Health Economics Glossary

In the dynamic landscape of healthcare, understanding the economic principles that support decision-making is essential for policymakers, industry professionals, researchers, and stakeholders. This health glossary provides an overview of key terms and relevant concepts in the field of WifOR’s Health Research, decoding complex terminology and building a bridge between scientific literature and wider society.

ESG

ESG stands for environmental, social, and governance. It is a framework that evaluates how a company performs on sustainability issues. ESG criteria are used by investors and stakeholders to assess the impact and value of a company. It covers topics such as climate change, human rights, diversity, ethics, and transparency.

Gross Value Added (GVA)

Gross Value Added (GVA) is an economic indicator for the value of goods and services produced in an area, industry, or sector of an economy. It is calculated by deducting all intermediate inputs from the production values and includes only the added value created in the production process.

GVA Effects (Direct)

Direct GVA effects are changes in the GVA creation corresponding to changes in the production of a sector. Increases in the productive activity imply increases in GVA according to the production-GVA-ratio of the respective sector (which can be derived from national accounts tables).

GVA Effects (Indirect)

Indirect GVA effects are changes in the GVA creation of sectors that supply goods or services to the sector where a direct effect is observed. Given the interdependence of production processes in an economy, positive direct GVA effects of increased production in one sector implicate additional GVA creation in supplier sectors. For example, additional production in a bakery requires intermediate inputs such as flour, yeast, electricity or machinery. Thus, additional production (and GVA creation) also takes place in the sectors supplying these goods and services.

GVA Effects (Induced)

Induced GVA effects are changes in the GVA creation caused by changes in consumption as a result of direct and indirect effects. Increased GVA creation implicates increased labor income. This, in turn, will be spent on consumption, inducing further production (and GVA creation).

Health Economy

The Health Economy encompasses the production and distribution of goods and services that serve to restore, maintain, and improve health as well as related R&D activities. WifOR defines the Health Economy as a cross-sectoral industry, divided into three sectors: Healthcare Economy, Industrial Health Economy, and Services & Support. This definition is the result of over a decade of research, commissioned by Germany’s Federal Ministry of Economic Affairs and Climate Action (BMWK).

Health Economics

Health Economics is an applied and interdisciplinary field that deals with the creation of health and health care, supporting healthcare decisions and policies. It analyses the cost and benefits of treatments and interventions, and seeks to improve the equity, accessibility, and affordability of health care. WifOR’s Health Economics research strives to achieve health for all, sparking innovation, driving resilient economic growth, and improving lives in the process.

Health Footprint

The health footprint is the incremental health benefit that a specific health intervention can generate compared to an alternative treatment. This benefit is applied to the entire patient population over a defined time horizon. Unit of measure is a disease-specific relevant health outcome.

Health Interventions

Health Interventions are an act or combination of activities or strategies that aim to improve or maintain health, targeting individuals or populations. They can involve different types of actions, such as education, care, policy, and environment. The purpose of health interventions is to assess, improve, maintain, promote, or modify health and/or health conditions.

Health Services

Health Services can contribute to improving health or the diagnosis, treatment, and rehabilitation of sick people. Primary health care enables health systems to support a person’s health needs, from health promotion to disease prevention, treatment, and rehabilitation. Healthcare services include hospitals and specialists.

Health Systems

Health Systems are a way of organizing and delivering healthcare services to a population. A health system consists of all organizations, people, and actions whose primary intent is to promote, restore or maintain health.

Health Technology Assessment (HTA)

Health Technology Assessment (HTA) is a multidisciplinary process that refers to the systematic, evidence-based evaluation of health technologies, procedures, aids and organizational structures for the provision of medical services with regard to their effects on patient’ health and health care. In addition to medical benefits it evaluates economic, ethical, social, and other effects of health innovations.

Healthcare Economy

The Healthcare Economy is a component of the Health Economy. The sector is made up of services provided by hospitals, rehabilitation, and preventive care facilities, (semi-) inpatient care facilities, medical practices, dental practices, and outpatient care.

Incidence

Incidence describes the relative frequency of disease cases occurring in a population (incidence cases) over a certain period of time. It is usually reported as the number of new cases occurring per 100,00 people in each period. Along with prevalence, it is one of the central metrics for describing and analyzing the spread of a disease in a population group.

Industrial Health Economy

The Industrial Health Economy is a component of the Health Economy. The sector includes pharmaceuticals, medical technology and large medical devices, biotechnological goods, e-health, wholesale, and entrepreneurial R&D activities.

Markov Model

The Markov model is a statistical model used to simulate transitions among different discrete health states of the average patient. The time horizon of analysis is divided into the level of time intervals (cycles), during which a patient with a certain probability (transition probability) can move from one state to another.

Maternity Assessment

Materiality Assessment is a tool for identifying and evaluating potential Environmental, Social and Governance (ESG) issues that could impact a company and/or its stakeholders. It helps to understand the relative importance of specific ESG and sustainability issues that drive corporate and communication strategy, goals, and reporting of stakeholders.

Mortality Rate

The Mortality Rate is a measure of the number of deaths in a particular population, scaled to the size of that population, per unit of time. It is typically expressed in units of deaths per 1,000 individuals per year.

Patient-Reported Outcome (PRO)

Patient-Reported Outcome (PRO) is a generic term for various concepts for measuring subjectively perceived health conditions. It is characterized by patients’ self-assessment and the perceptions and treatment of their illness.

Prevalence

Prevalence is the proportion of a particular population group affected by a disease. It is calculated as the number of people affected by a disease in relation to the total number of people examined and is usually expressed as a fraction, a percentage or the number of cases per 10,000 or 100,000 people. Along with incidence, prevalence is one of the most important metrics for describing and analyzing the spread of disease.

Quality-Adjusted Life Years (QALYs)

QALYs are a generic measure of disease burden used in economic evaluation to assess the value of medical interventions. One QALY is equal to one year in perfect health for an individual, while a QALY of 0 corresponds to death.

R&D

Research and Development or Research and Technological Development (RTD), is a set of innovative activities undertaken by companies to introduce new products and services. R&D is often the first stage in the development process.

Sensitivity Analysis

A sensitivity analysis is a process that determines the robustness of an economic model and how different values of an independent variable affect a particular dependent variable or the results.

Services & Support

In the context of health, Services & Support is a component of the Health Economy. The sector includes health insurances, public health administration, retail trade, sports and wellness, and other goods and services.

Socio-Economic Footprint

The socio-economic footprint is the sum of the economic benefits that come along with the incremental health benefits of one treatment compared to an alternative treatment. These benefits are added up over the entire patient population over a defined time horizon. The socio-economic footprint is depicted in terms of gained productive time for paid and unpaid work, which is valued according to gross value added (GVA) or wages per labor input (i.e. labor productivity).

Unpaid Work

Unpaid work refers to work performed by an individual outside gainful employment, such as household, care- or voluntary work. In order to distinguish unpaid work from leisure time and other activities, the third person criterion is used: unpaid work encompasses only activities which are replaceable by another person.

Work Productivity and Activity Impairment Questionnaire (WPAI)

Work Productivity and Activity Impairment Questionnaires are questionnaires in which patients indicate the extent to which a disease prevents them from performing work and daily activities. The questionnaire measures limitations in occupational activities as well as everyday activities such as housework or physical activity. WPAIs are used to assess the impact of an intervention on work productivity and activity in patients with a particular disease.