An Exclusive Health Research and Post Graduate University
Health
economics is one of those rapidly growing fields that bring down business with
health care together. A health economist has a unique passion for using their knowledge
of economics by applying it to a variety of challenges in health and medicine.
As the population continues to grow, the demand for quality and cost-effective
health care similarly grows, leaving careers in health economics vital to
sustaining our health care system.
Who is a Health Economist?
Health
economists are professionals who investigate how our funds and resources are
used in health care. They also focus on the distribution of resources and the
maintenance of health in the health care system. They ponder over the questions
of various alternatives available for health care and then decide about
choosing the best alternative. They may work in the public side of health care
or they may be employed by privately owned companies. A health economist will
use his skills and the tools learned during his education and career experience
to analyze health care and its many subfields. Health economists will
evaluate health care policies and respond to numerous challenges in the health
care field.
How do resources invested in good health contribute to a
Nation’s Economy?
Good
health contributes to the nation’s economy in the following four ways:
Enhanced Workers’ Productivity
The
most obvious gains from healthier workforce are savings of workdays, enhanced
workers productivity, greater better-paying job opportunities and longer
working lives. A study on lepers in urban areas of Tamil Nadu concluded that if
deformities with them are eliminated then the expected annual earnings of those
with job will enhance by more than three times. The study also concluded that
if deformity of all 645,000 lepers in India is eliminated, it would add an
estimated $130 million to the country’s GNP (1985). If elimination of 1% of the
disease burden of leprosy can boost India’s GNP by such a huge magnitude, then
it would be interesting to estimate the effect of complete elimination or near
to complete elimination of disease burden in India on India’s GNP.
There
is strong link between poverty and ill health. Ill health creates immense
stress even among those who are financially secure. Onset of a long and costly
illness can drive the economically well-off into poverty. Hence, it is
essential to prevent the non-poor from falling into poverty trap and reduce
suffering of those who are already below poverty line.
Improved Utilization of Natural Resources:
Health
investment also contributes to better utilization of economic resources of a
country. Many
Developing
economies waste huge sum of money on treatment of various diseases rather than
their prevention. This leads of wastage of resources. In Sri Lanka, for
example, the near-eradication of malaria during 1947-77 is estimated to have
raised national income by 9 per cent in 1977. Over the period of three decades,
the cumulative cost of such an initiative was $52 million as compared to the
cumulative gain in national income of $7.6 billion, implying a spectacular
benefit-cost ratio.
Eradication
of diseases also enhances labor productivity. The investment made in treating
disease can be diverted to other productive uses. Thus, health spending
contributes to improved use of factors of production, viz. land, labor and
capital.
Multiplier Effect of Health Expenditure Extending to Next
Generation:
Poor
health conditions, inadequate sanitation and nutrition adversely affect the
benefits of schooling, primarily in three ways:
(i)
decreased enrolment resulting in increased
illiteracy,
(ii)
poor ability to learn resulting in high
dropout rates,
(iii)
Limited participation by girls either
due to poor health of self or others in family.
Good
health at the initial stage of life, i.e. among children from 1-6 years of age
is a pre-requisite for future development of these children. A child who is
physically and mentally fit at the age of 5 or 6 years is more likely to enroll
for school and will develop a strong foundation through active learning and
regularity in class. A study conducted in Nepal concluded that the probability
of attending school is only 5 per cent among nutritionally stunted children as
compared to 27 per cent for those at the normal level.
A
study suggests that four years of primary education boosts farmers’ annual
productivity by 9 per cent, on an average, and workers who do better at school
earn more. Studies in Ghana, Kenya, Pakistan, and Tanzania indicated that the
workers who scored 10 per cent above the sample mean in various cognitive tests
had a wage advantage ranging from 13 to 22 per cent. In a study conducted in
Nepal, it was found that farmers with better mathematical skills were more
likely to adopt new crops which were more profitable’.
Long run Reduction in Cost of Medical Care:
Health
spending in short run prevents and reduces the incidences of diseases in long
run and results in huge savings in treatment costs. For some diseases, the
expenditure pays for itself even when all the indirect benefits – such as
higher labor productivity and reduced pain and suffering – are ignored.
Polio
is one such example. As per some estimates made in America in certain region,
prior to the eradication of polio showed that investing $220 million over 15
years to eliminate the disease would prevent 22,000 cases and save between $320
million and $1.3 billion (depending on the number of people treated) in annual
treatment costs. The programmer’s net return, after discounting at even as much
as 12 per cent a year, was estimated to be between $18 million and $480
million.23 Thus, money spent on healthcare in short run results in multiple
gains in terms of improved health and cost savings in long run.
How does the discipline of Health Economics contribute to
the Indian Healthcare Sector and resultantly Indian Economy?
The
World Development Report 1991, published by World Bank asserts: “the challenge
of development is to improve the quality of life, especially in the world’s
poor countries. A better quality of life generally does not call for higher
incomes but it involves much more. It encompasses as ends in themselves better
education, higher standards of health and nutrition, less poverty, a cleaner
environment, more equality of opportunity”
Necessarily,
health has to be defined from a practical point of view and, therefore, it has
been defined according to life expectancy, infant mortality and crude death
rate etc. Thus, the World Banks Report emphasizes among other things, health
and quality of life as essential components of economic development.
