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Economic analysis of mental health services 

Economic analysis of mental health services
Economic analysis of mental health services

Martin Knapp

and Dan Chisholm

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date: 01 July 2022

Economics is concerned with the use and distribution of resources within a society, and how different ways of allocating resources impact on the well-being of individuals. Economics enters the health sphere because resources available to meet societal needs or demands are finite, meaning that choices have to be made regarding how best to allocate them (typically to generate the greatest possible level of population health). Economics provides an explicit framework for thinking through ways of allocating resources. Resource allocation decisions in mental health are complicated by the fact that disorders are common, debilitating, and often long-lasting. Epidemiological research has demonstrated the considerable burden that mental disorders impose because of their prevalence, chronicity, and severity: globally, more than 10 per cent of lost years of healthy life and over 30 per cent of all years lived with disability are attributable to mental disorders. Low rates of recognition and effective treatment compound the problem, particularly in poor countries. However, disease burden is not in itself sufficient as a justification or mechanism for resource allocation or priority-setting. A disorder can place considerable burden on a population but if appropriate strategies to reduce this burden are absent or extremely expensive in relation to the health gains achieved, large-scale investment would be considered misplaced. The reason is that scarce resources could be more efficiently channelled to other burdensome conditions for which cost-effective responses were available. For priority-setting and resource allocation, it is necessary to ask what amount of burden from a disorder can be avoided by using evidence-based interventions, and at what relative cost of implementation in the target population. Cost and cost-effectiveness considerations enter into health care reform processes, priority-setting exercises within and across health programmes, and regulatory decisions concerning drug approval or pricing. Two broad levels of economic analysis can be distinguished: macro and micro.

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