Fundamentals of clinical economics in health interventions

Health economics is a science of efficient use of medical resources. Economic evaluation deals with both inputs or costs and outputs or consequences and is done when there are choices. The inputs or costs can be direct, indirect or intangible. The consequences can be measured as natural health units or utilities which aggregate multiple health units or quality adjusted life years. In the current health care scenario in India the cost data is usually lacking. An exact way for estimating the cost is elicitation of opportunity cost which is the value of time or input at its highest. The total cost is the cost of producing a particular quantity of the output and is made up of fixed and variable costs. Fixed costs do not vary with the quantity of output but variable costs do. In India, the total cost of health care provided by a multidisciplinary team can be estimated either by the 'per diem' approach which assumes no cost sharing by the departments, or by the allocation method which takes into account the quantity of service provided by each department and costs them individually. Cost effectiveness or utility and cost-benefit analysis are considered complete economic evaluation. Analyses are done from a pre-specified perspective which could be patients', payers', providers' or societal. Costs incurred at a later time are discounted. Such evaluations help us make informed decision to choose between various health interventions. Their increasing use in health research in the developing countries is needed.