This
can happen only with the continued commitment of the government to spend on
physical, mental, educational and emotional development of a child who is a
prospective human capital of the country.
The figure below
explains the three stages framework of health-wealth nexus. India is currently
in stage 2 as depicted in the figure below. A rapid transition is needed in
which efficient health systems improve quality of life, well-being of people
and reduce burden of diseases, which will in turn increase productivity and
growth in the country (stage 3). India needs a huge public investment in order
to push Indian health sector from stage 2 to stage 3.
Health Economist ensures that human resource, which is the
only active factors of production, activates the other factors. Improvement in
health standards such as increase in life expectancy, reduction in infant and
maternal mortality and access to health services with equity has been one of
the major thrust areas in social and economic development programmers of
developing countries. Health economist helps in running these programs
efficiently.
Health economist understands that health is a very peculiar
asset because unlike almost anything else, including even some other forms of
human capital, it is almost entirely inalienable. Health Economist is required
in an economy because health has great value-in-use but no value-in exchange.
Good health cannot be purchased from any source through money or any other
means. Thus Health Economist’s role is important to ensure judicious use of
economic resource in creating as asset called Health, which has a huge
implication in the growth of the economy.
Some examples of challenges faced by Health Economists and
their contribution in overcoming them:
The
challenges of increasing urbanization with rapid growth of slums and low income
families in cities have raised the need for health care facilities in and
around urban slums. The Eleventh Five Year plan has focused on accessibility of
health services in closer proximities of urban slums and in the areas where 20%
or more of population are SC/ST or other minorities are concentrated.
Achievement
of health objectives involves much more than curative or preventive medical
care. Many communicable diseases can be prevented through a combination of
health and non-health interventions such as safe drinking water and sanitation
which directly contribute in reducing the burden of communicable diseases.
Besides high levels of air pollution, unhygienic living conditions combined
with malnutrition may cause respiratory problems and other communicable
diseases. An onslaught of new diseases such bird flu, swine flu, Japanese fever
etc. is taking heavy toll of population in India and other developing
countries.
India
doesn’t have the resources to combat the huge challenge of Non-Communicable
diseases. It can only be overcome by investing economy’s scarce resources
judiciously in a mix of preventive and curative healthcare model.
The growing size of healthcare sector in India
The
healthcare sector in India will grow to $158.2 billion in 2017 from $78.6
billion in 2012. "The healthcare sector is growing at a 15% CAGR and jumped
from $45 billion in 2008 to $78.6 billion in 2012 and expected to touch $158.2
billion by 2017," Equentis Capital said in its report.
The country's healthcare
system is developing rapidly and it continues to expand its coverage, services
and spending in both the public as well as private sectors, it said.
India being a country
with growing population, country's per capita healthcare expenditure has
increased at a CAGR of 10.3% from $43.1 in 2008 to $57.9 in 2011 and going
forward this figure is expected to rise to $88.7 by 2015.
Demand growth, cost
advantages and policy support were instrumental in attracting FDI inflows into
the healthcare sector. During April 2000-March 2013, FDI inflows for drugs and
pharmaceuticals stood at $10.3 billion, while inflows into hospitals and
diagnostic centers, and medical appliances stood at $1.6 billion and $0.6
billion, respectively.
Growth in the public sector
Government is committed
to increase public spending on health from its current level of 1 %. As a
result the size of existing governmental programs and schemes will increase and
new schemes will be added to it. NRHM is being reconstituted as NHM,
incorporating both urban and rural health.
Growth in the private sector
The private sector has
emerged as a vibrant force in India's healthcare industry, lending it both
national and international repute. Private sector's share in healthcare
delivery is expected to increase from 66% in 2005 to 81% by 2015. Private
sector's share in hospitals and hospital beds is estimated at 74% and 40%,
respectively.
There is substantial
demand for high-quality and specialty healthcare services in tier-II and
tier-III cities. To encourage the private sector to establish hospitals in
these cities, government has relaxed the taxes on these hospitals for the first
5 years.
Growth in the Insurance sector
Over
the years, health insurance is gaining momentum in
India; gross healthcare insurance premium is expanding at a CAGR of 39% over
FY06-10. This trend is likely to continue, benefitting the country's healthcare
industry
Growth in mobile technology, KPOs
Strong mobile technology
infrastructure and launch of 4G is expected to drive mobile health initiatives
in the country. Mobile health industry in India is expected to reach $0.6
billion by 2017, the report said.
To standardize the
quality of service delivery, control cost and enhance patient engagement,
healthcare providers are focusing on the technological aspect of healthcare
delivery.
Digital health knowledge
resources, electronic medical record, mobile healthcare, hospital information
system are some of the technologies gaining acceptance in the sector. Going
forward, the healthcare sector's spending on IT products and services is
expected to rise from $53 billion in 2012 to $57 billion in 2013.
