L16: Introduction to resource allocation

Question 1

What is priority setting?

Answer 1

Allocation of resources between the competing claims of different services, different patient groups and different elements of care

Question 2

What is rationing?

Answer 2

Describes the effects of those decision on individual patients
The extent to which patients receive less than the best possible treatment as a result

Question 3

Why set prioritites?

Answer 3

Scarcity of resources- demand outstrips supply

Difficult decisions have to be made

Question 4

How are priorities set?

Answer 4

Resources could be used in many ways

Ethics need to be clear and explicit about what we are trying to achieve and who benefits from public expenditure

Question 5

What are the two different forms of rationing?

Answer 5

Explicit and implicit rationing
Explicit: Based on defined rules of entitlement
Implicit: Care is limited but neither the decisions, nor the bases for those decisions are clearly expressed

Question 6

What are the problmes to implicit rationing?

Answer 6

Lead to inequalities and discrimination
Open to abuse
Decisions based on perception of social deservingness
Doctors appear increasingly unwilling to do it

Question 7

How are the rules for explicit rationing determined?

Answer 7

Care is limited
Technical processes e.g. assessment of efficiency and equity
Political processes e.g. lay participation

Question 8

What are the pro for explicit rationing?

Answer 8

Transparent and accountable
Opportunity for debate
More clearly evidence based
More opportunities for equity in decision-making

Question 9

What are the cons for explicit rationing?

Answer 9

Very complex
Heterogeneity of patients and illnesses
Patient and professional hostility 
Impact on clinical freedom
Some evidence of patient distress

Question 10

What is NICE and why was it set up?

Answer 10

National Institute fro Health and Care Excellence

Provide guidance on whether treatment (new or existing) can be recommended for use in the NHS in England

Question 11

What role does NICE play in terms of treatment?

Answer 11

Controversial role in relation to expensive treatment
If not approved, patients are effectively denied access to them
If approved local, NHS organisations must fund them (if clinically approprite) sometimes with adverse consequence for other priorities

Question 12

What are the basic concepts in health economics?

Answer 12

Scarcity 
Efficiency
Equity 
Effectiveness
Utility 
Opportunity costs

Question 13

What does scarcity mean?

Answer 13

Needs outstrips resources

Prioritisation is inevitable

Question 14

What does efficiency mean?

Answer 14

Getting the most out of limited resources

Question 15

What does equity mean?

Answer 15

The extent to which distribution of resources is fair

Question 16

What does effectiveness mean?

Answer 16

The extent to which an intervention produces desired outcome

Question 17

What does utility mean?

Answer 17

The value and individual places on a health state

Question 18

What does opportunity cost mean?

Answer 18

Once you have used a resource in one way, you no longer have it to use in another way
Viewed as a sacrifice rather than financial expenditure
Measure in benefits foregone
opportunity cost in the value of the next best alternative use of those resource

Question 19

What is the difference between technical efficiency and allocative efficiency?

Answer 19

Technical efficacy→interested in the most efficient way of meeting a need
Allocative efficacy→ you are choosing between the many needs to be met

Question 20

What is economic evaluation?

Answer 20

Comparison of resource implications and benefits of alternative ways of delivering healthcare
Can facilitate decision so that they can be more transparent and fair

Question 21

How do we measure cost?

Answer 21

Different ways of measuring cost
Cost of:
→healthcare service
→patients time
→associated with care-giving
→associated with illness
→economic cost borne by other employers, other employees and the rest of society

Question 22

How can you measure benefit?

Answer 22

Improved or maintained health is hard to measure
Is benefit:
→ impact on health status
→ saving in other healthcare resources
→ improved productivity

Question 23

How can you compare costs and benefits?

Answer 23

Different ways to do so

1. Cost minimisation analysis
2. Cost effectiveness analysis
3. Cost benefit analysis
4. Cost utility analysis

Question 24

What is cost minimisation analysis?

Answer 24

• Outcome assumed to be equivalent
• Focus is on cost
• Not used often as the outcomes are often not equivalent
  e. g. range of different things produce the same outcome choose the cheapest one

Question 25

What is cost effectiveness analysis?

Answer 25

• Compare drugs or interventions which have a common health outcome → e.g. reduction in BP
• Compared in terms of cost per unit outcome
• If cost are higher for one treatment but benefits are too need to calculate how much extra benefit is obtained for the extra cost
• Key q’s: Is the extra benefit worth the extra cost?

Question 26

What is cost benefit analysis?

Answer 26

• All inputs and outputs are valued in monetary terms
• Can allow comparison with interventions outside healthcare
• Methodological difficulties e.g. putting monetary value on non-monetary benefits such as lives saved
• ‘Willingness to pay’ often used, but this is also problematic

Question 27

What is cost utility analysis?

Answer 27

• Particular type of cost effectiveness analysis
• Focuses on quality of health outcome produced or foregone
• Most frequently used measure is quality adjusted life years (QALY)
• Interventions can be compared in cost per QALY terms

Question 28

How do you know which type of analysis to use?

Answer 28

1) Is there good evidence on effectiveness of interventions being compared? 
→ No- costing study
→ Yes - 
2) Are the interventions equally effective?
→ Yes - cost minimization study 
→ No - 
3) Can all outcomes be values in monetary terms (willingness to pay)? 
→ Yes - cost benefit analysis 
→ No - 
4) Can outcomes be measures as QALYs? 
→ No - cost effectiveness analysis
→ Yes - cost utility analysis

Question 29

Why QALYs?

Answer 29

Need to compare cost-effectiveness of different uses of resources
Need an effectiveness measure that can be used over a wide range
QALYs→ composed of survival and quality of life

Question 30

How do QALYs work?

Answer 30

Assumes that 1 year of perfect health = 1 QALY

Quality and quantity of life included

Question 31

What are some alternatives to QALYs?

Answer 31

Health year equivalents (HYE)
Saved-young-life equivalents (SAVEs)
Disability Adjusted Life Years (DALYs)

Question 32

How does NICE make its decisions?

Answer 32

Below £20K QALY technology will normally be approved
£20-£30K judgements will take account of:
- Degree of uncertainty
- If changes in HRQoL is adequately captured in the QALY
- Innovation that adds demonstrable and distinctive benefits not captured in QALYs
Above £30K need an increasingly stronger case

Question 33

What are some of the criticisms of QALYs?

Answer 33

• Controversy about the values they embody
• Do not distribute resources according to need but according to the benefits gained per unit of cost
• May disadvantage common conditions
• Technical problems with their calculations
• QALYs may not embrace all dimensions of benefit, values expressed by experimental subjects may not be representative
• QALYs do not assess impact on carers or family