Abstract

PIP: The few economists who have penetrated beyond theories and generalities and tried to deal with the realities of applying quantitative analysis to health have come to appreciate the unique difficulties associated with this task. If the output of health services is to be measured, it is necessary to isolate the contribution they make to health status. A decision that must be made early on is to select the unit of measurement. In the fight for appropriations the health administrator may find it prudent to emphasize the gains to the economy from better health and to seek help from economists in quantifying the economic losses caused by particular diseases. Crude cost benefit analysis, in which the only benefits measured are economic benefits, can have limited application in health. If health programs were to be geared only to serve crude economic objectives, they would need to be focused heavily on the younger worker. Due to the fact that the doctor often suspects the economist of being incapable of thinkng beyond economic criteria, the dialogue between the economist and the physician is frequently unproductive. Cost benefit analysis can be undertaken where some unit other than money is used to measure the benefits. As choices are already being made about the allocation of resources, it would seem better to have priorities which are explicit and consciously chosen than priorities which emerge from the aggregate response of doctors to the pressures placed upon them wherever they happen to be located and using such facilities as happen to be at hand. There is an allocation of health services in every society. What must be assessed is how good or bad this allocation is. Progress can best be made by studying the total effects of particular programs where practicable in an experimental situation. The greatest contribution the economist can make to health planning is not in model development but in cost effectiveness studies. The value of such studies is illustrated by an example, i.e., the study of the expansion of medical education in developing countries, which could be contributing substantially less to health than if the resources were used in alternative ways.