Telemedicine
is also a fast emerging sector in India. In 2012, the telemedicine market in
India was valued at $7.5 million, and is expected to rise at a CAGR of 20% to
$18.7 million by 2017. With increased private participation, the healthcare
sector has also witnessed rise in FDI inflows. As per
law, 100% FDI is permitted for all health-related services under the automatic
route.
Job Outlook for Health Economist
The
job outlook for health economists is excellent right now. This is due, in part,
to the diverse range of opportunities for health economists. These careers
include work in hospitals, academia and research, universities, health
insurance corporations, pharmaceutical companies, governmental bodies and even
international funding organizations and NGOs. With so many environments to
choose from, a health economist will likely find the right area of health
economics to apply his or her skills and training. Salaries typically vary
depending on the sector and level of seniority but generally speaking, the
business side of health care tends to provide some of the highest salaries in
health care – sometimes surpassing those of physicians.
Jobs in Private Sector particularly Insurance Industry
In the private sector,
a health economist can provide services for biotechnology companies and private
health insurance companies, among many others. For instance, a health economist
might design a strategic plan for a specific new technology or product. In this
way, a health economist will maximize the company's profits as they find more
efficient ways to do business and increase exposure and profit from marketing.
Jobs in Government Sector
There
are many opportunities for a health economist to work in the government sector. A health economist might investigate and
assess health care policies such as those affecting occupational health. In
this way, a health economist helps to monitor the quality and cost
effectiveness of procedures and regulations. They will also apply their skills
to ensure that health care can be sustained and that it is operating within a
safe and effective framework. Health economists may also evaluate medical
benefits and applications for specific services and products. They will make
policies for the effective delivery of health system in India.
Jobs in Research Sector
A
health economist plays a key role in the
research sector, where involvement could include the analysis of data for
clinical trials relating to costs and health care infrastructure. Another
important research area would involve the physician and patient relationships
in terms of patient care and costs. A health economist may collect data on how
health care services are applied and used at different levels of healthcare. A
health economist will conduct economic evaluations and evaluate the impact of
health schemes.
Jobs as a Consultant
As
a health economist, you might choose to work as a consultant. In this role, you would provide consulting in
health economics and you would also perform modeling and forecasting. This kind
of role is highly analytical and aims to improve existing structures to provide
future successes. In a consulting role, you might also work at the
international health care level, where you could examine and analyze
macroeconomic regulations and how they affect different countries. You may even
look at how various policies can provide support to several countries and how
communication might be improved.
Right Education for Health Economist
At
the very minimum, a health economist usually requires a post graduate degree in economics
although given the competitiveness of the field, a post graduate degree in
Health Economics with some aspects of management is highly recommended for the
best chances of success. But that is not enough. A person has to acquire
knowledge about health systems, policy, public health, epidemiology, demography
and challenges faced by the healthcare sector.
Some famous Health Economists from India
A.K.
Nandakumar
Mr
Nandkumar is a health economist by
training specifically interested in health care financing, resource tracking,
universal healthcare, and healthcare policy and research. He is the Chief
Economist for Global Health at USAID. After an enriching stint with Deloitte
consulting returned as Professor of the Practice at Brandeis University.
Director of the PhD Program at The Heller School for Social Policy and
Management at Brandeis University and the Director of the Institute for Global
Health and Development. He had worked in the Indian Administrative Service
during the early years of his career. His recent research has focused on the fungibility
of donor assistance, factors affecting technology adoption in low and
middle-income countries, the linkages between health expenditures and maternal
and infant mortality, and the relationship between growth in a country’s income
and its healthcare spending.
Rajeev Ahuja
Mr. Rajeev Ahuja, PhD, is an economist working
in the Health, Nutrition, and Population unit of the World Bank, India office.
Although, his work at the Bank has been focused on issues in health care financing
in India, he considers himself as a human development finance specialist,
with special interest in donor financing. He has been closely involved in
project preparation and implementation activities of the Bank in the health
sector in India.
Barun Kanjilal
Dr.
Barun Kanjilal is health economist. After postgraduation, he obtained a PhD in
Economics from Louisiana State University, U.S.A. where he worked as a
post-doctoral researcher. He has been appointed as Adjunct Associate Professor
in the Department of Public Health Policy and Administration at the University
of North Carolina at Chapel Hill, USA. Dr. Kanjilal has published/presented
several papers on applied economics in international journals / conferences.
His current research and teaching interests are in the application of various
quantitative tools in the area of health economics and financing.
Most of these prominent people working in the area of health
economics are Health Economists by training. They took their degrees in
economics or other subjects and then pursued their career in health care. The
reason for this is that ‘Health Economics and Financing’ as a stream has very
recently become a part of academia in India.
A Course on Health Economics Finance and Insurance will thus
fill the gap in terms of a specialized degree, which can serve the demand of
the health care sectorIt can thus be concluded that looking at the current growth
rate in the healthcare sector, those who hold degree a specialized degree in
Health Economics, Financing and Insurance will be in great demand.
If
one has an analytical mind and strength for investigation and logic coupled
with a deep interest and care for improving the health of the public, then a
career in health economics will probably prove exciting and rewarding.
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