Transcript Introduction to Health Economics (2)

Economics, Ethics and health
Care Funding
Craig Mitton, PhD
Faculty of Health and Social Development, UBC-O
Centre for Healthcare Innovation & Improvement, CFRI
Outline of Session
► Background
to priority setting
► Economic framework: overview
 Practical steps
 Key concepts
 Expected benefits
►A
bit on ethics
► Activity in Canada and elsewhere
Background: scarcity
► Allocation
of health care funds according to
defined populations is a global phenomenon
► Basic notion is that of a fixed funding envelope –
not enough to meet all needs
$
Resources
Services =
Claims on Resources
Levels of Priority Setting
► Provincial
► Health
or state level
authorities
► Hospitals
► Program areas
► Individual services
► Bedside
Background: surveys
► Surveys
in various countries have reported feelings
of inadequacy amongst decision makers for priority
setting
 United Kingdom (late 1990s)
 Australia (2003)
 Canada (late 1990s, 2004, 2005)
 Unclear what tools are available assist in such activity
 Consistent approaches to priority setting often not taken
Common Approaches
► Historical/
political allocation: funding based on
last year’s budget with some adjustments
 Can become: ‘whoever yells the loudest’
 Continual growth in budgets
► Other
approaches:
 Needs assessment, core services
 Fail to consider basic economic principles
Economic principles
► Opportunity
cost:
 By investing in program A, some benefit lost by
not investing in program B…
►Lost
benefit of the next best alternative use of
resources is the opportunity cost
►Need to weigh out costs and ‘benefits’ of service
options
Economic principles
► The
margin:
 about the next unit of resources
►if
I had $1.00 where would I invest that dollar…
►if my budget was to reduce by $1.00 where
would I find that dollar…
 make the most of the available resources
(regardless of how much is in the total pot)
Implications of the principles
► To
do more of some things, we have to take
resources from elsewhere, by either:
 doing the same things at less cost; or
 taking resources from areas of (effective) care
► Measure
costs and benefits of health care
► Often about how much rather than whether
Economic approaches
► Compare
benefits from programs funded
to resources required
 Economic evaluation
► More
pragmatic but still based on the
same underlying principles
 Program budgeting and marginal analysis
PBMA
► Framework
to assist decision makers in
making choices around limited resources
► Used in health care since 1970s
 Currently being used in health authorities in
Alberta and British Columbia
► Can
be combined with ethical approaches in
its application and is as evidence based as
time and data allow for
From principles to practice
1. What resources are available in total?
2. In what ways are these resources currently spent?
3. What are the main candidates for more resources and what
would be their effectiveness?
4. Are there any areas of care which could be provided to the
same level of effectiveness but with less resources, so
releasing resources to fund candidates in (3)?
5. Are there areas of care which, despite being effective,
should have less resources because a proposal in (3) is
more effective (per $ spent)?
PBMA: Practical Steps
►Determine aim and scope of activity
►Identify and map resource use
►Form an advisory panel
►Define and weight decision making criteria
►Identify options for service growth and resource
release
►Evaluate proposed investments and
disinvestment
►Validate results, recommendations for (re)allocation, communicate decisions
►Evaluation, refinement and ongoing revision
Key Concepts
► Shifting
or re-allocating resources based on explicit
comparison of options against the criteria
► Single group generating expansion/ reduction
options
► Incentives to encourage participation
► Clinicians and managers working together
► Tool that supports decision making
Benefit measurement
► Approach
generally depends on scope of
activity and resources available
 Clinical outcomes
 QALYs, DALYs, WTP, DCE
 Multi-attribute decision analysis (MCDA)
►
MCDA has a long history in other sectors
 Limited ‘real’ health care examples published
 Fits with decision maker perspective
MCDA rating and scoring
► Score
service options for investment and
resource release in terms of benefits for
patients under pre-defined set of criteria
 E.g., on a scale of 1 to 10 how geographically
equitable is service Y?
► To
get a single measure of each service’s
benefit need to combine the scores
 Assuming a linear function, can add the
scores taking into account criteria weights
PBMA: Outcomes
► Primary benefit from PBMA
• Achieving real resource shifts that are consistent
with strategic decision-making objectives
► Secondary benefit from PBMA
• Changes in decision making culture, evidence base
•
•
•
•
Defining objectives and programs
Ownership of planning process
Transparent and defensible decision making
Clinician engagement and partnership
Potential Challenges
► Data
and time requirements
► Benefit measurement and relative value
► Mis-alignment of incentives
► Re-allocation of resources…
BUT these are always a problem in health care!!
 Managers and docs alike tend to want more
formal, explicit, transparent method for priority
setting and resource allocation

Incorporating ethics
► Ethical
framework
 accountability for reasonableness
► Has
gained momentum the last few years
 hospitals, technologies, drugs
► Focus
is on ensuring that the chosen process of
priority setting is fair and legitimate
► Based on four ethical conditions
‘fair process’
► What
evidence, reasons and principles are used
and where did they come from?
► Who is involved in the process, what
communication plans were used?
► What mechanisms allow for revisiting of
decisions if new evidence arises?
► How will decision makers ensure the process
was fair?

