Economics, particularly healthcare economics, is more relevant now than ever, although the field’s enthusiasts may appear to be few and far between. The word “economics” has its origins in the ancient Greek words for “house” and “custom or law.” Roughly translated, it means “rules of the house.” Painting in the broadest of strokes, economics is concerned with the allocation of resources among actors. Microeconomics and macroeconomics are the discipline’s two main sub-fields. Microeconomics focuses on the behavior of individuals and firms within markets. Macroeconomics, on the other hand, is concerned with large-scale issues related to markets as a whole. These include national economic planning and monetary policy, among others.
Economics and Healthcare
How does any of this relate to healthcare? Well, healthcare is not free. Far from it, as a matter of fact. According to Johns Hopkins, healthcare has become one of the largest industries in the world, and life expectancies in every corner of the globe continue to skyrocket. Adding more years to each individual’s lifetime means that, on the whole, people will have more years during which to become ill. This means more hospital stays and more prescription drugs being consumed. It also likely means more brick-and-mortar healthcare facilities will be built, meaning a boon for the engineering, architectural, and construction industries.
Decisions about how to allocate doctors’ and nurses’ labor, whether to build a new hospital, whether to pass a new law, how much research to put into a new drug (and, once the research has been completed, decisions about how to price the drug) are made almost solely based on questions related to economic principles. Where will labor be most valuable? How can we find the most cost-effective materials for the hospital? How much did it cost to develop this drug, and what kind of long-term returns can we expect from it? People asking these, and other healthcare-related questions, will turn to those with knowledge of economics for the answers. With exponential growth expected in the global healthcare industry, being conversant in the issues facing the industry and familiar with the players involved will prove invaluable.
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Regardless of whether you agree that it is the most dismal of the sciences, establishing at least a passing familiarity with the concept of healthcare economics will provide you with the tools necessary to understand many of the challenges politicians and businesspeople face in mapping global policy.