ABSTRACT
This chapter introduces some basic concepts underpinning the analytical framework which seeks to facilitate decision making against a background of scarce resources. The area of health economics that will be of most relevance to practitioners, commissioners and managers and that forms the core of this book is economic evaluation. Economic evaluation is the comparison of resource implications and benefits of alternative ways of delivering healthcare. Commissioners and providers of healthcare are being asked to make judgements about the relative merits of different interventions that lead to decisions about resource allocation. Health economics is a subdiscipline of economics, which focuses on the allocation of healthcare resources in a world where demands exceed resources. The growing pressures on health budgets make it increasingly important for decisions to be made in a manner that is both fair and transparent.
