ADVANCED NURSING PRACTICE

HEALTH CARE ENVIRONMENT AND HEALTH ECONOMICS

SUBMITTED TO SUBMITTED BY

MRS. SONI. P. S MS. GOPIKA

PROFESSOR 1ST YEAR MSc NURSING
KIMS COLLEGE OF NURSING KIMS COLLEGE OF NURSING

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 INDEX
SI.NO. CONTENT PAGE
NUMBER
1 INTRODUCTION 3

2 HEALTH CARE ENVIRONMENT 3

3 NIGHTINGALE CONCEPT OF ENVIRONMENT 4

4 COMPONENTS OF ENVIRONMENT 6

5 CONCEPT OF ENVIRONMENT 7

6 TYPES OF BUSINESS ENVIRONMENT 11

7 ENVIRONMNET 12

8 ENVIRONMENT HEALTH HAZARDS 14

9 HEALTH AND ENVIRONMENT 17

10 ENVIRONMENT ISSUE 18

11 HEALTH ECONOMICS 20

12 MODEL OF ECONOMICS 23

13 CONCEPT OF HEALTH ECONOMICS 24

14 NEED OF HEALTH ECONOMICS 25

15 IMPORTANCE OF HEALTH ECONOMICS 25

16 COMPONENTS OF HEALTH ECONOMICS 25

17 MAJOR TASK OF ECONOMICS 26

18 FACTORS INFLUENCING HEALTH ECONOMICS 27

19 ECONOMIC ANALYSIS 27

20 ECONOMIC INDICATOR OF HEALTH 27

21 ECONOMIC CONCEPT OF HEALTH CARE 28

22 CONCLUSION 29

23 REFERENCE 29

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INTRODUCTION

A verity of environmental forces has shaped the delivery of health care services and brought
about variations in the development of hospital systems. Preeminent among these forces has
been the shift in the industry from an emphasis on providing hospital services to an emphasis
on furnishing health care environment, an aging population, the increasing demand for chronic
care, and new technologies that support alternative delivery system have focused attention on
a broader spectrum of health care services.

HEALTH CARE ENVIRONMNET

INTRODUCION

The health care environment research focuses on the experiences of patients, family,
and employees. Furthermore, hospital-related injuries- psychosocial and physical- are
investigated as they may be avoided as well as health economic factors that can be linked to
the environment. The experience of the environment of a room is personal. Individual
perceptual conditions such as sight, hearing and sense of touch has an impact on how we
perceive and understand a room. Moreover, our different backgrounds, understanding and
experience also play a role. The scents, sounds, materials and views are also perceived and
valued differently and may influence, consciously or unconsciously, our experience of the
environment as attractive, pleasant and welcoming, or the opposite. Therefore, the same
environment can be perceived completely different by different people.

CONCEPTS OF HEALTH CARE ENVIRONMNET

HEALTH

The health of an individual as an integrated system within the context of the

environment is termed as holistic health

According to WHO “Health is a state of complete physical, mental, and social wellbeing
and not merely the absence of disease or infirmity”

HEALTH CARE REVOLUTION

Health care is now regarded as a public right and an important responsibility of

government to provide this care to all people irrespective of race, religion, caste, creed, urban
or rural, rich or poor.

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HEALTH CARE

The term “health care” is more than medical care. It includes not only the traditional
public health service but also medical, nursing and dental services provided to individuals or
communities for the purpose of promoting, maintaining, monitoring or restoring health, and
the related education and research

COMMUNITY HEALTH

Community health refers to the health status of the members of community, to the
problems affecting their health and to the totality of health care provided to the community

HEALTH SERVICE

Also known as health infrastructure, the term health service refers to the permanent
country wide system of established institutions (for example hospitals, health centres, sub
centres, health laboratories, training and research institutions) the objective of which is to cope
up with the various health needs and demands of the population and thereby providing health
care to individuals and the community

NIGHTINGALE CONCEPTS OF ENVIRONMENT

The Nightingale, the environment of the patient was quite encompassing. Although she
did not specifically distinguish among the physical, social or psychological environments as
such, she speaks of all three in the practice of nursing.

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Major areas of concentration Examples
Environment Nightingale stresses the physical environment in her
writing. In her theory, Nightingale’s writings reflect a
community health model in which all that surrounds human
beings is considered concerning their health state.
Ventilation Fresh air, which is of primary importance, can be achieved
through open windows.
An outlet is needed for impure air. Drafts caused by open
windows and doors are to be avoided
Cleanliness Just as it is necessary to renew the air around a sick person
frequently to carry off morbid effluvia from the lungs and
skin, by maintaining free ventilation, so it is necessary to
keep pores of the skin free from all obstructing excretions.
Light Second only to the need for fresh air is the value of light.
Beds should be placed in such a position as to allow the
patient to see out the window – the sky and sunlight
Warmth Guarding against the loss of vital heat is essential to the
patient’s recovery.
Chilling is to be avoided. Hot bottles and drinks should be
used to restore lost heat.
Effluvia(smell) Sewer air is to be avoided and care is needed to get rid of
noxious body odour caused by disease. Fumigations and
disinfectants should not be used but the offensive substance
removed.
Noise Intermittent sudden noise causes greater excitement than
continuous noise, especially during patient’s first sleep.
Whispering or discussing a patient’s condition just outside
his or her room is cruel.

