Healthcare Economics Overview

The New Medicare Clinical Laboratory Fee Schedule Rates
August 27, 2022
August 27, 2022

Healthcare Economics Overview


Healthcare economics is the application of economic principles in solving healthcare issues. The production theory of healthcare economy principles can be applied in determining the efficient use of the hospital’s resources. Determining the value of healthcare services is not an easy task because of the nature of healthcare as a service and not a product (Dang et al., 2016). Therefore, the focus of healthcare economics is to seek the most efficient procedure for budgeting the limited resources in healthcare organizations. The cost of interest in this discipline is the opportunity cost which is the value of a product when it is put to its best use. In economic analysis, the managers instituted strategies that bring about the most profit from resources (Dang et al., 2016). Efficiency in healthcare is achieved by selecting a product and the most effective ways to distribute and get markets for the produce. The economic analysis model is applicable at the national and community levels to fight the opioid epidemic. Opioids are a public good whereby one person’s utilization may have profound indirect impacts on others. This calls for the state and federal governments to determine the ideal ways to manage this societal issue.

Opioid Crisis

The ineffective use of opioids, including analgesics such as fentanyl, codeine, and morphine, has resulted in high numbers of hospitalizations and sudden deaths from overdosing opioids. The use of illicit opioids, including heroin, also contribute to the burden of the opioid crisis in society. Abusing opioids affects virtually all groups of people, including children, adolescents, college students, veterans, and the elderly. Children born from parents who abused opioids may be born with the addiction. Adolescents and college students may be introduced to opioids by their peers, whereas the aged may become addicted to opioids due to their prolonged use to treat pain. According to the Centers for Disease Control, 50000 individuals died in 2019 from opioid-related complications. The cases of opioid abuse in the United States have been on the rise since the late 90s (Robinson et al., 2019). The other complications of misappropriate use of opioids are the risk of addiction and dependence on individuals. Prolonged use of opioids by patients may result in a transition to other illicit drugs, including heroin, to reduce supply. This epidemic also leads to a significant economic burden on the government to treat and rehabilitate individuals. Direct costs are required to meet the healthcare costs, reduced productivity, and criminal justice involvement of the abusers of opioids (Robinson et al., 2019). Therefore, this epidemic requires a collective and collaborative approach for its effective management.

Organizations involved in Treating the Condition

Several organizations are involved in fighting the opioid crisis. For instance, the U.S. Department of Health and Human Services (HHS) is involved in strengthening the treatment of opioid-related problems, keeping track of data on opioid misuse, and agitating for better pain management in hospitals. It is also involved in enhancing research on pain management and antidotes for opioids overdoses (Phillips et al., 2017). The National Institutes of Health (NIH) is another agency involved in research to curb the opioid crisis better. Evidence-based data is vital in resolving the problem of opioid overdose. The allied against opioid abuse is also an example of a nonprofit, non-governmental organization involved in managing the opioid crisis. It aims to provide education and awareness nationally to reduce the misuse and abuse of opioids. Organizations are instrumental in the optimum management of the opioid crisis in the United States.

Policy Analysis Framework

One policy attempting to address the opioid epidemic in North Carolina is the North Carolina opioid action plan updates and opportunities of 2017. This policy focuses on preventing the opioid epidemic, harm reduction, and connecting addicts to care (Kansagra & Cohen, 2018). Since the policy’s inception in 2017, it has resulted in a decreased number of opioid prescriptions, an increased the number of patients beneficiaries of Medicaid insurance policies, and the prescription of buprenorphine has increased. The harm reduction services included in this policy include providing syringes to opioid abusers, teaching healthcare personnel about linking up individuals to care, and prescribing naloxone to persons at risk of opioid overdose. Other services include training to reduce stigma, increasing buprenorphine dispensing, and the utilization of telemedicine to enhance coverage of treatment in rural areas (Kansagra & Cohen, 2018). These services will be offered in community settings and at hospital facilities. This policy receives funding from the federal government to enhance treatment and preventative services (Kansagra & Cohen, 2018). Some of its benefits include reduced stigma to opioids patients, increased linkage to care and reduced prescription of opioids by clinicians.

Ways of Controlling the Opioid Crisis

Policymakers at the hospital and the community levels need to encourage several evidence-based strategies to curb this menace. Firstly, the effective prescription of opioids by healthcare personnel is imperative in controlling this epidemic. Nurses and physicians need to taper the dosing of opioids according to the individual’s unique personal needs. The prescribers need to follow the pain management protocols to treat pain. Clinicians need to conduct a risk-benefit analysis before prescribing certain pain-relieving medications (Phillips et al., 2017). Other appropriate pain management options, including naloxone, may be considered for pain relief. Prescription drug monitoring is useful in enhancing patient safety and wellbeing.

Second, patients need to take steps to prevent the ineffective use of opioids. Patients need to disclose all the drugs they are taking to the clinician, including the counter drugs and herbal medications. They also need to follow the physician’s directions on the use of opioids. This includes adherence to the dosage, scheduling, and potential interactions between drugs and food. Furthermore, patients should store and discard the drugs appropriately once completing the treatment plan. Policymakers should institute educational programs for community members on the rational use of opioids (Phillips et al., 2017). Additional information on the delirious effects of opioid overdose is also key in preventing their abuse.

Third, drug manufacturers need to adopt the abuse-deterrent formulations of a drug to curb the misuse of drugs. This strategy includes putting the drugs in physical or chemical preparations which prevent their inappropriate use. The opioid drugs may also be put in designs that exert their effects after a long time. Agonist or antagonist combinations that counteract the effects of a drug once manipulated also stop its abuse (Kansagra & Cohen, 2018). Additionally, this strategy promotes new drug formulations, which renders it ineffective when the drug is not administered via the oral route. Altering the composition of opioids may reduce their abuse.


The success of the opioid prevention plan can be measured using several findings—first, reductions in the number of hospital admissions or deaths from opioid-related deaths. Sufficient adherence to the preventative options will reduce the burden of the opioid crisis. Second, effective adherence to the prescription plan by the patients indicates the success of the plan. Furthermore, the local drug enforcement agency reports on opioid misuse also give a clue on the success of the prevention plan (Phillips et al., 2017). The reduction in the number of apprehensions of individuals for opioid-related crimes indicates the program’s effectiveness in the community.

In summary, effective economic planning is required for the prudent use of resources. Policymakers need to consider the efficient allocation of scarce resources for proper outcomes. Community collaborations between the healthcare personnel and the community members are key for preventing the opioid crisis. Healthcare providers need to follow the rules of standard prescription of opioids to reduce their misuse. Patients should adhere to the prescriptions to prevent opioid overdoses. State and federal governments need to increase pain management options to reduce over-reliance on opioid medications.


Dang, A., Likhar, N., & Alok, U. (2016). Importance of economic evaluation in health care: An Indian perspective. Value in Health Regional Issues, 9, 78-83. Web.

Kansagra, S. M., & Cohen, M. K. (2018). The opioid epidemic in NC: Progress, challenges, and opportunities. North Carolina Medical Journal, 79(3), 157-162. Web.

Phillips, J. K., Ford, M. A., Bonnie, R. J., & National Academies of Sciences, Engineering, and Medicine. (2017). Evidence on strategies for addressing the opioid epidemic. In pain management and the opioid epidemic: Balancing societal and individual benefits and risks of prescription opioid use. National Academies Press (U.S.).

Robinson, A., Christensen, A., & Bacon, S. (2019). From the CDC: The prevention for states program: Preventing opioid overdose through evidence-based intervention and innovation. Journal of Safety Research, 68, 231–237. Web.