Introduction to Resource Allocation
Resource Allocation
•The issue of resource allocation in health care is complex and requires input from a number of groups/disciplines
•The need to make decisions about resourced allocation arises from the fact that the demand for health care resources is virtually infinite; the supply is much less!
•We need to decide, then, how much of our resources should be used for health care and which health care needs to satisfy
•As health care becomes more successful and more technical, it also becomes more expensive
–New therapies, improved therapies
–Chronic diseases
–Aging population (contributes to increased demand)
–Economic factors
–Higher expectations (?)
McGregor (1989)
Until recently: “The principle cost involved in health services was for the comfort and support of the sick, and this cost was relatively low because patients either recovered or succumbed fairly rapidly. The interventions that medicine could make in the course of disease were so slight that a doctor could carry almost all equipment of importance around in a little black bag.”
What we’ll be focusing on:
•November 17: Introduction, overview of issues & problems, the Romanow report
•November 25: Macro-allocation – the case of IVF treatment
•December 2: Micro-allocation – issues in organ transplantation
What are the issues?
•How much funding for health care?
•Who should fund what?
•What to treat/fund?
•How to decide what to treat/fund?
•Who should decide what to treat/fund?
•How to distribute available care among individuals
What must be considered?
•Ethical issues (e.g. distributive justice)
•Economic issues (e.g. cost control, efficiency)
•Medical issues (e.g. “medical necessity,” what is “health)
•Empirical issues (e.g. which treatments are effective? How effective are they?)
•Social issues (e.g. values of the population in question)
Rationing vs. Allocation
•“Historically, ‘to ration’ has meant ‘to distribute equitably,’ so a notion of fairness or justice has been intrinsic to the understanding of rationing.”
•More recently, the term has come to be associated with the idea of deciding which needs to meet
“In the
Hoffmaster, citing Hadorn & Brook, JAMA, 1991
“Levels” of resource allocation
•Macro allocation: at the level of the government. What proportion of a society’s budget will go to health care? (federal and provinicial) How will this money be distributed within the area of health care (e.g. diagnostic and therapeutic services, hospital budgets, drugs, physician salaries, preventive medicine, rehabilitation) (provinicial)
•Meso allocation: hospitals and other organizations providing health care services must decide how to distribute the budget they receive from the government across their various divisions and services
–The ethical issues arising at this level of resource allocation have been less studied than the other two levels
• Micro allocation: made in the case of individual patients, primarily by physicians: how extensive should diagnostic tests be? How aggressively to treat disease? When to discontinue rehabilitation.
•Much writing on micro allocation looks at situations in which resources are scarce: how to adjudicate between competing claims to limited resources
Rationing vs. allocation, again
•“Allocation” generally used to refer to higher level decisions that constrain the availability of resources
•“Rationing” generally used to refer to decisions about how resources that have been limited (through allocation decisions) should be used
Macro allocation: What should be funded? Who should
decide?
Demarcation
•A principle of demarcation is a criterion that divides a group of things into two groups. In the case of resource allocation, such a principle would be used to determine what should and should not be funded.
•The question, then, is what kind of principle should be used…
1. Cost
effectiveness
•What if we fund the most cost-effective treatments? This way, we can benefit the greatest number of people
•But, this would mean that it would be more important to fund tooth capping than appendectomies. We need to figure out a way to compare dissimilar treatments.
2. How beneficial
is the treatment?
•We want to fund the things that will do the most good…i.e. that give the best net benefits
•But we also need to consider the starting point. What if we have two treatments that give equal net benefits, but one treatment is for a condition that is associated with poor functioning and the other with a condition that is associated with moderate functioning?
3. Medical Necessity
•A demarcation principle based on medical necessity says that we should fund only medically necessary treatments
•Freedman and Baylis: (a) this approach is intuitively plausible and in some cases is the only possible approach, but in other cases it “results in some obvious inequalities and distortions in government coverage practices” e.g. Jane Smith
•Freedman and Baylis: (b) We also need a concept of medical necessity. But it’s notoriously difficult to define health…
•WHO definition: “Health is a state of complete physical, mental and social well-being and not merely the absence of disease.”
•Callahan: On this definition, crime, poverty and other social problems are medical problems…the definition is too inclusive
•Callahan: “Health is a state of physical well-being” which need not be perfect but is “at least adequate, i.e. without significant impairment of function.”
•But there are problems here, too: first, what about mental health? Second, the elderly, people with disabilities or people with chronic health problems pose problems for this definition.
Prioritizing: The
•Prioritization is a form of demarcation in which all candidates for funding are ranked. A line is then drawn somewhere in the list; everything above the line funded, everything below is not
•Late 1980s, early 1990s, Oregon Health Services Commission released a list of treatment/condition pairs that had been ranked by a cost-benefit calculation
•The ratings of “benefit” were determined in part through public participation
•Phone survey:
1,000
•Each outcome was assigned a decrement value based on an average rating from 0 to 100 (with 0 being death and 100 being perfect health)
–E.g. wearing eyeglasses was rated 95, so given a decrement rating of -0.05
•Public input is important in a democratic society (principle)
•Health care is meant to serve the public, so we should ask the public what they want (practical)
•Rankings don’t always make sense:
–0.046: not being able to drive or use public transit
–0.049: having to stay at a hospital or nursing home
–0.5: wearing eyeglasses
•What groups of people should we ask?
