Healthcare Resource Allocation
David Hadorn, MD, Ph.D
University of Otago
Wellington School of Medicine
27 September 2010
Healthcare Resource Allocation
• Definitions
• Oregon as case study
• NZ experience and current activity
Definitions
• Resource Allocation – implies differential
value to be maximised
• Rationing – implies fairness, restricted
portions, limitations on services
• Prioritisation – implies ordering effect with
some services falling below threshold
Oregon
• Legislation passed in 1989
• Designed to set priorities amongst all
health services for use in Medicaid
• Philosophy was (and remains) to drop
services, not people, when funding gets
tight
• Still going strong today, with waiting list
Oregon, cont.
• Health Services Commission develops
prioritised list
• Several hundred ‘line-items’ (condition-treatment
pairs)
• Legislature sets funding level
• Actuaries translate this into a funding threshold
on the prioritised list
• Service threshold is specified (currently 503 /
680)
• Services below funding threshold (nominally) not
covered
In more detail…
Oregon
• First list developed 1990 using classical
CUA ($ / QALY)
• Priority order seemed obviously wrong
Result of First CUA
History of Prioritisation in NZ
• Core Services Committee 1992
• Gave up task of defining ‘the core’ in 1996
(too hard, too controversial, Oregon)
• HFA took over prioritisation efforts 19972000
• Since then, little progress on national
systematic prioritisation – some DHB work
• PHARMAC has kept going strong
Current HVDHB Scoring Components
Score Maori Health Criteria
1
No targeting for Maori,
mainstream service
2
Little targeting to Maori (e.g.
targeted to low income),
mainstream service
Score Effectiveness Criteria
1
No expert evidence
2
Conflicting evidence but
recommended by Service
Planning Groups
Some evidence or expert
consensus
3
Mainstream service
targeted to Maori
3
4
Maori service
4
5
Fully by Maori for Maori
service
15% Weighting
Good international evidence
or well designed controlled
trials
5
Good New Zealand
evidence or randomised
control trials
25% Weighting
Score Equity Criteria
1
Untargeted service
Untargeted service but with
relatively high proportions of
those with the poorest
health and highest need
3
Some targeting to those
with the poorest health and
highest need
4
Generally targeted to those
with the poorest health and
highest need
5
Targeted specifically to
those with the poorest
health and highest need
25% Weighting
Score Value-for-Money Criteria
2
Scored on 4 separate
dimensions below
35% Weighting
Value-for-Money dimensions
Score Cost per Person Criteria
Score Cost Savings Criteria
1
2
>$10,000 per person
$1,000-$10,000 per person
1
2
Little or no cost offsets
Small cost offsets
3
$100-$999 per person
3
Medium cost offsets
4
$10-$99 per person
4
Large offsets
5
$0-$9 per person
5
Very Large cost offsets
15% Weighting
5% Weighting
Score Effectiveness per Person
Criteria
1
Little, if any, direct gain
2
Some benefits, small
reduction in disability or
small increase increase in
quality of life
3
Medium benefits, moderate
reduction in disability and/or
some increase in quality of
life or life expectancy
4
Large benefits, good
reduction in disability and/or
increase in quality of life or
life expectancy
5
Huge
benefits, adding many
years of quality life
10% Weighting
Score Timing of Benefits Criteria
1
2
10+ years
6-9 Years
3
3-5 years
4
2 years
5
Within 1 year
5% Weighting
Ranked Table of Initiatives
Prioritisation Scoring Table - With Weightings
Plan
Diab/Card
Primary
Card
Child
Youth
Cancer
Chronic Dis
Child
Health Comm
Health Comm
Primary
Youth
Child
Health Comm
Oral
Primary
Youth
All
All
Diab
Disability
Maternity
Resp
Surgery
Youth
All
Health Comm
Child
Oral
Maternity
Youth
Child
Surgery
Health Comm
Proposal/Initiative
Diabetes Pilot prevention
PHO JV
Card rehab Prog
Kidznet
Youth School Health Clinics - targeted
Cancer mole removal subsidy
Chronic Dis Clinical Pathways in Primary care
Immunisation assertive outreach
Lifestyle - CHW via targetted PHO
Smoking Cessation
Primary care teams - Additional Nurses
YHS to older youth
Ear Caravan
Physical Activity - Market Green Scripts
Pilot Basic dental service
Primary care reduce copayments -Targeted
Youth School Health Clinics
Service Directory
Audits - additional
Increase Podiatry Service
Disability Advisor
Additional post natal support -special needs
Flu Vac assert recall
Increase Nurse clinics Card & ED
Peer support /educators
Workforce development fund
Ethnicity Collection
Workforce development - well child
Oral Health enrol adolescents w default prov
Maternity coordination mechanism
Youth Health Coordinator
Mental Health Moderate needs pilot
Surgery Diagnostics - Radiology
Workforce Study
15%
25%
25%
Score
78
68
68
64
65
74
65
72
66
69
62
61
68
62
69
66
53
46
67
66
52
63
65
53
50
62
68
47
60
55
37
44
41
37
Maori
9
9
9
9
6
3
9
9
9
6
6
9
9
3
9
12
6
6
9
9
3
6
3
3
6
9
12
6
9
6
3
6
3
6
Effective
ness
20
15
20
10
15
25
15
15
10
20
15
15
15
20
10
10
15
5
20
20
10
15
20
15
10
15
15
10
10
15
5
10
10
5
Equity
25
15
15
20
20
20
20
20
25
20
15
15
20
10
25
20
10
10
15
15
15
20
15
10
10
15
20
10
20
10
5
10
5
5
63
64
45
50
55
41
36
6
6
6
3
9
6
3
20
20
10
15
10
10
5
15
15
10
15
15
10
5
0%
0%
15%
Consist w Acceptabi Cost per
NZHS
lity
person
0
