Chapter 5: Economics of Health Care Delivery

budget limits

-the amount of money available to an individual or organization to spend on a particular good (product) or service.

business cycle

-a natural, recurring expansion and contraction within business.

capitation

-a payment system whereby one fee is charged to the client to pay for all services received or needed

cost-benefit analysis

-a method of comparing the monetary gains and expenses associated with a health care program or service, including start-up and maintenance costs.

cost-effectiveness analysis

-compares alternative approaches for achieving the same goals between two or more interventions.

cost-utility analysis

-a method of determining which program provides the best outcome for the lowest cost.

demand

-willingness, ability, and desire to purchase a commodity or service.

diagnosis-related groups

-a client classification scheme that defines 468 illnesses.

economic growth

-reflects an increase in the output of a nation. Two common measures of economic growth are the gross national product (GNP) and the gross domestic product (GDP).

economics

-science concerned with the use of resources, including the producing, distributing, and consuming of goods and services.

effectiveness

-a measure of an organization's performance as compared with its philosophy, goals, and objectives.

efficiency

-the process of meeting goals in a way that minimizes costs and maximizes benefits.

enabling

-the act of shielding or preventing the addict from experiencing the consequences of the addiction. Also applies to general shielding of individuals from the consequences of their actions.

fee-for-service

-list of health care services with monetary or unit values attached that specifies the amounts third parties must pay for specific services.

gross domestic product

-a statistical measure used to compare health care spending between countries.

gross national product

-the total value of all final goods and services produced in the United States in 1 year.

health care rationing

-a method to reduce health care costs by controlling the use of health care services and technologies.

health economics

-branch of economics concerned with how scarce resources affect the health industry.

human capital

-a measure of macroeconomic theory that involves improving human qualities, like health, and is a focus for developing and spending money on goods and services because health is valued; it increases productivity, enhances the income earning ability of peo

inflation

-a sustained upward trend in the prices of goods and services.

intensity

-the use of technologies, supplies, and health care services by or for the client.

investment in public health

-movement toward improving a population's health by all levels of government.

macroeconomic theory

-branch of economics that deals with the total or aggregate of all individuals and organizations.

managed care

-refers to integrating payment for services with delivery of services and emphasizing cost-effective service delivery along a continuum of care.

managed competition

-a creation of market conditions in which the more efficient providers will survive and the more costly will be put out of business.

market

-a network of buyers and sellers of a commodity, such as health care services.

means testing

-a method used to assess whether a client's income level qualifies the client for Medicare/Medicaid.

Medicaid

-a jointly sponsored state and federal program that pays for medical services for the aged, poor, blind, disabled, and families with dependent children.

microeconomic theory

-the branch of economics that deals with the behaviors of individuals and organizations and the effects of those behaviors on prices, costs, and the allocation and distribution of resources.

prospective payment system

-the diagnosis-related group payment mechanism for reimbursing hospitals for inpatient health care services through Medicare.

public health economics

-the branch of economics that focuses on producing, distributing, and consuming goods and services as related to public health.

public health finance

-a growing field of science and practice that involves acquiring, managing, and using of monies to improve the health of populations through disease prevention and health promotion strategies.

quality of adjusted life-years

-the sum of years of life multiplied by the quality of life in each of those years.

retrospective reimbursement

-method of payment to an agency based on units of service delivered.

safety net providers

-clinics that increase access to health and social services for vulnerable populations with limited financial ability to pay for care.

supply

-quantity or amount of goods or services available.

third-party payer

-reimbursement made to health care providers by an agency other than the client for the care of the client (e.g., insurance companies, governments, or employers).