Dictionary
The Dictionary provides concise definitions of health economics terms, arranged alphabetically for quick reference. Use it to understand unfamiliar terminology or confirm the meaning of a specific term.
P
- Preferred DrugFirst-Line Formulary Choice, Favoured Formulary Agent
- A medication assigned to a lower-cost formulary tier, typically with lower patient cost-sharing, to encourage its use over costlier alternatives.
- Preferred Provider OrganizationPPO, Preferred-Network Plan
- A managed care plan offering a discounted contracted network while still allowing out-of-network care at higher cost-sharing, without requiring referrals.
- Premium SubsidyInsurance Subsidy, Premium Assistance
- Financial assistance provided by a government to reduce health insurance premium costs for eligible individuals or households.
- PrepaymentAdvance Payment, Prepaid Financing
- A financing mechanism in which individuals contribute funds toward future healthcare costs before they are incurred, through taxation or premiums.
- Present BiasPresent Bias Concept, Current-Moment Bias
- The tendency to place disproportionate weight on immediate rewards or costs relative to future ones, beyond what constant discounting predicts.
- Price CutMandated Price Decrease, Price Lowering
- A reduction in a drug's price, whether voluntary or mandated, affecting a treatment's ongoing cost-effectiveness and overall budget impact.
- Price Elasticity of ICERICER Price Sensitivity, ICER Elasticity
- A measure of how sensitively a treatment's ICER responds to price changes, used to identify the price at which it crosses a cost-effectiveness threshold.
- Price GrowthPrice Increase, Price Rise
- The component of rising healthcare expenditure attributable to increases in input prices, such as wages or drug costs, rather than volume or intensity.
- Price ProtectionPrice Guarantee, Price-Increase Cap
- A contractual clause limiting or preventing future price increases beyond an agreed threshold for a specified period, giving payers cost certainty.
- Prior UtilisationPrior Use, Previous Utilisation
- An individual's past pattern of healthcare service use, commonly used as a predictor within risk adjustment models of future costs.
- Priority SettingPrioritisation, Rationing Decisions
- The systematic process of deciding how to allocate limited health resources across competing needs, informed by cost-effectiveness and equity.
- Priority Setting CoverageCoverage Prioritisation, Priority-Based Coverage
- The process by which a payer determines which services are included within a covered benefits package, informed by cost-effectiveness and evidence.
- Private Discount RateIndividual Discount Rate, Market Discount Rate
- The rate at which an individual personally discounts future costs and benefits, typically higher than the social discount rate used in policy evaluation.
- Private Insurance PremiumCommercial Insurance Premium, Private Cover Premium
- The periodic payment an individual or employer makes to a private insurer in exchange for coverage of specified healthcare costs.
- Private Sector PerspectiveCommercial Viewpoint, Industry Standpoint
- An analytic viewpoint including only costs and outcomes relevant to private organisations, such as insurers or employers, excluding costs borne by public payers.
- Producer TheoryTheory of the Firm, Supply-Side Theory
- The branch of microeconomic theory analysing how firms choose inputs and output levels to maximise profit given their costs and market conditions.
- Programme PerspectiveProgram Perspective, Intervention-Programme Viewpoint
- An analytic viewpoint defined by the boundaries of a specific programme, including all costs and outcomes attributable to it regardless of the broader payer.
- Prospective EvaluationForward Evaluation, Concurrent Evaluation
- An economic evaluation in which cost and outcome data are collected forward in time from the study's start, unlike a retrospective evaluation.
- Prospective PaymentPPS, Fixed Prospective Rate
- A methodology establishing a fixed reimbursement in advance of care delivery, based on diagnosis or procedure type, rather than actual incurred costs.
- Psychiatric Hospital EconomicsInpatient Psychiatric Economics, Mental Hospital Economics
- The application of health economic evaluation to inpatient psychiatric facilities, comparing cost and outcomes against community-based alternatives.
- Public Sector PerspectiveGovernment-Sector Viewpoint, State Analytic Perspective
- An analytic viewpoint including costs and outcomes relevant to government budgets, potentially spanning multiple public agencies rather than a single health payer.
- Purchasing Power ParityCommon-Basket Comparison, International Price Comparison
- A method of comparing economic value across countries based on the relative cost of a common basket of goods and services, rather than exchange rates.
R
- RAND Health Insurance ExperimentRAND HIE, Health Insurance Experiment
- A large randomised US experiment assigning families to insurance plans with varying cost-sharing levels, providing key evidence on how price affects healthcare use.
- Rate AdjustmentRate Correction, Adjusted Rate Method
- A modification to an existing payment rate, up or down, implemented to reflect changes in costs or policy priorities.
- Real-World ValueRoutine-Practice Value, Observed Value in Practice
- An assessment of a technology's actual benefit and cost-effectiveness observed under routine clinical practice, unlike trial-based efficacy value estimates.