Theory of nightingale

Theory by Florence Nightingale defined Nursing as “the act of utilizing the

environment of the patient to assist him in his recovery.” It involves the nurse’s initiative to
configure environmental settings appropriate for the gradual restoration of the patient’s health

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and those external factors associated with the patient’s surroundings affect the life or biologic
and physiologic processes and his development. Nightingale discussed the Environmental
Theory in her book Notes on Nursing: What it is, what it is Not. She is considered the first
theorist in nursing and paved the way in the foundation of the nursing profession we know
today.

Environmental Factors

In Florence Nightingale’s Environmental Theory, she identified five environmental factors:

fresh air, pure water, efficient drainage, cleanliness or sanitation, and light or direct sunlight.

• Pure fresh air – “to keep the air he breathes as pure as the external air without
chilling him.”
• Pure water – “well water of a very impure kind is used for domestic purposes. And
when the epidemic disease shows itself, persons using such water are almost sure to
suffer.”
• Effective drainage – “all the while the sewer may be nothing but a laboratory from
which epidemic disease and ill health are being installed into the house.”
• Cleanliness – “the greater part of nursing consists in preserving cleanliness.”
• Light (especially direct sunlight) – “the usefulness of light in treating disease is very
important.”
Assumptions of Florence Nightingale’s Theory
The assumptions of Florence Nightingale in her Environmental Theory are as follows:

• Florence Nightingale believed that five points were essential in achieving a healthful
house: “pure air, pure water, efficient drainage, cleanliness, and light.”
• A healthy environment is essential for healing. She stated that “nature alone cures.”
• Nurses must make accurate observations of their patients and report the state of the
patient to the physician in an orderly manner.
• Nursing is an art, whereas medicine is a science. Nurses are to be loyal to the medical
plan but not servile.
COMPONENTS OF ENVIRONMENT

The four major components of environment include lithosphere, hydrosphere,

atmosphere and biosphere, corresponding to rocks, water, air and life respectively.

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 ❖ LITHOSPHERE

It is the outermost layer of earth called crust, which is made of different minerals. Its
depth can reach up to 100 kilometres and is found on both land (terrestrial crust) and oceans
(oceanic crust). The main component of lithosphere is earth’s tectonic plates

❖ HYDROSPHERE

It comprises of all forms of water bodies on the earth including oceans, seas, rivers,
lakes, ponds, streams etc. It covers 70% of earth’s surface. 97.5% of water found on earth is in
the oceans in the form of salt water. Only 2.5% of water on the earth is fresh water. Out of this,
30.8% is available as ground water and 68.9% is in frozen forms as in glaciers. Amount of
0.3% is available in rivers, reservoirs and lakes and is easily accessible to man.

❖ ATMOSPHERE

Atmosphere is gaseous layer enveloping the earth. The atmosphere with oxygen in
abundance is unique to earth and sustains life. It mainly comprises 78.08% nitrogen, 20.95%
oxygen, 0.93% argon, 0.038% carbon dioxide, and traces of hydrogen, helium and noble gases.
The amount of water vapour present is variable.

❖ BIOSPHERE

Biosphere refers to all regions on Earth where life exists. The ecosystem that supports
life could be in soli, air, water or land. The term Biosphere was coined by Geologist Edward
Suess who used this term for place on Earth where life can be found. Biosphere refers to the
sum total of all living matter, the biomass or biota. It extends from the polar ice caps to the
equator with each region harbouring

CONCEPTS OF ENVIRONMENT

MICRO ENVIRONMENT

Micro environment refers to the environment which is in direct contact with company/
hospital and affects the routine activities of business straight away. It is a collection of forces
or factors that are close to the organization and can influence the performance as well as the
day-to-day activities of the firm.

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Six components of micro environment are: Company, Suppliers, Marketing
Intermediaries, Competitors, General Public and the Customers.

The Company

Various groups in an organization like the top management, finance, operations, human
resourcing, research and development (R&D), accounting etc needs to be taken into account
by the marketing management for designing the marketing plans. Marketing managers needs
to work closely with them as that will help them to make decisions with broader strategies and
plans.

Suppliers

The suppliers are an important part of an organization’s overall customer value delivery
network. They are the ones who provide inputs to business like raw materials, parts, cutting
tools, equipment’s etc. The quality and reliability of vendors are very essential for smooth
functioning of business of any organization. Any shortage or delays of supplies, in terms of
natural disasters or other events can cause damage to sales in short run and lead to customer
dissatisfaction in the long run.

