Membership of the Faculty of Public Health (MFPH) Health Economics, Decision Science and Health Information Syllabus

Health Economics, Decision Science and Health Information syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Health Economics, Decision Science and Health Information in Membership of the Faculty of Public Health (MFPH), not a summary of it.

1. 1

   Principles of Health Economics

   4 topics

   • Scarcity, opportunity cost and the margin
   • Efficiency concepts
     • Technical and allocative efficiency
     • Pareto efficiency
   • Equity vs efficiency trade-offs
   • Market failure in health care
     • Externalities and public goods
     • Information asymmetry and supplier-induced demand
2. 2

   Economic Evaluation

   5 topics

   • Types of economic evaluation
     • Cost-effectiveness analysis
     • Cost-utility analysis and QALYs
     • Cost-benefit and cost-minimisation analysis
   • Incremental cost-effectiveness ratio and thresholds
   • Discounting and time preference
   • Sensitivity analysis and uncertainty
   • NICE appraisal methods and cost-effectiveness plane
3. 3

   Health Information and Data Sources

   4 topics

   • Routine UK health datasets
     • Census and ONS data
     • Mortality and cancer registration data
     • Primary care and disease registers
   • Demography and population structure
     • Standardisation (direct and indirect)
     • Life expectancy and population pyramids
   • Data quality dimensions and limitations
   • Information governance and data linkage
4. 4

   Decision Analysis and Modelling

   4 topics

   • Decision trees and expected values
   • Markov models
   • Mathematical models of infectious disease
   • Use of modelling in policy and forecasting

Health Economics, Decision Science and Health Information flashcards for Membership of the Faculty of Public Health (MFPH)

22 of 61 cards from the Health Economics, Decision Science and Health Information deck — real questions with worked answers.

1. Define scarcity in health economics and explain why it is the discipline's starting point.

   Scarcity is the fundamental condition that resources (money, staff, equipment, time) are finite while wants and needs are effectively unlimited. Because not all desirable health care can be provided, choices must be made about how to allocate resources — making prioritisation and trade-offs unavoidable.

2. Define opportunity cost and give a health care example.

   Opportunity cost is the value of the next best alternative forgone when a resource is used for a particular purpose. Example: funding a new cancer drug means the same money cannot be spent on, say, hip replacements — the health benefit of those forgone hip replacements is the opportunity cost.

3. What does 'thinking at the margin' mean in economics?

   Marginal analysis evaluates the additional (incremental) benefit and additional cost of doing a little bit more or less of an activity, rather than total or average values. Optimal allocation occurs where marginal benefit equals marginal cost.

4. Distinguish marginal cost from average cost.

   Marginal cost is the change in total cost from producing one additional unit ($MC=\frac{\Delta TC}{\Delta Q}$). Average cost is total cost divided by total output ($AC=\frac{TC}{Q}$). Decisions about expansion should use marginal, not average, cost.

5. Define technical efficiency.

   Technical efficiency is achieving the maximum possible output from a given set of inputs (or using the minimum inputs to achieve a given output). It is about avoiding waste in production, regardless of which output is most valued.

6. Define allocative efficiency.

   Allocative efficiency is producing the combination of goods/services that society values most highly — putting resources where they yield the greatest benefit. It requires technical efficiency plus producing the right mix of outputs.

7. Distinguish productive efficiency from allocative efficiency.

   Productive (technical) efficiency concerns producing a given output at lowest cost. Allocative efficiency concerns whether the right outputs are produced — the mix that maximises social welfare. A service can be productively efficient yet allocatively inefficient.

8. What is a Pareto improvement and Pareto efficiency?

   A Pareto improvement makes at least one person better off without making anyone worse off. Pareto efficiency (optimality) is reached when no further Pareto improvements are possible — any change would make someone worse off.

9. What is the equity-efficiency trade-off in health care?

   Efficiency seeks to maximise total health gain from resources; equity seeks a fair distribution of health and care. Sometimes the most efficient allocation (greatest aggregate benefit) is not the fairest, so policymakers must balance maximising health against distributing it equitably.

10. Distinguish horizontal equity from vertical equity.

    Horizontal equity is the equal treatment of people with equal need. Vertical equity is the appropriately unequal (greater) treatment of people with greater need. Both are dimensions of a fair health system.

11. Define market failure and list the main types relevant to health care.

    Market failure occurs when a free market fails to allocate resources efficiently. Main types in health care: imperfect/asymmetric information, externalities, public goods, market power (monopoly), and uncertainty (leading to insurance failures).

12. Explain asymmetric information in health care and give two consequences.

    Asymmetric information means one party (usually the provider) knows more than the other (patient). Consequences include supplier-induced demand (providers influencing demand for their own benefit), and in insurance: adverse selection and moral hazard.

13. Define a positive externality in health care with an example.

    A positive externality is a benefit accruing to third parties not involved in the transaction. Example: vaccination protects the unvaccinated through herd immunity. Markets under-provide goods with positive externalities, justifying public subsidy.

14. What are the defining characteristics of a public good?

    A pure public good is non-rival (one person's consumption doesn't reduce availability to others) and non-excludable (cannot prevent people from benefiting). Examples: clean air, mass health-promotion campaigns. Markets under-supply them due to free-riding.

15. Define moral hazard and adverse selection in health insurance.

    Moral hazard: insured individuals consume more care than they otherwise would because they don't bear the full cost. Adverse selection: those most likely to claim (highest risk) are most likely to buy insurance, driving up premiums and potentially collapsing the market.

16. Name the four main types of full economic evaluation.

    Cost-minimisation analysis (CMA), cost-effectiveness analysis (CEA), cost-utility analysis (CUA), and cost-benefit analysis (CBA). All compare two or more options in terms of both costs and consequences.

17. How does each economic evaluation type measure outcomes?

    CMA: outcomes assumed equal, compares costs only. CEA: natural/clinical units (e.g. life-years gained, cases detected). CUA: utility-based units, typically QALYs. CBA: outcomes valued in monetary terms, allowing comparison across sectors.

18. What is a QALY and how is it calculated?

    A Quality-Adjusted Life Year combines length and quality of life. It is the time in a health state multiplied by a utility weight: $QALY = \sum_{i} t_i \times u_i$, where utility $u=1$ is full health and $u=0$ is death (negative values are possible for states worse than death).

19. What is a DALY and how does it differ from a QALY?

    A Disability-Adjusted Life Year measures health loss (burden of disease) — one DALY is one lost year of healthy life. $DALY = YLL + YLD$ (years of life lost + years lived with disability). QALYs measure health gained (a benefit); DALYs measure health lost (a burden).

20. State the formula for the Incremental Cost-Effectiveness Ratio (ICER).

    $$ICER = \frac{C_1 - C_0}{E_1 - E_0} = \frac{\Delta C}{\Delta E}$$ where $C$ and $E$ are the costs and effects of the new intervention (1) versus the comparator (0). It is the extra cost per extra unit of effect (e.g. per QALY gained).

21. What is a cost-effectiveness threshold and what value does NICE typically use?

    The threshold is the maximum acceptable cost per QALY a decision-maker is willing to pay; it represents the assumed opportunity cost (health displaced elsewhere). NICE typically uses a range of £20,000–£30,000 per QALY gained.

22. How is an ICER interpreted against the threshold?

    If $ICER < $ threshold, the intervention is considered cost-effective (good value). If $ICER > $ threshold, it is not cost-effective. Interventions that are both cheaper and more effective (dominant) are adopted regardless of the threshold.

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