20 January 2023

HEU online training series – Health Economics

As part of the Health Economics Unit’s recent training programme on population health management with Nottingham and Nottinghamshire Integrated Care Board (ICB) we ran several interactive online sessions on the topic of health economics. The sessions were attended by people from different analytical fields who were interested in finding out how health economics can be integrated into decision making. Our aim was to help participants understand the kind of decisions that can and should be informed by health economics​ and introduce them to some of the key concepts in health economics, specifically economic evaluation​. Will Rawlinson, Senior Health Economist, explains more.

Our approach to training

Our audiences for these sessions were quite varied, so we ran overview sessions for a general audience which focused on some of the central concepts in health economics, as well as more targeted sessions for a participant with an analytical background. Throughout the sessions, we built in interactive exercises and encouraged participants to talk about projects they had worked on and how health economics might have been applied to those.

What is health economics?

So, what is health economics? One area of economics concerns how society allocates finite resources among alternative uses. Health economics is a branch of economics which applies this principle to the topic of health. Essentially, health economists are interested in shaping how society allocates resources to impact the health of the population.

Health economics covers many different areas, such as how we define and value health, what factors influence our health, and the planning, budgeting, and monitoring of healthcare.

An introduction to economic evaluation

For the first session with the team at Nottingham, we focused on something known as economic evaluation. Economic evaluation aims to provide a rational and transparent framework for informing health decision making, with the goal being to maximise the health benefits delivered from the limited resources available to us.

Economic evaluation is important to get to grips with as it makes up a large part of the work we do as health economists and can have a big impact on decision making.​ In simple terms, it is the process of comparing costs and consequences of alternative ways of delivering health, for example the different policies, services, and medications decision makers have to choose between when deciding where to invest their limited budget.

Through economic evaluation, we seek to identify the most efficient options for caring for a population’s health. Broadly speaking, an efficient option is one that provides a greater health benefit per unit cost than alternatives.

During the sessions we used real life examples from our work at HEU to bring the theory to life for our audience. For example:

  • Can an AI chatbot collect information from patients on elective surgery wait lists with the same accuracy as the existing manual process, and can it do so at a reduced cost?
  • Is sending home diagnosis kits to patients at risk of CKD an efficient use of resources compared to other screening approaches?
  • Should we fund expensive robotic surgery equipment or continue to provide manual minimally invasive surgery?

Figure 1. Economic evaluation flow chart

Why is health economics important?

Clearly, there are finite resources available to care for the population’s health – a constraint we face when organising healthcare​. The goal of a health economist is simple – and one that is shared by all medical professionals: within the constraints we face, we want to achieve the best health outcomes for our population​.

Health economics is used at both a national and local level across the UK to help make sure the NHS provides treatment that is value for money and generates the greatest possible health benefit for the population on its finite budget.

A great example of how health economics is used to make a difference at a national level is NICE’s technology appraisal process. This process ensures that medicines and treatments prove their clinical and cost-effectiveness before being made available within the NHS. This helps to ensure that that the benefits provided by new medicines or treatments outweigh the opportunity costs of displacing another medicine or treatment used in the NHS. On a local level, health economics can support commissioners to make financially sound decisions, through describing the cost impact of technologies, or identifying the most efficient methods to hit healthcare targets.

Health economic evidence is also crucial in demonstrating the value of new, innovative technologies, thereby supporting wider roll-out. For example, a cost-consequence analysis of an innovative smart-phone based home-diagnosis kit for chronic kidney disease recently indicated that using the technology may reduce costs relative to current standard of care[1]. This and other evidence has helped secure funding for wider roll-out, and a large clinical trial. Our team will be using the results of the trial to generate more economic evidence, which may lead to the technology being embedded into practice.

Feedback, learnings and next steps

The sessions were very well-received with participants appreciating the interactive learning style. One participant said: “Very clearly explained. I particularly enjoyed the scenarios and interactivity”.

What was interesting for us, was to see which examples really resonated with people – mostly those that were linked to health economics at a local rather than national level. This will be really helpful in shaping future sessions we have planned across the Midlands region.

At the Health Economics Unit, we are passionate about helping system leaders and budget-holders to allocate their precious, finite resources most effectively. We are a member of the NHSX Innovation Collaborative, and work closely with several other academic health science networks, all of whom share our ambition to accelerate the use of innovative, new technologies through health economic evidence. If you’d like to find out more about how our health economics service could help you, please get in touch with us.

[1] The compliance and cost-effectiveness of smartphone urinalysis albumin screening for people with diabetes in England – PubMed (

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