Marketing Intermediaries

The marketing intermediaries are also an important component for company’s overall
value delivery network. They include those individuals or firms who help the company in
promotion, sales and distribution of its goods to the final buyers

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 Reseller

They are those who hold and sell companies product, wholesaler and retailer

Physical distribution firm

The help the company to stoke and move goods from their points of origin to their
destinations, Transportation and warehousing

Competitors

Competitors are rivals who compete with the organization in market and resources as
well. According to the marketing concept, a company needs to provide greater customer value
and satisfaction that its competitors, in order to be successful.

General Public

The public refers to the group of people who have an actual or potential interest in
company’s product or who can have an impact on the organizations ability to achieve its
objective. There are seven types of publics identified in a company’s marketing environment
which includes financial publics, media publics, government publics, citizen-action publics,
internal publics, local publics and general public.

Customers

The most important actors in the microenvironment are its customers. The whole of
value delivery network aims to engage the target customers and create strong relationships with
them. There are five types of customer markets that companies might try to target. These
include consumer markets, business markets, government markets, reseller markets, and the
international markets.

MACRO ENVIRONMENT

The major external and uncontrollable factors that influence an organization’s decision
making, and affect its performance and strategies. These factors include the economic factors,
demographics, legal, political, and social conditions, technological changes, and natural forces

Specific examples of macro environment influences include competitors, changes in

interest rates, changes in cultural tastes, disastrous weather, or government regulations.

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Six components of macro environment are:
Demographic, Economic, Natural, Technological, Political and Cultural environments.

Demographic environment

Demography can be defined as the study of human population in context of size,

density, age, location, gender, race, occupation and other statistics. The marketers have special
interest in the demographic environment because it consists of people and people are the
driving force for development of markets.

Economic environment

The economic environment consists of factors that can affect consumer purchasing
power as well as the spending patterns. As an example, it is not advisable for a company to
start exporting its goods to a country before having examined the citizens spending patterns.
Important economic criteria include GDP, GNI, Import duty rate, unemployment, inflation,
spending patterns as well as the disposable personal income.

Natural environment

It refers to the natural resources or physical environment that are required as inputs by
marketers or which is affected by the marketing activities. The ecological conditions have
become a crucial factor to consider as the environmental concerns have grown strongly in the
recent years. Example, air and water pollution, floods, droughts, etc.

Technological environment

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 Technology has a crucial influence in the macro environment. An organization needs
to perform a thorough research on the spread and use of technology, before investing in any of
marketing activities. The company needs to have an understanding of the technology
penetration as well as user interface technology in the region and make plans accordingly for
their communication and campaigns.

Political environment

The developments in the political environment strongly affect the marketing decisions.
This involves laws, government agencies, as well as the pressure groups that can influence or
give constrains to various individuals or organizations in a given society.

Cultural environment

The cultural environment links to factors which affects the basic values, preference,
perceptions and behaviour of the society. Organizations needs to understand the cultural beliefs
and practices prevalent in society for marketing decision making. Failure of companies in
understanding foreign cultures can lead to many cultural blunders. For example, a symbol
having a positive meaning in one culture can have a negative meaning in some other culture.

TYPES OF BUSINESS ENVIRONMENT

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INTERNAL ENVIRONMENT

An organization’s internal environment is composed of the elements within the

organization, including current employees, management, and especially corporate culture,
which defines employee behaviour.

Although some elements affect the organization as a whole, others only the manager.

The factors which exist within the organisation, imparting strength or causing weakness to the
organisation, comes under internal environment.
It includes:

o Value System

o Vision and Mission

o Objectives

o Corporate Culture

o Human Resources

o Labour Union

EXTERNAL ENVIRONMENT

External environment refers to the environment that has an indirect influence on the
business. External environment may be defined as all those conditions and forces which are
external to the business and are beyond the individual business unit, but it operated within it.
further classified as micro environment and macro environment.

ENVIRONMENT

PHYSICAL ENVIRONMENT

The basic environmental components are physical in nature and relate to such things as
ventilation and warmth. These basic factors affect one’s approach to all other aspects of the
environment. A patient’s bed must be clean, aired, warm, dry, and free from odour. One should
provide an environment in which patient can be easily cared for by others or self. The entire
room should be well ventilated.

The physical environment links patient and staff outcomes to four areas:
1. Reduce staff stress and fatigue and increase effectiveness in delivering care

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2. Improve patient safety
3. Reduce stress and improve outcomes
4. Improve overall healthcare quality
SOCIAL ENVIRONMENT

Observation of the social environment, especially as related to specific data collections

relating to illness is essential to preventing disease. Thus, each nurse must use observational
powers in dealing with specific cases rather than be comfortable with data addressing the
‘average’ patient. The patient’s total environment not only includes the patient’s home or
hospital room but the total community influencing that specific environment.