0
9
0
0
15
0
0
9
0
0
15
0
0
12
0
0
9
0
0
9
0
0
12
0
0
9
0
0
6
0
0
15
0
0
12
0
0
12
0
0
15
0
0
12
0
0
12
0
0
12
0
0
15
0
0
15
0
0
9
0
0
15
0
0
9
0
0
12
0
0
12
0
0
12
0
0
15
0
0
15
0
0
15
0
0
12
0
0
15
0
0
15
0
0
9
0
0
12
0
0
15
5%
Cost
offsets
4
3
4
3
2
4
3
4
3
5
2
2
3
3
2
2
2
1
1
3
1
2
4
3
2
1
1
1
1
1
1
1
2
1
10%
5%
Time to
effectiven
Outcomes
ess
8
3
6
5
6
5
4
3
6
4
8
5
6
3
8
4
8
2
10
2
6
3
4
4
6
3
8
3
6
5
6
4
4
4
4
5
4
3
6
4
4
4
6
5
6
5
6
4
6
4
4
3
2
3
2
3
4
4
4
4
4
4
4
4
4
5
2
3
Mental Health
Mental Health
Mental Health
Mental Health
Mental Health
Mental Health
Mental Health
Mental Health
Psychological therapies
MH Quality & Outcomes program devel
Youth crisis respite services
MH Aged Care
Workforce development - MH Scholarships
Primary Mental Health long term stable
Outsource MH link Newsletter
0
0
0
0
0
0
0
0
0
0
0
0
0
0
9
15
6
6
15
6
15
3
1
2
1
1
1
1
6
4
6
6
2
4
2
4
3
5
4
3
4
5
National Prioritisation Back on
Agenda
Renewed government interest in prioritisation signaled through series of
Wellington Health Economist Group seminars:
Gerald Minnee, Ruth Isaac, NZ Treasury. Health system sustainability
in the long term: Why we need to act today. 22 May 2008
Judy Kavanaugh, MOH. Prioritisation: why is it so hard? 21 August 2008
Janet McDonald. Prioritisation: Change and Adaptation in Families
with Young Carers. 11 September 2008
David Hadorn and Martin Hefford. Saying ‘no’ in three countries:
alternative methods of healthcare prioritisation. 16 October 2008
(repeated at VUW and Treasury)
Creation of Centre for Assessment and Prioritisation July 2009
“Meeting the Challenge”
• Ministerial Review Group (MRG) – Horn
Report
• Released 16 August 2009
• Changed dynamic for health reform
• Several recommendations support CAP’s
mission
MRG on prioritisation
From MRG report:
[We recommend] revamping and strengthening the
National Health Committee, so that it is better able to
perform its original role of assessing the appropriateness
and cost-effectiveness of new services, and
progressively reassessing existing services. p 5
[A] single national agency removed from both DHBs and
the Ministry [is needed]. The best approach would be to
strengthen the NHC. p29 sec72
Cabinet Paper
•
“[MRG] identified improved prioritisation as way to
manage costs and improve safety and effectiveness of
health services, as has been achieved by PHARMAC
with respect to community pharmaceuticals. This
requires smarter control of the introduction of new
technology and interventions . . . while decreasing the
utilisation of less effective and outdated services.”
Cabinet Social Policy Committee, Improving the Health
System: Further Elements: Paper One: Prioritisation of
New Technologies and Interventions, 19 March 2010
Decisions Yet To Be Taken
• Cabinet has embraced MRG’s main
recommendation but still has to decide
• (1) how NHC should select and assess
interventions
• (2) whether and how NHC decisions should
affect or constrain District Health Boards’
funding decisions, and
• (3) whether and how groups of similar products
and services (e.g., new technologies, devices,
diagnostics) might be ring-fenced and subjected
to a fixed budget, PHARMAC-style.
Minister at Arms’ Length from
Process
• “risk” of becoming “directly [involved] in detailed
and potentially sensitive decisions . . . [including]
establishing the work programme, which may
also be contentious.”
• “can create PHARMAC-like budget
arrangements to place Minister at arms length
from the decisions”
• OTOH Minister must retain ability to veto output
in capacity as elected representative
• But make it difficult to veto, like PHARMAC
Treasury is Cautious
• Treasury cited these issues as reasons to ‘defer’
development of a prioritisation infrastructure (despite
Minister’s expressed wish to begin “as soon as possible”
with consultation to run alongside):
“Deferral would enable the decisions to be taken further
in terms of how prioritisation will in fact work and how
any prioritisation recommendations will be implemented
(crucially, how it will or will not constrain DHBs). These
design details matter, as there is a risk of fuelling, rather
than dampening, health cost pressures if the model is
wrong.”
How Should NHC Advice Bind
DHBs?
• Don’t want to force DHBs to purchase
services deemed high priority (like NICE in
UK) or to invest or disinvest in same
services (accept some disparities as price
for local control)
• Give DHBs options for new investments
and disinvestments – balance costs
Proposed Prioritisation Method:
• National Health Committee would use “Traffic Light”
approach
• Combines central assessment and prioritisation with
local choice
• Using Cabinet-approved methods, including
consultation, National Health Committee would develop
three lists: green, orange, red
• Green = good new investments (new technology or
expand existing)
• Orange = good candidates for disinvestment, i.e.,
marginal value for money
• Red = indications for which services should not be
performed or funded (zero or negative net benefit)
Proposed method, continued
• Cost of green list = cost of orange + red
lists – compatible with fixed budget
• DHBs permitted to choose amongst
designated services based on local
considerations
• Could go ‘off list’ but would be asked to
explain why to Minister