However, resource allocation in a hospital can be analyzed by using production theory to determine efficient resource use. The information provided by hospital epidemiologists is critical to understanding health-care production processes used by a hospital and developing economic incentives to promote antibiotic effectiveness and infection control. The application of basic textbook principles to understanding economic behavior in the health-care industry is not a straightforward exercise because of the complex nature of health care as a service or product. Health care is not an item that is pulled off a store shelf, placed in a shopping cart, and paid for at the cash register. The desired result cannot be guaranteed and depends on various factors, many of which are beyond the control of the health-care provider.
Economic analysis is based on the fundamental notion of efficient use of available resources.
Economics is a behavioral science that begins with two propositions about human behavior. First, human behavior is purposeful or goal directed, implying that persons act to promote their own interests. Thus, the basic problem addressed by economics is how to allocate limited resources among unlimited demands. Within this context, the concept of cost in economics is based on opportunity costs rather than financial costs. Opportunity cost is the value of a resource when it is employed in its next best use.