PSYCHOLOGICAL ENVIRONMENT

The effect of mind on the body was fairly well accepted in Nightingale’s time.
Nightingale recognized that a negative environment could cause physical stress thereby
affecting the patient’s emotional climate. Therefore, emphasis is placed on offering the patient
a variety of activities to keep his or her mind stimulated.

Communication

Communication with the patient is viewed in the context of the total environment.
Communication should not be hurried. When speaking with patients, it is important to sit down
in front of them. The place one communicates with the physician and family about the patient
is in the context of environment of the patient.

Advice

One should not encourage the sick by false hopes and advice about their illness. Rather
the emphasis here is on communicating about the world around them that they miss or about
good news that visitors can share. Again, patients are viewed in the context of their total
environment.

BIOLOGICAL ENVIRONMENT

Biological environment consists of living things like plants and animals. Mainly biological
environment 2 types:

• Abiotic
• Biotic

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 Abiotic environment

Abiotic environment is the environment with non-living part of the ecosystem that shapes
its environment. Examples are, temperature, light, and water. In a marine ecosystem, Abiotic
factors would include salinity and ocean currents. Abiotic and biotic factors work together to
create a unique ecosystem.

Biotic environment

Biotic environment consists of all living things in an ecosystem. Biotic components are
the living things in an ecosystem.

ENVIRONMENTAL HEALTH HAZARDS

WHO defines:

Environmental health comprises those aspects of human health, including quality of

life, that are determined by physical, chemical, biologic, social and psychosocial factors in the
environment. And any external factor that negatively affects your health can be considered an
environmental health hazard.

The environmental health hazards fall into 4 general categories

1) Biological
2) Physical
3) Chemical
4) Psychological

BIOLOGICAL

Disease producing infectious agents in the environment that are capable of entering the
human body such as viruses, bacteria or other microorganism are environmental hazards of
biological nature. Transmission by direct contact, contaminated water, vectors (rodents and
arthropods such as flies, mosquitoes, ticks’ mites)

Water borne diseases

Water borne diseases are diseases affected or spread through contaminated water. Some water
borne pathogenic microorganisms spread by water can cause severe life-threatening diseases.

E.g.: Typhoid fever, Cholera, Hepatitis A, Diarrhoea, Dysentery

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 Food borne diseases

Illness caused by food contaminated with bacteria, viruses, parasites or toxins Norovirus,
Salmonella, Clostridium perfringens Campylobacter, Staphylococcus aureus are the most
common germs causing illnesses from eating contaminated food.

Classification

Food borne diseases can be classified in to 2main types:

• FOOD INFECTION is classified as bacterial, viral, parasitic, or fungal.

• FOOD POISONING is classified according to the type of toxin that causes it
which may be natural, bacterial, fungal or chemical
Vector borne diseases

Disease that results from an infection transmitted to humans and other animals by blood
feeding arthropods, such as mosquitoes, ticks, and flies. E.G: Dengue fever, Malaria Yellow
fever, Chikungunya, Lymphatic filariasis, Japanese encephalitis

CHEMICAL

These include toxic agents such as polychlorinated biphenyls, asbestos, lead, and
pesticides such as insecticides, herbicides, and rodenticides, industrial waste, emissions, from
motor vehicles. Result of experimental studies with animals indicates that these chemicals
cause severe chronic health problems thus causing a serious threat to human health.

Pesticides

Pesticides are substance that are meant to control pests. Some pesticides are herbicides,
rodenticides, bactericide, insect repellent, animal repellent, antimicrobial and fungicide.

Lead

Lead is a chemical element with the symbol Pb and atomic number 82. It is a heavy
metal that is denser than most common materials. Exposure to high levels of lead may cause
anaemia, weakness and kidney and brain damage. Very high exposure can cause death. Lead
can cross placental barrier which means pregnant women who are exposed to lead also expose
their unborn child. Lead can damage a developing baby’s nervous system.

Herbicides

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 Herbicide is a pesticide used to kill unwanted plants. Selective herbicides kill certain
targets while leaving the desired crop relatively unharmed. Herbicides also known as weed
killers, are substances used to control unwanted plants.

Example: Glyphosate, trade name is Roundup

Environmental Tobacco Smoke

It refers to the exposure to tobacco smoke- exposed to someone else cigarette or pipe
smoke. Inhaling second-hand smoke causes lung cancer in non-smokers. Some research also
suggests that second-hand smoke may increase the risk of breast cancer, nasal sinus cavity
cancer and nasopharyngeal cancer in adults and leukaemia, lymphoma and brain tumours in
children.

PHYSICAL

There are five main classes of physical hazard namely Explosive, Flammable,
Oxidising, Gases under Pressure and Corrosive to metals

• May explode if exposed to fire, heat, shock, friction.

Explosive
• Avoid ignition sources (sparks, flames, heat)
• Keep your distance
• Wear protective clothing

• Flammable if exposed to ignition sources, sparks, heat. Some

Flammable
substances with this symbol may give off flammable gases in contact
with water.

