribution of wealth suffer poorer health. Objective measurements of peoples health status, health related behavior and the environment might be combined to provide and over

all picture of health. The health of different populations, from neighborhoods to nations, may be assessed and compared using this method.
-

Improvements in the social and physical environment, such as an increase in the number of smoke-free places, an increase in the number, accessibility and safety of play areas and sports centers, or improvements in housing amenities and density, may also be added into the equation. Peoples health-related beliefs and attitudes, and the extent to which their conform to professional beliefs, have also been considered to be a measure of health. (e.g. the percentage of the population seeking to make recommended lifestyle changes, or having and understanding of basic health issues).

Determinants of Health Two variables of Determinants of Health: 1. Measure of health, or ill health (e.g. mortality or morbidity) 2. Factor such as gender or occupation that could account for the differences in health. The health status can be accounted for not only by one variable, but many factors which interact together. Such as: Key social stratification factors (class, gender, age, ethnicity) Environmental factors (housing tenure, environment, regional locations, access to health services, access to leisure facilities) Lifestyle (nutrition, smoking, physical activity, psychosocial factors, obesity) including CHD.

What is clear is that ill health does not happen by chance or through bad luck. To identify the major determinants of health and ill has focused on the links between social class and health and so on, such as follows:

Genetic and biological factors which determine an individuals predisposition disease. Lifestyle factors in which health behaviors such as smoking contributes to disease Environmental factors such as housing or population The extent and nature of health services

Social and Health In 1980 a report was published of a Department of Health and Social Security working group on inequalities in health. The report is known as the Black Report, it provides a detailed study of the relationship between morality and morbidity, and social class. The term social class, social disadvantages, socio-economic status and occupation are often used interchangeably. The classification of social class derives from the Registrars scale of five occupational classes ranging from professionals in class I to unskilled manual workers in class V. this has been largely unchanged whereas Class III was divided into manual and non-manual work. The office of the National Statistics introduce eight new categories for the census in 2001 to take account of changes in the labor market with a social class for the self-employed and one for people who have never worked or who are long-term unemployed. Social Class Classification: 1. Higher managerial and professional 1.1 e.g. company directors, bank managers, senior civil servants 1.2 e.g. doctors, barristers and solicitors, teacher, social workers 2. Lower managerial and professionals e.g. nurses, actors, musicians, police , soldiers 3. Intermediate

e.g. secretaries, clerks 4. Small employers and own account workers e.g. publicans, playground leaders, farmers, taxi drivers 5. Lower supervisory, craft and related occupation e.g. printers, plumbers, butchers, train drivers 6. Semi-routine occupations e.g. shop assistants, traffic wardens, hairdressers

7. Routine occupation e.g. waiters, road sweepers, cleaners, couriers 8. Never worked and long-term unemployed Social class classification serves as an indicator of the way of life and living standards experienced by different groups. It correlates with other aspects of social position such as income, housing, education and working and living environments. Market place Demand reflects the consumers desire for a commodity Supply the amount of commodity available for supply sale Aggregate demand - The totality of a group of consumer Demand schedule - The quantities consumers are willing to buy of a good at various prices Aggregate supply - The totality of a group of producers supply Supply schedule - The quantities producers are willing to offer for sale at various prices

Movement along the curve - A charge from one point to another on the same curve Shift of the curve - A charge in the entire curve Non-price factor - Also known as parameters, are factors other that price Demand function - Shows how quality demanded is dependent of its determinants Supply function - Shows how quantity supplied is dependent on its determinant Consumption - Defined as the utilization of goods