2. Summary of the situation
regarding resource allocation
in health care
Some challenging issues exist: widespread perception
amongst decision makers that there are not enough
resources (very commonly there is not sufficient
resources to carry on with current services as they
are and add new services) and amongst the public
that major changes are needed
And there is uncertainty on the part of decision
makers on how to address this need for changes
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3. The goal in resource
allocation
Decision-makers need to determine:
what health care services to provide
for whom to provide services
how to provide services
where services should be provided
… in order to meet local and/ or system level
objectives including access, health gain…
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4. How is that typically done?
Resource allocation decisions are typically based on:
Historical patterns with incremental adjustment
Politics and the ‘squeaky wheel’
Needs assessment
Core services
economic evaluation (limited)
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5. What is required?
A pragmatic decision-making approach that….
– Aligns resources strategically with system goals and community
needs
– Leads to publicly defensible decisions based on available evidence
and community values
– Facilitates stakeholder engagement around improving benefit with
limited resources
– Supports the public accountability of health care decision-makers
How do we move in this direction?
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6. Elements of the solution
We need to draw from:
Medicine
Economics
Ethics
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8. Economics: Relevant Economic
Principles
• Opportunity cost
– every time we choose to use resources to meet one need we give up
the "opportunity" to use those resources to meet some other need
– aim of economics is to ensure that we undertake activities where
benefits outweigh opportunity cost
• The Margin
– Marginal Cost = cost of one more unit of output/consumption
– Marginal Benefit = benefit from one more unit of output/
consumption
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9. Ethics: Role of ethics
Provides moral compass to guide difficult
value-based decisions about limited resources
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10. Goals of legitimacy and fairness
Experience shows difficulty of agreeing on what
decisions should be made
Competing goals/ mandates
Incomplete data and information
Conflicting stakeholder interests/values
It is more likely agreement can be reached on how
decisions should be made
Social acceptability rests on real/ perceived
legitimacy & fairness of decision process
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11. How do we put all this together: a framework
such as Program Budgeting and Marginal
Analysis (PBMA)
PBMA is a formal framework to assist decision-
makers in making resource allocations decisions
Combines medicine, economics and ethics
Used since the 1970’s in health care
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12. 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
Peacock et al. 2006
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13. Critical success factors
Strong leadership and Board endorsement
Solid project management
Internal and external buy-in
Physician involvement/ ownership
Clear objectives and alignment with strategic goals
Clear roles and responsibilities
Clear institutional boundaries
Explicit, validated criteria
Training and two way exchange of information
Change management processes – credible commitment
Commitment to evaluation and improvement
Political overlay and expectation management
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14. Benefits of PBMA
Primary benefit:
implementation
Achieving resource allocation shifts that are consistent with
strategic decision-making objectives
Secondary benefits
Evidence driven decisions
Ownership of planning process
Transparent and defensible decision making
Clinician engagement and partnership
Gibson et al. JHSRP 2006
Ruta et al. BMJ 2005
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15. What about values?
Best outcomes vs.
fair chances?
How much priority to Individual choice vs.
disease prevention? collective good?
Resource allocation decisions =
value-based decisions
Modest benefits for many vs.
Urgent vs. likelihood
significant benefits for a few?
of success?
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16. How are values integrated in
resource allocation decisions?
Priority setting processes (such as PBMA) are based
on formal comparisons of possible courses of action
e.g. investments or disinvestments
These comparisons involve the application of
evaluation criteria
It is in the selection of these criteria and of their
weights that values are reflected
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17. What about Economic
Evaluation as a resource
allocation framework?
Economic evaluation is a set of scientific
methods to assist decision-makers in making
choices between alternative interventions
Concerned with efficiency not just
effectiveness
Based on principles of welfare economics
maximise the well-being of the community
‘Fair’ choices require a systematic comparison of
costs (resources) and consequences (outcomes or
benefits) of alternative health programs
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18. Limitations of Economic
evaluation
Some technical limitations:
• Potential challenges to validity
• Does a low ICER mean that the new drug/ technology is ‘cost-effective’?
• What does an ICER actually mean in terms of budget impact?
Key issue:
• What about other factors affecting the decision, i.e. how do we integrate
ethical considerations and multiple system objectives
Because of this issue, while in some cases, CEA is an ideal tool, in the broader
context of typical resource allocation decisions, it plays a role but it is usually not
sufficient, which brings us back to frameworks such as PBMA
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19. Conclusion
Irrespective of the specific framework adopted,
proper prioritization requires:
Alignment with multiple organizational
objectives
Explicit recognition of the role of evidence
and values
Engagement of stakeholders
Public accountability
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