• Avoid ignition sources (sparks, flames, heat)

• Keep your distance
• Wear protective clothing

•
Oxidising

• Contains gas under pressure. Gas released may be very cold. Gas
Gas under Pressure
container may explode if heated.

• Do not heat containers

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 • Avoid contact with skin and eyes

Corrosive
• May corrode metals.

• Keep away from metals

Natural disasters such as earthquakes, volcanoes and accidents, noise, heat, vibration,
radiations, insects, rodents, and certain type of equipment fall in to the category of physical
hazards.

For example, air temperature and humidity may be adversely affected in industries that
use blast furnaces, laundry equipment contributing to health problems such as respiratory
disorders, dermatitis, GI disturbances, and eye inflammation.

PSYCHOLOGICAL

Many of stressors- violence, stress, substance abuse, and dependence are known threat
to health individuals, families and communities. Additionally feeling of wellbeing may be
altered by factors such as high level of noise, overcrowding or isolation, lack of adequate
sources or opportunities for economic advancement.

SOCIOLOGICAL

Social problems include health problems, crime, deviance, violence, poverty,

inequality, population problems, delinquency and institutional instability

HEALTH AND ENVIRONMNET

AIR POLLUTION

The effects of air pollution on the health of individuals depend on the chemical
properties of the pollutant and size of particle, which in turn, affects the site of deposition in
the respiratory tract, adverse health effects from air pollution may range from mild to severe.
For example, mild irritation of respiratory tract can occur when larger particles are entrapped
in the upper respiratory tree. On the other hand, severe respiratory problems and even
asphyxiation may occur as a result of direct absorption of a pollutant such as carbon monoxide,
from the alveoli into the blood. The risk of developing cancer or a chronic pulmonary disease
increases with prolonged exposure to air pollutants.\

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WATER POLLUTION

The most pressing health problems related to water quality involve contamination of
waterways with the microbial pathogens found in human body wastes, a problem directly
related to lack of or faulty sewage disposal facilities. Swimming facilities as swimming pools,
hot tubs and natural bathing areas like lakes, rivers and ponds are sometimes dangerously
polluted and provide a medium to vectors to flourish.

NOISE POLLUTION

It can be defined as any unwanted or undesirable sound in the environment. Its effects
can range can range from mildly annoying to psychologically and physically debilitating. The
most severe health problem resulting from the noise pollution is temporary or permanent
hearing loss. It also affects an individual’s psychological and physical health because it disrupts
communication, sleep, leisure and work activities.

ACCIDENTS

Unintentional injuries like due to falls, drowning and fires kill more than 100,000
people each year and incapacitate millions of others with many lifelong disabilities. Of these,
approx. 46000 deaths are motor vehicle related injuries

SOCIAL AND HAZARDOUS WASTES

Wastes are being generated at an alarming rate. The amount of solid waste continues to
soar, partly as a result of today’s “Throwaway” attitude where many products are used once
and then discarded. In addition to solid wastes, the disposal of hazardous waste is critical issue.

ENVIRONMENTAL ISSUES

MAJOR ISSUES

Seven major environmental issues which will directly or indirectly affect health have been
identified:

Population: There was little change in population growth rates by the year 2000. The estimated
world population by the end of century will be 6.3 billion.

Food production: Worldwide food production was projected to increase by 90% between 1970
& 2000. However, the largest increase of food will occur in richer countries and the countries

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of Middle East. Africa and Southern Asia will continue to have inadequate amount of food for
their people.

Natural resources: Nonfuel resources appeared sufficient to meet demands through the year
2000, but discoveries and investments will be needed to maintain reserves.

Water: Shortages will become more severe, over pumping of ground water, poor land use
practices and pollution of existing water supplies will reduce the availability of water at a time
of rising need.

Forests: Loss of forest will continue over the next 20 years

Wild life: Rates of extinction will increase sharply resulting in loss of hundreds of thousands
of species, especially in the tropical forest regions.

Pollution: Increased emissions of carbon dioxide and chlorofluorocarbons in the atmosphere

are threatening to alter the world’s climate and upper atmosphere significantly by 2050. Acid
rain from the burning of fossil fuels is affecting increasingly wider areas with damage to lakes,
soil, and crops.

GLOBAL WARMING

As a result of increased burning of fossil fuels, deforestation, and the production of

certain synthetic chemicals there is dramatic increase in heat trapping gases in the atmosphere.
Carbon dioxide is the major offender allowing energy from the sun to pass through, while
absorbing radiation from the earth and creating a planetary hot house.

NASA (National Aeronautics and Space Administration) has reported that the
atmospheric ozone layer, which protects life from harmful ultraviolet radiations, has begun to
thin globally. As ozone layer diminishes in the upper atmosphere, the earth receives more
ultraviolet radiations, which promotes skin cancers and cataracts and depresses the human
immune system.

