Article On Health Economics

AN ECONOMIC ANALYSIS OF HEART DISEASE TREATMENT IN PRIVATE HOSPITAL WITH SPECIAL REFERENCE TO METROPOLITAN CITY OF CHENNAI Dr. Tmt. V. Renuka Devi* Tmt. Sindhu T. S** Abstract Private Hospital Treatments of Heart Disease is little costlier for the divergent standard of people in Chennai, their daily attitude will differ from person to person like too much of tension in both working places and their homes, food habits, resting times, lack of physical activities, and other habits, etc: at last it leads to cardiac problems. Middle income people are facing the Socio-Economic Burden to get their treatments in Private Hospitals, Medicines per month of this disease are little costly, Expenses of diagnosing the Heart diseases through ECG, CT scans, Echocardiograph, Angiogram, etc. are little expensive it comes around Rs. 50,000, the main burden of the disease are faced by the person is at the time of Surgery and Sometimes it leads to change the financial capacity of the patient. Most of the Peoples income are changed After their Surgery (Especially Bypass Surgery), they choose Alternative Jobs or Voluntary Retirement to reduce their Workload. 60% of people are comparatively earning lesser amount than pre-surgery, rest of the peoples are the employees with low hurdle to do their work. The treatment of heart Disease is a constant process till the end of their life, Patients have to consult their physicians every month, monthly medicine charges, Once in three months check-up, this cost approximately comes around Rs. 12,000. Automatically it Background of the patient and their Family.

affects the Economic

*

Reader and Head , Department of Economics, Ethiraj college for

women, Chennai. **

M.Phil Research Scholar, Department of Economics, Ethiraj College

for Women

AN ECONOMIC ANALYSIS OF HEART DISEASE TREATMENT IN PRIVATE HOSPITAL WITH SPECIAL REFERENCE TO METROPOLITAN CITY OF CHENNAI Dr. Tmt. V. Renuka Devi* Tmt. Sindhu T. S** Health Economics Health Economics has been explained by various authors in different ways. A general survey of some of the definitions suggest that health economics is the discipline that determines the price and the quantity of limited financial and nonfinancial resources devoted to the care of the sick and promotion of health. It covers the medical industry as a whole and extends to such fields as the economic analysis of the cost of diseases, benefits of health programs and returns from investment in medical education, training and research. The aim of economics applied to health field or “ health economics” is to quantify overtime the resources used in health service delivery and to organize, allocate and manage them in such a way that they are used for health purposes with maximum efficiency in preventive, curative and rehabilitative health services, so as to achieve maximal individual and national productivity.

*

Reader and Head , Department of Economics, Ethiraj college for

women, Chennai .**

M.Phil Research Scholar, Department of Economics, Ethiraj College

for Women

Health Economic View of Demand and Supply In the Health care delivery system has taken as a market were the supply and Demand has made as in the ordinary market. Here Medical institutions and providers are taken as the supply side, where as the patients or consumers are on the demand side According to Indian health care delivery system, it is providing free of cost in the Government hospitals, most of the people are avoiding to take the health delivery for their major diseases like heart disease and cancer because of poor quality of treatment, Slow Process of treatment,

irresponsive

Attenders, patients satisfaction derived from the treatment of government hospital deteriorates and diverts them towards private hospital Most of the middle income groups are approaching the private hospitals for better treatment , better environment, infrastructural facilities and hospitality. In The treatment given by the private hospitals are fully satisfied by the demanders, where as the cost for the treatment is very costly to them, it makes them really burdened. So many peoples sell their land and jewels, opting loans from banks and relatives. Some of the people standard of living has changed ,their children’s educations are affected. After their treatment they have to spend the money for monthly medicines/ drugs, rent for their houses, Electricity charges, household expenses, school or college fees ,children’s dresses, stationery expenses, health check-up costs , doctors consultation fee, repayment of loans,and other expenses etc; it is an additional expenses for them to face their day to day life.

