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Effectiveness is one of the major types of economic evaluation used in designing health care for populations.  It is an indicator of test performance which is defined as “the condition of being true, correct, or exact” (Davies, 1993).

Drummond et al. (1994) defined effectiveness as “the capacity of producing a desired result or effect (or effectiveness)”. On the other hand, Gold et al., (1996) define it as “the ability to accomplish a job with a minimum expenditure of time and effort.”

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The clinical perspective on effectiveness is a concept that investigates the appropriate use of clinical resources: whether tests and treatment are selected appropriately, based on diagnoses. To determine the clinical perspective on effectiveness, the following questions must be answered:

Are the tests accurate? Are the resources used appropriately? What is the impact of testing information? What is the diagnostic ability of the tests?  The population perspective on the other hand, is largely concerned with the appropriate production, consumption and distribution of health care to society.

2. Define allocative and production efficiency.

Allocative efficiency is a measure of financial performance that looks at how well the organization’s assets and liabilities are being managed and used to provide services.

It should be noted that the production and cost functions relate inputs to outputs and define the efficiency aspects of the relationship.  Hence health economic evaluation essentially attempts to quantify them. If inputs and outputs are measured in ‘physical’ units, then we are dealing with technical efficiency. If inputs are valued and outputs

remain in physical units, we have a cost function and we are dealing with allocative and production efficiency, and therefore with cost effective analysis. If both inputs and outputs are valued, then we are dealing with overall allocative efficiency and therefore cost benefit analysis. This measurement principle for classification of types of economic evaluation forms a valuable link between economic theory and measurement.

3. Define equity. Differentiate between substantive and procedural equity.
Equity means fairness – in relation to the distribution of health care and in

the financing of health care.  Equity is an important policy objective in almost every health care system. Essentially, equity is a synonym for fairness; in this context, it means fairness in the distribution of health and health care between people. Equity is also relevant to assessments of the means by which health care is financed, principally the burden of finance, and whether the amount of money that people pay for health care is fair.

While there is no uniquely correct way of defining equity, it is informative nonetheless to consider it in a systematic way. A useful distinction is between substantive and procedural. Substantive equity refers to the equal treatment of equals – for example, the extent to which those who are equal with respect to health status have equal access to health care.

Procedural equity refers to the unequal treatment of unequal – for example, the extent to which those who are unequal with respect to income differ with respect to how much they have to contribute towards the costs of health care.

However, what is actually meant by equity might well differ across countries. The precise meaning and importance of equity at the health system level will depend upon factors such as cultural beliefs and attitudes.

 In many countries there is a sense that there should be equality before the health care system just as in equality before the law. Although this view is espoused most often and most loudly in Scandinavia and Canada, it also is a value that is held widely in

Europe. The systems may not always deliver the same service to all residents or citizens, but equity is nevertheless a prevailing value in health care, if not always a specific policy goal. In Canada, in Sweden, and in many other countries around the world, universality is not questioned.

Similarly, the concept of equity (that is, the idea that the kind of health care system available to one group of the population should be identical to that received by people of very different economic circumstances) is accepted in many countries throughout Scandinavia as well as in Canada (although the inequities in Canada tend to be geographic rather than by income).

For example, the Vancouver/Richmond Health Board in British Columbia stated the following as one of its eleven principles: “The framework for the delivery of health care will be based on the ideals of social justice and equitable access to service. (Equitable access refers to the removal of barriers to service bdelivery and decision-making about care for all segments of the population).”

In the United Kingdom, the vast majority of people—over 90 percent—use the National Health Service as the mainstream care provider and the only source of health insurance. Those who have supplementary insurance in the United Kingdom, approximately 10 percent of households, do not use that particular coverage to trade up in any meaningful sense to advanced health care services.

The access to supplementary insurance allows them to jump the queue for more minor operations—varicose veins and so forth. Very few Britons are using their supplementary insurance to get cardiac surgery, for example, because there really are no parallel cardiac surgery facilities outside the National Health Service.

In most developed countries, health care is a right, and there is no equivocation. Access to some form of health care services is regarded as a right in almost all countries of the developed world and among the rapidly developing economies of Asia. Taiwan, for example, has recently instituted a system of universal coverage, albeit a program relatively basic in its scope.

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