ACID RAIN

Acid rain is caused by emission of sulphur dioxide and nitrogen oxides. Nitrogen oxide
formed when fuel is burnt at high temperature, come principally from motor vehicle exhaust,
electric utilities and industrial boilers that burn coal or oil. Once released into the atmosphere,
these compounds can be carried long distances by prevailing winds until they return to the earth

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as acid rain, snow, fog or dust. Fish and wildlife suffer harm, lakes are contaminated, buildings
and statues deteriorate and people experience health problems such as respiratory impairment.

HEALTH ECONOMICS

INTRODUCTION

From ancient times, we have been consuming rice, bread, vegetables, milk, fruits, etc.
We have been using clothes and houses. We have been using the services of doctors, engineers,
electricians, drivers, etc. As a student, you are getting the services of teachers and you have
used books, paper, pens, and pencils. In other words, we are all consumers, as a matter of fact;
each one of us is a consumer. Consumption or the using of goods and services is an economic
activity. Goods or commodities are to be produced before they are consumed. Production of
anything requires effort and skill. All those who help in the creation of goods and services are
producers. For example, Farmers grow rice, wheat, pulses, etc. goldsmith makes jewels,
cobbler makes shoes and slippers, and so on. The services are created by the drivers, tailors,
teachers, doctors, etc. The activities of people are divided into two categories viz., economic
and non-economic activities. Economic activities are those activities which man does to earn
money. The farmers work on his land to grow food-grains, vegetables, cotton, etc. Part of these
may be kept for self-consumption and the rest he may sell in the market. We can say that the
farmer is engaged in an economic activity. The farmer who works in the agricultural field, the
nurse who attends to patients in a hospital, the teacher who teaches in an educational institution-
in fact, everyone who works anywhere and at any time for getting income is considered as an
economic activity.

ECONOMICS

At present, there are four definitions of economics. Broadly speaking, the various
definitions can be lumped together under four heads via.,

1. Wealth Definition

2. Welfare Definition

3. Scarcity Definition

4. Growth Oriented or Modern Definition of Economics

DEFINITION

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ECONOMICS

A standard definition of economics could describe it as:

A social science directed at the satisfaction of needs and wants through the allocation of scarce
resources which have alternative uses.

HEALTH ECONOMICS

Health economics is the study of distribution of health care. It is a branch of economics

concerned with issues related to efficiency, effectiveness, value and behaviour in the
production and consumption of health and health care.

FOCUS OF HEALTH ECONOMICS

• The Health Economics mainly concentrates on how to extract maximum benefits from
health industry with least cost combination. Every investor-may be money capital or
real capital tries to reap highest returns from his investments. It is important to note that
the benefits are not just in terms of monetary terms but also in terms of human welfare.
It gives ideas about service Industry.
• Health economics explains the health infrastructure as a means of health care industry.
It applies theories, techniques, models and other relevant tools to health services. It
includes all those material and non-material things used in health care industry.
• Health economics focuses on use or application of material things like medicines,
surgical instruments, lab equipment, drugs, vaccinations, family planning tools and
primary health care services and consumption of health and health care

ECONOMICS OF HEALTH AND ECONOMIC DEVELOPMENT

ECONOMICS OF HEALTH

Health refers to that state of living where the people have complete physical and mental
soundness.

Importance of Health:

1. Physical and mental soundness of labourers is very essential for conduct of various
economic, social and political activities.

2. It contributes to economic development.

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3. It is indispensable for national defines as we need strong soldiers to protect our country.

4. It improves efficiency in production and productivity.

5. It helps in wise allocation of natural and human resources.

Indicators of Health Status

Birth rate: It means number of live births per 1000 people in a year. In western countries the
birth rate is very low. Generally, higher the birth rate higher will be the health problems.

Death rate: It means number of deaths per thousand population in a year. It is very high in
Asian countries. This is due to lack of medical facilities. Death is high also because of low
literacy rate.

Infant mortality rate: Number of deaths of children under 1 year of age per thousand live
births is called Infant Mortality Rate. In other words, it refers to number of children die before
their first birth day, per thousand population in a year. In India 40 babies are dying at the time
of birth per 1000 live births which is very high when compared to western countries. This is
mainly because of lack of maternal education and unhygienic environment.

Total fertility rate: It means the number of children delivered by a woman. In India, it is
declined from 6 per woman to 3 in 2001.

Life expectancy: It means longevity of life or the number of years a person can live. Due to
decline in birth rate, death rate, infant mortality rate and fertility rate, life expectancy has gone
up from 37.1 years to 63 years in 2001, in India.

Concepts of Economic Growth and Economic Development

Economic Growth

It refers to increase in a country's real output of goods and services over a long period
of time. In other words, is a long-term increase in a country's real output of goods and services.
It is a continuous process. It takes place in rich countries where their sufficient progress is seen.
For example, USA is a developed country and any increase in its National Income is the sign
of Economic Growth.