Whether the price of the treatment increase or decrease, the peoples demand will not come down, price inelasticity of demand is happening in this health care delivery ,especially in the heart treatments. In Economic View Health care delivery system is a market Patients are the consumer or the demander (Demand) Hospital and their institutions are the supplier (Supply DEMAND OF HEART DISEASE TREATMENT Demand for health care service is very different from the demand for other economic goods.  In Economic goods consumer will be aware of the product,

where as consumer in the health care service is dependent upon the producer for getting information about the quality of the product or the treatment.  In Economic goods consumer are the king to decide ‘what

to buy’ and ‘where to buy’ in other part consumer choice is decided by the producer or the physicians.  Consumer is treated as a king in the economic goods

whereas in the health care delivery, sometimes consumers are ignored (Because of limited No. of Beds). 

Variations of Price will fluctuate based on consumers demand whereas Health care demand will not fluctuate according to any change in Price.(Health Care is Necessity)

Factors of Health Demand  Income of the purchaser  Price of health services  Price of complementary services (Ayurveda, homeopathy…etc.,)  Goodwill or assurance of the health care services.

Functions of Health Care Demand  Health care demand function D= fm (Hs, A, P) D- health care demand. m- quality of medical care demand. Hs – health status (wish). A- Individual perception of the need. P- price of the medical care to the consumer (they Charge different price).

 Price of a health status:

General demand is different from medical demand because general demand is consumable

there is no time gap,

medical demand is the demand when they have sick only they will demand. When the price of health services increase or decrease the demand will not vary, if they have heart disease only they will

demand health services, product is available only if they get appointment from the physician or surgeon.  Entry of the market: Only the medical professionals ,licensing requirements, paramedical, laboratory clinics ,etc can only enter this market , they are known as the producers of health care services, health professionals are the monopoly sellers they fix the price of their own whether the price increases or decreases the patient has to demand for their betterment of health. The Demanders enter only when their necessity of health care is required.

FIGURE: 1 PRICE INELASTICITY DEMAND OF HEART DISEASE TREATMENT IN PRIVATE HOSPITAL Y

D1 (Demand)

Price

P2

P

P1

O

D

X

Demand of Heart Disease treatment in Private hospital

Diagrammatic Explanation:  In the diagram

OX axis represent heart disease treatment in the

private Hospitals.  OY axis represent the price or cost of the treatment. 

DD1 refers the Demand curve for the heart disease treatment.

 This diagram shows that when the price of heart disease Treatment is Rs.3,00,000 (P) the demand will be the same, whether If the price has declined to Rs.2,80,000 (P1), or when the price of the treatment has augmented upto Rs.5,00,000 (P2) . Consumers psychological assurance or goodwill of the private hospital treatment are the major factor for this rigid demand.  It refers to a situation when the quantity demanded remains unchanged irrespective of any rise or fall in the price of a commodity. The demand is perfectly inelastic, the elasticity of demand is zero. (E=0). 

Perfectly inelastic demand curve DD1 it is a vertical line parallel to the Y- axis, in this figure Treatment demanded is OD both at the price of Rs. 3,00,000/- and Rs.5,00,000/-. It shows that when the Price increase or Decrease Demand of the

Health Care Services of private hospitals remain the same, Here Demand Determines Necessity Part Of their life. SUPPLY SIDE OF THE HEART DISEASE TREATMENT Hospitals and their dependants are the supply side of the health care service market, whereas in the private hospitals their capital investments are very high as most of the machineries are imported for diagnosis and heart treatments, which nearly costs crores of rupees and they have to spend for their maintenance charges, specialized facilities such as intensive care units, angiography suites and operating rooms, electricity , building expenses, costly drugs, doctors, nurses, attenders and other staffs salaries are be paid by the private hospitals.

private hospitals act as the business, it motivates both the profit and welfare of the people, they make the patient comfortable with quality of treatments,

environment,

infrastructural

facilities,

good

hospitality,

immediate treatments, good response to the patients,etc Hence people started comparing the government hospitals with

private hospitals and

automatically goodwill goes to the private hospitals. so people are willing to get their treatment from these institutions, medical Institutions charged their expenses from the patients. Surgery cost is about Rs.3,00,000 to Rs.8,00,000 (it varies depending on the class), and is one of the costliest surgery in the world. High income groups manage to pay the fees with savings and other arrangements, whereas the middle income groups are facing the great burden to pay the amount what they are charged. COST OF HEART DISEASE DIAGNOSING MACHINES

S.No 1 2 3 4 5 6 Tota l

Machines for diagnosis Cost of the machine Echocardiograph 3D colour Nucleous scan ECG Angiogram Holter monitor Thread mill

