OPERATIONAL MANAGEMENT SCIENCE

Operational Management Science

Operational Management Science

Introduction

Health economics is widely understood to encompass the study of the demand and supply for elderly medical services(physician services, services provided in hospitals and independent laboratories, pharmaceuticals, etc.) and for health insurance, as well as comparative studies of different health care systems. It also includes the study of the determinants of demand for health itself, global public health problems, and the nonmedical inputs into health, such as a decent living standard, education, physical and social environment, and personal lifestyle choices, to the extent that they are exogenous (e.g., independent of one's health status) (Alcock, 2012, pp.13-64). Although the nonmedical factors are increasingly realized to be important in achieving a healthy community at an affordable level of expenditure, most courses in health economics are primarily concerned with the provision of medical care and with health insurance that primarily covers medical care. We also focus on medical care as an input into health because it provides no benefits other than its contribution to health, unlike diet, recreation, and exercise (Anderson, 2005, pp.226-230).

It is important to clearly distinguish between health and health care. Health can be considered a form of human capital (like education), and medical care and other components of health care are inputs into the production of health. Spending on health is more appropriately treated as an investment in a stock of health (capital) rather than an item of current consumption. The formal model of investment in health, developed by Michael Grossman, employs a marginal efficiency of health capital function (MEC), which we can think of as a quasi-demand function for health (Bergeron, 2006, pp.21-56). The MEC is specific to an individual in that different people are endowed with different initial stocks of health and also suffer different shocks to their health status over time. It is downward sloping because it assumes diminishing returns to marginal inputs into the production function. Grossman distinguished between gross and net investment in health since there is depreciation in health capital that must be overcome as well as net investment in improvements in the health stock.

Services To Support Older People

After World War II, the National Health Service (NHS) was enacted in the United Kingdom. It differs from the Canadian system in that it is a national health system, not a nationwide universal insurance system. Doctors who participate in the NHS are employees of the government and are paid by a mix of salary and capitation. Originally, hospitals contracted directly with the district health authorities who paid them for their services. In the early 1990s, the system was altered to give hospitals and physician practices some degree of autonomy. Hospitals are now often organized as trusts. Large regional groups of physicians are given their own budgets to manage (Blakemore, 2007, pp.33-98). However, the source of funding is still the government, and therefore global budget caps apply. The United Kingdom is well known for high-quality care but long waits for all but emergency services, known as “rationing by ...