Economic Development

It refers to overall progress of the country through institutional and technological

changes. It includes increase in output along with improvement in technology and institutional
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setup. Here, there is no sufficient progress. Supposes a farmer shifts from traditional method
of cultivation to modern method is called development and not Growth. To achieve growth,
one should have reached the stage of development.

MODELS OF ECONOMICS

❖ POSITIVE ECONOMICS

Positive economics to establish cause and effect in a scientific manner. Positive

economics is concerned with the development and testing of positive statements about the world that
are objective and verifiable.

❖ NORMATIVE ECONOMIC

Normative economics establishing the means by which socially desirable outcomes can
be achieved. Normative statements derive from an opinion or a point of view. Thus, the words 'should',
'ought to' or 'it is better to' frequently occur. The validity of normative statements can never be tested.

COMPARISON OF POSTIVE AND NORMATIVE ECONOMICS

CONCEPTS OF HEALTH ECONOMICS

❖ MICRO ECONOMICS

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 Microeconomics is the social science that studies the implications of incentives and
decisions, specifically about how those affect the utilization and distribution of resources.

• Microeconomics studies the decisions of individuals and firms to allocate resources of

production, exchange, and consumption.
• Microeconomics deals with prices and production in single markets and the interaction
between different markets but leaves the study of economy-wide aggregates to
macroeconomics.
• Microeconomists formulate various types of models based on logic and observed
human behaviour and test the models against real-world observations.
Health micro economics is concerned with how individuals choose minimize costs or maximize
profit or utilities within a given health care system within a set of rules and prices.

❖ MACRO ECONOMICS

Macroeconomics is a branch of economics that studies how an overall economy—the

market or other systems that operate on a large scale—behaves. Macroeconomics studies
economy-wide phenomena such as inflation, price levels, rate of economic growth, national
income, gross domestic product (GDP), and changes in unemployment.

• Macroeconomics is the branch of economics that deals with the structure,

performance, behaviour, and decision-making of the whole, or aggregate, economy.
• The two main areas of macroeconomic research are long-term economic growth and
shorter-term business cycles.
• Macroeconomics in its modern form is often defined as starting with John Maynard
Keynes and his theories about market behaviour and governmental policies in the
1930s; several schools of thought have developed since.
• In contrast to macroeconomics, microeconomics is more focused on the influences on
and choices made by individual actors in the economy (people, companies, industries,
etc.).

COMPARISON OF MACRO AND MICRO ECONOMICS

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NEED FOR HEALTH ECONOMICS

• Medical advances
• Due to increase in life expectancy
• Changes in family structure and norms
• Advances in health research
• Higher expectation among people
• Public awareness

IMPORTANCE OF HEALTH ECONOMICS

o To formulate health services

o To establish the true costs of delivering health care or to estimate all real costs like the
use of patient’s time, loss of output elsewhere in the system etc
o To evaluate the relative costs and benefit of particular policy options
o To estimate the effects of certain economic variables like user charges, time and
distance costs of accessibility etc on the utilization of health services

COMPONENTS OF HEALTH ECONOMICS

▪ Meaning and scope of health economics

▪ Determinants of health
▪ Demand for health and health care

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 ▪ Supply of health care
▪ Health care markets
▪ The relationship between economic growth and health
▪ Health sector budgeting and planning
▪ National health system
▪ Equity in health outcomes and in health care
▪ International health

MAJOR TASKS OF ECONOMICS IN HEALTH REFER

➢ Descriptive Quantification
➢ Explanatory or Predictive
➢ Evaluative

FEATURES OF HEALTH ECONOMICS

• Health and medical care are concerned as economic goods

• Health is a private or a public good
• Measurement of health is also considered in economics
• Stock of health
• Investment aspects of health
• Loss due to ill health
• Resource costs of different diseases effects of health and medical care provision
• Planning of health and medical care
• Choice of technology in health care system
• Provision of equity in health outcomes and health care

AREAS OF HEALTH ECONOMICS

• Economic evaluation and health technology assessment

• Health system research
• Simulation modelling and risk prediction
• Health inequality
• Methodological and other research
• Child health
• Genomics

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 • Global health

FACTORS INFLUENCING HEALTH ECONOMICS

Social and economic factors referee such as, income, education, employment,
community safety, and social supports can significantly affect how well and how long we live.

These factors affect our ability to make healthy choices afford medical care and
housing, manage stress, and more.

ECONOMIC ANALYSIS

There are 4 main types of economic analysis in health;

Cost minimization: in this the inputs are compared and outputs are considered to be equal
which rarely so

Cost benefit: in this type of analysis all outputs are measured in monetary terms.

Cost effectiveness: here a clinical output such as morbidity, mortality, reduction in blood
pressure or quality of life etc; is measured as a measure of the effectiveness.

Cost utility: it is a form of analysis is a form of financial analysis used to guide procurement
decisions.