Economics and ethics have different focuses… both can
contribute to priority setting activity
Canadian PMBA examples
►
Chinook Health Region (AB)
 Surgery, chronic disease
►
Headwaters Health Authority (AB)
 Surgery, long term care
►
Calgary Health Region
 Macro, children’s services
►
Vancouver Island Health Authority
 Macro, within portfolios
►
Interior Health Authority
 Community care services
►
Northern Health Authority
 Home and community care
Northern Health Authority
► Scope:
all non-hospital H&CC services
► Participants: range of clinicians, managers and
finance personnel
► Objective: recommendations for allocation and reallocation to impact 2007/08 budget year
► Timeline:







May 17 – decision maker training workshop
June – form advisory panel
July – formulate and validate decision criteria
Aug/ Sept – generate investment and release options
Sept. 26 – decision making retreat
Oct. – recommendations to Executive
Nov/ Dec. – evaluation and process refinement
Home & Community Care
► Criteria
defined and assigned weights
 Health gain, access, appropriateness, strategic alignment
► Scoring
of proposals for investment and resource
release on quantitative score sheet
► Scores entered into decision analysis software
► Transferred to excel to present benefit scores
► Recommendations for re-allocation, endorsed by
Senior Executive
► Evaluation and refinements for next year
SUB-CRITERIA
GUIDELINES FOR SELF-RATING
1
2
3
4
5
6
7
8
9
i) incremental health
gain - magnitude of
health gain as measured
by relevant clinical
outcomes resulting from
the initiative compared to
current practices &
available services
no difference
in outcomes
compared
with current
practices/servi
ces
minimal
improvement
to outcomes
compared
with current
practices/servi
ces
moderate
improvement
to outcomes
compared
with current
practices/servi
ces
high
improvement
to outcomes
compared
with current
practices/servi
ces
vast
improvement
to outcomes
compared
with current
practices/servi
ces
ii) anticipated impact the incremental
improvement the initiative
will have on clients health
and quality of life and
performance
no difference
on quality of
life and
performance
compared
with current
practices/servi
ces
minimal
improvement
on quality of
life and
performance
compared
with current
practices/servi
ces
moderate
improvement
on quality of
life and
performance
compared
with current
practices/servi
ces
high
improvement
on quality of
life and
performance
compared
with current
practices/servi
ces
vast
improvement
on quality of
life and
peformance
compared
with current
practices/servi
ces
iii) early intervention likelihood that early
intervention will reduce
the risk of complications
0-11%
12-23%
24-35%
35-46%
47-58%
59-70%
71-82%
83-94%
>95%
iv) target population - #
of incremental clients to
be served annually by the
initiative divided by # of
new clients with this
condition/ disease in NH
region
0-11%
12-23%
24-35%
35-46%
47-58%
59-70%
71-82%
83-94%
>95%
Rati
ng
(19)
0=opinion;
1=some
evidence;
2=high
quality
evidence
Home & Community Care
► Evaluation
add in a criteria on innovation
improved vetting of original business cases
greater focus on re-allocation
BUT implemented in relatively short time, engagement
perceived to be high, and process viewed as
improvement over previous historical/ political
allocations
 additional time would allow for greater use of evidence
and more in-depth analysis of proposals




International applications
► Approaching
close to 100 exercises in over 80
health organizations
 England, Scotland, Wales, NZ, Australia, over the last
3 decades
 Wide range of program areas, majority at micro/
meso levels; more recently macro level applications
 Distinct shift from focus on ‘efficiency’ to more of a
management process aimed at re-allocating resources
to better meet wide range of organizational objectives
International applications
► South
West Area Health Service (WA)
 Initial enthusiasm, training and survey work
 Lack of leadership prevented moving forward
► Waitemata
District Health Board (NZ)
 Internal champion, training for both macro level
exercise and within Mental Health
 Process carried out BUT…
► Challenges
in understanding business case approach
► Lack of evidence due to rushed completion
► Laid back CEO, lacked highest support
International lessons
Clear messages
Need for involving multiple stakeholders
Incorporating ethical frameworks
Understanding of organisational behaviour and context
Leadership is everything
Watch out for (major) organizational instability
Summary
►
►
►
Despite challenges, decisions
have to be made with or
without an explicit approach
to priority setting
PBMA can assist decision
makers in thinking about
economic principles and reallocating resources
Lots of examples of PBMA
implementation and
evaluation in Canada and
elsewhere
Acknowledgements
Michael Smith Foundation for
Health Research and Canada
Research Chairs program
[email protected]