- RebateManufacturer Discount, Volume Concession
- A retrospective payment from a manufacturer to a payer, typically a percentage of price or based on utilisation volume, reducing true net cost.
- Reduced ConsumptionConsumption Reduction, Demand Reduction
- A coping strategy where a household cuts spending on other essentials, such as food, to cover healthcare costs, indicating financial strain.
- Regional PerspectiveRegional Viewpoint, Devolved Perspective
- An analytic viewpoint considering costs and outcomes relevant to a defined geographic region within a country, rather than the health system as a whole.
- Registry TrialRegistry-Based Trial, Register-Embedded Study
- A trial embedded within an existing disease or procedure registry to identify participants, randomise treatment, and collect outcome data at lower cost.
- Reimbursement RestrictionFunding Restriction, Restricted Coverage
- A coverage limitation, such as restricting a treatment to a patient subgroup or requiring prior therapy failure, to manage cost or ensure appropriate use.
- Reinsurance DesignReinsurance Structure, Cession Arrangement
- The specific structure of a reinsurance arrangement, including the attachment point and the proportion of costs above it the reinsurer covers.
- Resource ReallocationResource Shifting, Fund Redeployment
- The process of shifting resources from lower-value to higher-value uses, informed by comparative cost-effectiveness evidence, the core of priority setting.
- Resource ValuationInput Valuation, Resource Pricing
- The process of assigning a monetary value to a measured quantity of resource use, typically by multiplying it by a unit cost.
- Respiratory Disease BurdenLung Disease Burden, Respiratory Morbidity Burden
- The total impact of respiratory diseases on a population, covering mortality, morbidity, and healthcare costs, commonly quantified using disability-adjusted life years.
- Results ExportResults Output, Data Export
- The process of transferring a model's calculated outputs, such as cost-effectiveness results, out of its software environment for further use.
- Retrospective Risk AdjustmentRetro Risk Adjustment, Concurrent-Year Adjustment
- A risk adjustment method calculating payment adjustments after a coverage period ends, based on actual observed diagnoses and costs.
- Return on InvestmentROI, Investment Return
- Return on investment is a monetary measure of the gain attributable to an intervention relative to its investment cost, calculated under an explicitly stated benefit, cost, time, and ratio convention.
- Risk AdjustmentRisk-Adjusted Payment, Morbidity Adjustment
- Risk adjustment makes outcomes, costs, utilisation or payments more comparable by accounting for differences in characteristics that affect expected results but are not the focus of the comparison.
- Risk ClassificationRisk Categorisation, Risk Grouping
- The process of categorising individuals by expected healthcare costs or risk level, used as an input to pricing or risk adjustment.
- Risk PoolInsurance Pool, Pooled Group
- The group whose healthcare costs are collectively financed through a shared insurance arrangement, with premiums covering those who become ill.
- Risk Sharing DesignRisk-Sharing Structure, Sharing Arrangement Design
- The specific structure of a risk-sharing arrangement, including the threshold at which sharing begins and the proportion of costs each party bears above it.
- Rule of RescueRescue Principle, Identifiable Victim Effect
- An ethical intuition describing the strong societal impulse to devote resources to rescuing identifiable individuals in immediate danger, even against cost-effectiveness logic.
S
- Scatter PlotScatter Diagram, Scattergram, Scatter Chart
- A graphical display showing individual data points along two axes, commonly used to plot probabilistic sensitivity analysis results on the cost-effectiveness plane.
- Screening EconomicsEconomics of Screening, Early-Detection Economics
- The economic assessment of a screening programme’s full pathway, comparing its costs, health benefits, harms, budget implications and opportunity costs with feasible alternatives.
- Sepsis EconomicsEconomics of Sepsis, Septicaemia Economics
- The application of health economic evaluation to sepsis, a life-threatening infection response condition with substantial mortality and intensive care costs.
- Service Line BudgetClinical Service Budget, Service-Line Budgeting
- A budget allocated to a specific clinical service line, such as cardiology, covering its costs and expected revenues.
- Severity ModifierSeverity Weight, Severity Adjustment Factor
- An adjustment to a standard cost-effectiveness threshold permitting a higher accepted cost per QALY for treatments addressing more severe conditions.
- Shadow PriceImplicit Price, Accounting Price
- The implicit value of a resource with no observable market price, reflecting the opportunity cost of using it in a particular way.
- Shared SavingsSavings Sharing, Savings Distribution
- An arrangement in which a provider receives a portion of cost savings achieved relative to a predetermined spending benchmark for a population.
- Signaling TheoryTheory of Signalling, Spence Signalling
- A body of theory analysing how individuals with private information take costly actions to credibly reveal it in markets with information asymmetry.