Definition of Health Economics:

Health economics is the discipline of economics applied to the topic of health care. Broadly defined, economics concerns how society allocates its resources among alternative uses. The scarcity of these resources provides the foundation of economic theory and from this starting point, three basic questions arise:

What goods and services shall we produce?

How shall we produce them?

Who shall receive them?

Health economics addresses these questions primarily from the perspective of efficiency maximizing the benefits from available resources. Equity concerns are also recognized what is a fair distribution of resources. Considerations of equity often conflict with efficiency directives. However, due to the contested nature of this area and the difficulties in quantifying equity dimensions, this element has not been a major focus of health economist’s work.

Health economics is used to promote healthy lifestyles and positive health outcomes through the study of health care providers, hospitals and clinics, managed care, and public health promotion activities.