(Rs) 1. 25 crores 1. 75 crores 2. 5 lakhs 3. 5 crores 4 .5 lakhs 12 .5 lakhs 6. 69 crores

Source: Primary data of one of the leading private hospitals in Chennai. The above table shows the price of various Diagnosing Machineries. Most of the machineries are imported from foreign countries, which totals to around Rs. 6,69,50,000 crores (with out taxes, duties and maintenance charges) . These machines are bought through loans, so the authority has to pay the interest to the banks. Supply side also faces the burden for their investments of machineries, equipments, building expenses, import drugs, monthly maintenance charges, surgeon’s fees,etc so these expenses are charged from the patients. In this supply of health services act as a price elasticity ; Depending upon the price increase the supply of health services also increase, they provide better health care, hospitality, etc., FIGURE: 2 PRICE ELASTICITY SUPPLY OF HEART DISEASE TREATMENT IN THE PRIVATE HOSPITAL

S1 P2 Price

P P1 S O

S1

S

S2

Supply of Heart diseases Treatment in Private Hospital

Diagrammatic Explanation



In the Diagram ‘OX’ axis represent heart disease treatment in the private hospitals



‘OY’ axis represent the cost or price of the treatment

 ‘SS’ refers supply curve of the Heart Disease Treatment. 

The diagram shows that when the price of heart disease treatment or surgery comes down from Rs. 3,00,000 (P) to Rs. 2,80,000 (P1) the supply of health care is comparatively lesser than before, when the price of treatment increases up to Rs.8,00,000 (P2) the supply will be higher. This changes will happen within the premises of hospitals at the same time, depending upon the class.

 Price elasticity of supply it refers to the situation when any change in price, supply will differ according to change in the price. Price elasticity of supply is when a small change in price leads to a big change in supply. It is called the elastic supply. It can be explained with the help of a diagram, The price of the treatment increase from general ward patients to deluxe ward patients, the cost will vary between person to person depending on the price the supply of health care service is also increased.

DEMAND AND SUPPLY OF HEART DISEASE TREATMENT In the health service market, supplier of health services are medical institutions and demanders are the patient , the demand of this product will differ from Economic market, it is demanded when the patient has a disease. Three fourths of the Middle income Groups approach Private Hospitals because of the Quality of Treatment, at the same time they are charged at a sky- scraping prices for their treatment. Here price is fixed by the supplier, the supplier follows monopoly Price, they fix the price according to the capacity of the patients. ( Operation charges will be the same for all the patients, other health care facilities will vary depending on the price) FIGURE: 3 DEMAND AND SUPPLY OF HEART DISEASE TREATMENT IN PRIVATE HOSPITAL

Y

D1

S1

Price

P

S O

D

Quantity Demand and supply of Health Services

X

Diagrammatic Explanation: 

‘OX’ axis represents Quantity of Heart Disease services



‘OY’ axis represents price of the Heart Disease Treatment



‘DD1’ refers the Inelastic demand of Heart Disease Treatment



‘SS1’ represents the Elastic supply of Heart care services.

 ‘P’ represents price of the Treatment. 

The Diagram shows that when the price is increasing or decreasing the supply will change accordingly, Demand and Supply will be in equilibrium when the price is equal at the point ‘P’ where the demand and supply intersect.



It clearly shows that the Demand will increase when the patients are in need of health care, no matter whether the price increase or decrease. So there is no relationship between price and Demand of Heart Disease but the financial consequences relating to health care expenses will carry on throughout their entire life.

 Supply and price is closely related in the Health service Market. Demand And Supply of treatment makes one Better-off and other Worse-off, it determines the Price of the health Services. Demander’s face the Economic Burden of Getting the Service but a Supplier earns Profit to Provide the Service. COST-EFFECTIVE ANALYSES OF THE TREATMENT Cost – benefit analysis, in which both costs and benefits are expressed in the same units (such as Rupees ), and cost- effectiveness analysis, in which the costs are commonly expressed in monetary terms while the effectiveness is expressed in terms of the health benefit.