ECONOMIC INDICATORS OF HEALTH CARE

Consumer price index (CPI)

CPI measures the average change in price of all types of consumer goods and services
purchased by urban wage earners and clerical workers. This index is computed monthly by the
Federal Government.

Hospital status
Admissions, cost per inpatient day, length of stay, outpatient visit, occupation rates and
staffed beds indicate consumption and cost of consumption for hospital care.

National health expenditure

It includes both public and private expenditures for personal health care, medical research,
the construction of medical facilities, programme administration, insurance costs and
Government sponsored public health programs.

Personal consumption expenditure (PCE)

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 PCE represents private payments for medical care. The term personal consumption
expenditures (PCEs) refer to a measure of imputed household expenditures defined for a
period of time

Personal health care expenditure (PHCE)

It indicates expenditure for consumers whether insured or not. Included are expenses for
non-prescribed drugs and medicines, household supplies and other items not covered by
insurance.

Professional status

o Office visit-Indicate the number of office calls consumers make to a physician

o Physician fee-Reflects charges for office and other physician visits
o Surgical charges-Indicate the fee for common surgical procedures and emergency
medical procedures

ECONOMIC CONCEPTS IN HEALTH CARE

The three concepts of supply, demand and cost are intricately related in economics

The supply of health care

refers to the number of resources currently available for delivering health services.
Resources include health care facilities, manpower and financing. Supply levels are constantly
changing because of technological discoveries, costs for services, consumer demands, and
effect of Government regulations.

The demand for health care

refers to the amount and type of health care the consumer requires and is willing to
purchase. The demand level revolves around consumer needs and desires, costs of health care,
treatment selections ordered by the health care providers and general societal needs.

The cost of health care

refers to the amount a provider pays to produce health related goods and services, as
well as the amount a consumer pays to purchase these goods and services. Factors influencing
the cost of health care are numerous, ranging from consumer demands to advancements in
medical technology to the nation’s economy.

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 As people have become increasingly concerned about rising cost, economic concepts
have gained greater general currency in society's consideration of healthcare

This entry on economic concepts in healthcare will:

1. Clarify the differences between two important forms of efficiency analysis in

healthcare;
2. Articulate some of the difficulties in devising and using a common unit of health
benefit;
3. Examine the monetary evaluation of one health benefit, life extension;
4. Focus on some of the fundamental moral difficulties that the demand for efficiency
poses for clinical practice; and
5. Briefly explore the notions of externality and public good and their role in health
policy.

CONCLUSION

Evidence on the burden of disease of environmental health determinants provides a

strong basis for designing policies in many sectors that promote health and reduce exposure to
harmful substances. Data on the economic costs and benefits of such policies (including the
costs of inaction) provide additional compelling arguments for investing in disease prevention
and are thus of high political importance for policy- and decision-makers.

Economic methods are applied increasingly to translate health benefits into economic
value or to compare the performance of alternative policies in areas such as climate change,
outdoor air pollution, transport, water and sanitation. However, economic assessments are not
always robust, and economic evidence is still incomplete, for example with regard to the
impacts of noise pollution and asbestos.

REFERENCE

❖ JP Mahajan, “MANAGEMENT THEORY AND PRACTICE” 4TH edition, 2015,

Ane Books private limited, New Delhi (32-39)
❖ Dr. DK Sharma” HOSPITAL ADMINISTRATION AND HUMAN RESOURCE
MANAGEMENT” Fifth edition, 2010, PHI Learning private limited, New Delhi
(232-239)

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 ❖ Navdeep Kaur Brar “TEXTBOOK OF ADVANCED NURSING PRACTICE” First
Edition 2015, Jaypee brothers private limited, Bangalore (126-130)
❖ James AF Stoner, R Edward Freeman, “MANAGEMENT” 9 th edition, 2007, Shree
maitrey printech pvt ltd. Noida (32-39)
❖ Linda Roussel, “MANAGEMENT AND LEADERSHIPBFOR NURSE
ADMINISTRATORS” 5th edition, 2005, Jay pee brothers pvt ltd, New Delhi (42-58)
❖ RC. Royal, “HOSPITAL ADMINISTRATION AND HUMAN RESOURCE
MANAGEMENT” Fifth edition, 2010, All India learning private limited, New Delhi
(43-57)
❖ BT Basavanthappa “NURSING ADMINISTRATION” 3rd edition, 2011, Jaypee
brothers’ medical publishers, New Delhi (56-73)
❖ Harish basavaiah, “nursing health economics”1st edition (2009), Jaypee publications,
new Delhi (1-28)
❖ Ann B. Hamric, Judith A. Sprods, “ADVANCED NURSING PRACTICE, AN
INTEGRATIVE APPROACH”, 4th edition (2009), Elsevier publications (658-660)

Online reference

❖ Micro and macro environment, available on:

https://www.linkedin.com/pulse/micro-macro-environment-factors-analyzed-
companies-bobin-philip

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