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Economists regard resources as factors of production, i.e. labor, capital and entrepreneurship. The price paid to labor for its contribution to the process of production is called wages. The higher the quality of labor (physical and mental), the more productive the workforce is. Capital refers to manufactured resources such as factories and machines, i.e. man made goods used in the production of other goods. Entrepreneurs are a vital engine of economic growth helping to build some of the largest firms as well as some of the small businesses in your neighborhood. The payment an entrepreneur receives is profit as a reward for the risk he is taking.
Health systems
Health systems are responsible for delivering services that improve, maintain or restore the health of individuals and their communities. According to the WHO, this includes the care provided by hospitals and family doctors, but also less visible tasks such as the prevention and control of communicable disease, health promotion, health workforce planning and improving the social, economic or environmental conditions in which people live.
Fiscal sustainability
Fiscal sustainability in the public sector refers to the public budget with its functions on a yearly basis, medium term planning (2-5 years) and over longer periods of time, say more than 30 years (OECD). Is it always a balanced budget, or running a deficit as well? As William Vickrey (Nobel Prize 1996 in Economics) stated: “deficits are considered to represent sinful profligate spending at the expense of future generations who will be left with a smaller endowment of invested capital.”
Sustainability in the broadest sense means: ensuring healthy lives and promoting the wellbeing for all and at all ages for a long period of time. It is essential to sustainable development. The Social Development Goals of the UN/UNESCO address in this context the global challenges we face, including those related to poverty, climate, environmental degradation, prosperity, and peace and justice.
What is sustainability within health systems?
According to the Wake Forest University (Winston-Salem, NC) it consists of:
- constructing and managing health care facilities following sustainable practices;
- designing sustainable health care processes;
- promoting daily sustainable practices for healthcare employees and departments.
Financial sustainability draws on various sources of revenue (taxes, payroll taxes, premiums, out-of-pocket-expenditures etc.), allowing it to support its ongoing efforts and to undertake new initiatives. It also means equity in financing. Households should contribute to the health system on the basis of their ability to pay. Financial protection should ensure that the cost of care does not put people at risk of a financial catastrophe. To improve the fiscal sustainability of health systems, one could try to restructure the resources on different levels, as shown below. Resource mobilization means better use of existing factors of production.
Source: Technische Universität Berlin
Generally speaking, economists would propose that resources should be invested, where the health benefit is the highest, or as M.E. Porter proposed: “value defined as the health outcomes achieved per dollar spent.” Politicians should use as their empirical basis for their political decisions the results from evidence-based medicine (EBM), health technology assessment (HTA) and/or health assessment (HA).
Unfortunately, there is no gold-standard for health systems and no optimal health expenditures quota, but certain rules do exist, such as comprehensive coverage for the whole population, irrespective of social status, income and place of residence. In addition there are often examples of best practice in a specific country, community or for a medical treatment.1 Health in all areas of life and throughout one's life is also important but it is more a goal than a system.
An ex-ante macroallocation of resources is indispensable, but through whom within health care and with which mechanism and institutions? NICE in the UK (National Institute for Health and Care Excellence), GBA in Germany (Federal Joint Committee of Insurance Companies and Physicians) or similar regional institutions, competition, markets, NGOs, the parliament, democratic processes, social media, press, ministries and interest groups etc. Finally it is an interplay among patients and providers of medical services in the public, private, semi-public and the self-governmental sector. The total system is mainly interest-driven by all the participants.
The famous Brundland Commission has put forth a conceptual framework that many nations agree with, but it has been difficult to change these concepts about sustainability into concrete actions and programs. A comprehensive plan of action came out and entails actions to be taken globally, nationally, and locally in order to make life on earth more sustainable going into the future. Its Agenda 21 reinforces the importance of finding methods to generate economic growth without hurting the environment. The commission was a sub-organization of the UN that aimed to unite countries in pursuit of sustainable development. The Brundtland Report was intended to respond to the conflict between globalized economic growth and accelerating ecological degradation by redefining ‘economic development’ in terms of ‘sustainable development’.
On another note: look at sustainable cultivation and processing of goods and services. Take coffee as an example. Coffee cultivation should not contribute to deforestation or reduction of biodiversity; it should protect soil, water and air, respect human rights, labor and land rights, educate well-trained farmers to improve productivity and profitability etc.
We can ensure compliance with economic, social and environmental criteria for coffee production and processing in order to establish sustainable coffee supply chains. Thus there is a functional equivalence between completely different production functions (Coffee and health services).
