Health Services Exam 1

Health Economics

Studies how individuals, organizations, firms, governments and nations make choices regarding their health and healthcare in the allocation of scarce resources to satisfy their unlimited wants

Costs

In economics, negative outcomes of a choice are _____

Benefits

In economics, positive outcomes of a choice are _____

Tradeoff

Choices have both positive and negative outcomes. Any choice precludes other choices. This is called _____

Optimal choice

The feasible decision that maximizes a decision-maker's preferences given any constraints on his or her choice.

Opportunity cost

Even with the optimal choice, you have to give something up. The next best choice is called _____

Tangible costs

Costs that can usually be measured in dollars

Intangible Costs

Costs that cannot be associated with dollar value such as quality of life and emotional costs

Indirect tangible costs

Costs of pain, grief and suffering, opportunities missed out on, etc.

Direct tangible costs

Costs that result directly from the procedure but have no monetary value, like hotel, child care, travel, medication, treatments, etc.

According to Economic Theory…

There are tradeoffs to every choice

The opportunity cost is always the second best choice

The opportunity cost is an example of a tradeoff

Economics is the study of how and why people make choices

A negative outcome of a choice is considered a…

cost

According to Economic Theory and the Taxonomy of Healthcare Costs…

Humans have unlimited wants

Indirect costs are opportunity costs

Sometimes humans make choices because they can and sometimes humans make choices because they must

Domains

Aspects of a decision

Each domain includes various components

Utility

When a value is placed on each consumption bundle

A construct of satisfaction assigned to the whole choice, not particular components of the choice

Factor loadings

Number before the symbol representing the relative importance of components