Conversance with Fundamentals of Health Economics

By Robert J. Bonk, PhD

Medical communicators need a level of conversance with terminology and concepts in the field of health economics as cost becomes an outcome for treatment decisions. This blog introduces the fundamentals of health economics to medical communicators.

Effectiveness and Safety Plus Cost

Typically, decisions on health treatments depend on two outcomes: efficacy/effectiveness and safety. In other words, will a treatment’s benefits to a patient exceed any risks? These two factors have dominated decision-making by patients and their caregivers, as well as by health care professionals. More recently, though, a third outcome has joined the mix: cost. Now patients and providers need to ask if a treatment’s benefits will counterbalance any risks and at a reasonable cost. Moreover, all parties involved with paying for health treatments increasingly rely on cost information for making decisions about coverage and reimbursement.

Outcomes that include cost can be difficult to assess and express. As with any specialty, health economics (the field that studies cost outcomes for health-related modalities) has its own jargon. Not every medical communicator needs to be an expert in health economics, just as not every medical communicator need be an expert in statistics. However, medical communicators need to be conversant with the fundamentals of health economics in order to discuss costs as part of the decision-making process for health treatments.

Principal Analyses in Health Economics

Various research techniques can be used to assess cost outcomes: prospective vs retrospective, controlled vs cohort-matched, clinical vs epidemiological, and so forth. Nonetheless, these analyses, which typically calculate ratios of cost to outcome, can be grouped into 5 categories.

• Cost-of-illness, which identifies the economic costs of the untreated illness
• Cost-effectiveness, which measures the cost to achieve the desired end point
• Cost-benefit, which reduces that end point into comparative monetary terms
• Cost-utility, which translates the end point into condition-independent units
• Cost-minimization, which compares relative costs for equivalent treatments

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