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The economics of health

by Geraldine Hinter

Prof Leonie Segal: building research capabilityImproving public health and wellbeing is not just about having more doctors and hospitals

Putting dollars into nutrition services for people who have common lifestyle related conditions such as heart disease, obesity or diabetes can be a very effective way of improving health and can be much more cost effective than currently funded services.

That’s the message from UniSA’s newly appointed Research Chair in Health Economics, Professor Leonie Segal, who has been studying the relative cost-effectiveness of various approaches to health care. These include, medical and non-medical services, population-based compared with targeted clinical approaches and preventative compared with reactive approaches to care. Further, the "accepted view" about these matters is not supported by the evidence.

Prof Segal has a 25-year research background in economics, previously as the Deputy Director of the Centre of Health Economics at Monash University and before that as a public policy researcher.

Now based in the Division of Health Sciences, Prof Segal is building research capability in health economics within UniSA and in the State, working collaboratively with the Departments of Health, and Families and Communities.

"Health economics is a relatively new discipline and still quite small in terms of research profile and trained health economists in key agencies. But the potential of health economics to make a difference is massive," Prof Segal said.

"Health sector expenditure is more than $90 billion annually in Australia. The primary task of the health economist is to look at what happens to those health dollars, and to explore how they might be redirected to enhance the health and wellbeing of the community. In considering this, the interface between health and other sectors, such as community services, aged care and housing is important as well as issues of equity and access," she said.

"Given that resources are limited relative to need, it is important that resources go to those services that will make the greatest difference in improving health and wellbeing.

"Part of the research for my PhD was to develop a new approach to making decisions about where to allocate the health dollar. What traditionally happens in resource allocation is that decisions are made within budget silos, and there is little opportunity for resources to move across different budgets. This favours some services, such as pharmaceuticals, where there is an established funding mechanism, over others such as lifestyle interventions where no such funding mechanism exists.

"In applying that framework to diabetes, it was found that putting resources into prevention was both highly effective and potentially cost saving. However, even when such evidence is presented, it can take years for translation into policy. Thus as health economists, we also think about funding models, delivery arrangements and incentive structures that might support funding of those services that will yield greatest net benefit."

As part of her research at UniSA, Prof Segal is planning to develop a collaborative work program with the new National Centre for Child Protection at UniSA on the health economics of child protection.

"We will be looking at the cost-effectiveness of alternative service options for improving outcomes for children. Compared with many preventative health interventions – such as cholesterol lowering drugs to reduce the risk of a heart attack, which require ongoing funding often for decades, investing in early interventions for ‘at risk’ families offers the prospect of substantial long term benefits from a one-off investment."

Prof Segal, in building a health economics team, is looking to offer a way of understanding the complex problems of the public sector through a "policy relevant" lens, thus contributing to professional knowledge as well as public policy.

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