Effective of this heart disease treatments in private hospitals are better one for the high income groups as well as the middle income groups. According to developing country like India, peoples per capita income is comparatively lesser with other countries, even the developed countries are facing the burden for this heart disease treatment, then what will be the condition of the developing ones with huge heart diseases. Calculations Of Cost-Effective Treatment of Heart Diseases Cost new – Cost old Effect New- Effect Old 12,000-2,50,000 15,000-12,000

-2,38,000 =

3000

= -76.6 Source: Braunwald, “Heart disease A Text Book of Cardiovascular Medicine” Indian Edition, 7th edition, Saunders An imprint of Elsevier, pg: 20 Post surgery Medical Expenses (cost new)

= Rs. 12,000/-

Surgery Period Expenses (cost old)

= Rs. 2,50,000/-

Pre surgery period Income of the patient (Effect old)

= Rs. 15,00/-

Post- Surgery Period Income of the Patient (Effect new) = Rs. 12,000/Cost- Effective Treatment of Heart Disease is – 76.6

Practically Speaking Cost is effective for this heart disease treatment in private hospitals, the outcome of the cost is satisfactory by the patients and it gives them a new life, but the efficiency on physical activities come down so the Calculated Cost Effective Treatment of Heart Disease Shows Negative Points (-76.6). That is after the surgery, patients are unable to do hard work physically and mentally.

Most of the patients are shifted

alternative jobs which has less strain and 40% of the people are take voluntarily retirement. Comparing the cost –effectiveness with the treatments, it makes them feel very expensive for both the categories of income groups. Here High income groups can be referred as ‘ A’ and Middle income groups can be referred as ‘ B’ . Price of the treatments are fixed by the private hospitals it varies depending upon the class of the private hospitals and their patients willingness to pay (separate room and special care) Small change in the cost of the treatment will adversely affect the huge part of the financial condition of the middle income person that is category ‘B’ whereas in the high income groups their financial capacity is affected at a low level. Comparatively, Category ‘B’ is facing the Economic burden for treating heart disease in the private hospitals than category ‘A’. So Middle Income Groups are Facing the Economic Burden Of Treating Heart Disease In the Private Hospitals. To conclude cost effective of heart disease treatment in private hospitals are accepted by the patients. It clearly shows that too much of demand in private hospitals

when the prices are increased or not, the

demand is same and on the other hand it is a burden to all section of the people, it makes improvement in the physical part of the body but it brings down the financial future development of the patients.

ECONOMIC FLUCTUATIONS OF POST SURGERY PERIOD OF THE PATIENT

40

37

35 28

30

26

25 20 15

11

10 5 0

Same Salary

Decline d Vo lunta ry Nil Income Re tiremen t

Source: Primary Data Inference: The above Chart Clearly shows that 37% heart patients are earning the Same salary after their surgery and treatment. (it include a both surgery as well as medicines taker) For 28% People salaries have declined after their Surgery. 11% Heart Patients have taken Voluntarily Retirement From their Jobs, and 26% of heart Patients quit their jobs after their Surgery . It Concludes that After their Surgery Most of the people do not work efficiently than Before. So Cost- Effective is comparatively lesser than other Disease. Conclusion

Economic Burden of Heart Patients and Decline of Patients income make fluctuations in the Percapita income of a group of people, Contribution of GNP has declined by these heart Patients, so it drastically changes the state as well as the country’s Economy. To avoid this Economic Burden of Treating Heart Disease in the Private Hospitals, Government has to provide Better Quality of Treatment in their Hospitals, Every individual has to take the health Insurance scheme to avoid the Monetary burden at the time of Hospital Expenses. These burdens can be reduced by the medical insurance, but most of the people are not aware of the med claim or medical insurance, it covered more than half of the money spend for their treatment, it also reduced the economic burden of the patients and their family.

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REPORTS 1. Global Report, “Innovative Care For Chronic Conditions, Building Blocks For Action” 2. WHO, Preventing Chronic Diseases a Vital Investment 3. World Health Statistics(2006), World Health Organisation Report

WEBSITES www.thecardioblog.com www.lifeheart.com www.pubmed.com www.medicinenet.com www.healthline.com www.medkez.com www.heart.bmj.com www.thelancet.com www.google.com 10.www.hsph.harvard.edu.com 1. 2. 3. 4. 5. 6. 7. 8. 9.

NEWS PAPER 1. Times Of India 4-7-2008 (Fri) pg: 4