–
–0.114: loss of consciousness due to seizure, blackout or coma
–0.373: having to use a walker or a wheelchair (under one’s own control)
•BUT: -0.106: needing help to feed oneself or to go to the bathroom
•Reflection of cultural attitudes:
–0.455: trouble with drugs or alcohol
–0.372: having bad burns over a large area of your body
Macro Allocation: Who should pay? Who should benefit?
•The
•But Senator John Kitzhaber, M.D., wanted the plan to ultimately serve as a
template for all of
Why?
•1991: 135 million Americans without any health insurance: most of these people lived in homes headed by working men or women, but didn’t qualify for Medicaid coverage (even if they lived below the federal poverty line)
•Medicare and tax policies do not reflect need: wealthy Americans receive the same benefits as the poor
• “…the cumulative effect of Medicare, Medicaid, and federal tax policy is to provide a subsidy for the cost of health care to virtually all Americans except those who are uninsured. Working Americans among the uninsured remain wholly uncovered even as they help to subsidize other Americans’ health care through their taxes” (Dougherty)
• “To be eligible
for publicly subsidized health care in the
•Under the new
(proposed) system, all
–The amount of money spent would be spread wider and thinner
Do all people have a right to a basic level of health
care?
The Romanow Report
•Report of the
Royal Commission on the Future of Health Care in
•Found that, in general, Canadians value a universally accessible, publicly-funded health care system
•But they also worry about “sustainability”
•The Commission noted that “sustainability” requires more than a focus on money: need to ensure that sufficient resources are available (including health care providers, facilities, technologies, resources for research)
•Should guarantee timely access, quality of service, flexibility to suit changing needs
Health care in
•Who pays?
–We do: health
services in
–The publicly-funded part is funded through transfer payments from the federal government to the provinces, which make decisions about how to spend the money (within the terms stipulated by the federal Canada Health Act)
What things are publicly funded?
•Primarily in-hospital care and physician services
–These seem to be the core of what we value…
•Some provinces also cover some aspects of prescription drugs, home care, long-term care, rehabilitation/physiotherapy
–These things are
“negotiable” – e.g. annual eye examinations in
Private insurance/out-of-pocket spending
•Dental care
•Vision care
•Prescription drugs
•Physiotherapy/massage/chiropractic
•
What’s good about this…
•Guaranteed level of basic care for everyone
•The system is flexible enough to consider cases in which people have “extra” needs, e.g. prescription coverage for seniors
What’s not good…
•Health care needs (and our technical ability to fulfill those needs) are changing faster than our health care system
–High tech medicine
–Prescription drugs
The BIG issue: Private, for-profit service delivery
•Hospitals are generally non-profit
•Most physician services are delivered through what are “effectively owner-operated small businesses” (but what these businesses can charge is regulated)
•Large, for-profit organizations deliver some services, e.g. laboratory testing, long-term care
•Should we increase the amount of private, for-profit service delivery?
•What services should be candidates for privatization?
Pro…
•Privatization will result in more available resources and more choice for people seeking health care
•Competition will mean that services are in general better and also more efficient: there will be lower costs overall for health care
Cons:
•Private, for-profit health care runs contrary to Canadian values: a “two-tier” system will be inevitable
•A private system will be less cost effective in the long run
A distinction:
•Direct health care services: medical, diagnostic, surgical care
•Ancillary services: e.g. laundry, cleaning, food preparation
–In general, people find it more acceptable for these services to be privatized: this is because (1) there are alternatives in terms of choosing who should provide these services and (2) it’s easier to judge the quality of these services
•There are currently some companies/individuals providing private, for-profit direct health care:
–Approximately 300 clinics delivering services formerly provided (only) in hospitals: abortions, endoscopic surgery, physiotherapy, in vitro fertilization, laser eye surgery
•Some clinics/hospitals provide more complex surgeries (requiring overnight stays)
•This may be problematic because:
–It’s hard to assess the quality of direct health care services (may require long-term follow-up)
–Private clinics/hospitals may funnel resources (especially providers) from publicly-funded hospitals
–Two-tier health care…
•The Commission recommends that direct health care services not be run privately and for profit
Some questions
•Should more of the federal government’s budget be allocated to health care?
•Who should decide what should be publicly funded?
–What kinds of information do we need to make this decision?
Sources for this Lecture…
•Beauchamp TL, Walters L Contemporary Issues in Bioethics 5th Ed. 1999 Wadsworth Publishing Company
•Baylis et al. Health Care Ethics in
•Hoffmaster, Daniels articles from textbook