Jeremiah Hurley

Implications of Basing Health Care Resource Allocations on Cost-utility Analysis in the Presence of Externalities

Cost-utility analysis is increasingly being advocated as a tool for helping to establish funding priorities among programs and services in the health-care sector. As currently conducted, however, cost-utility analysis is problematic as a basis for achieving allocative efficiency because it excludes externalities. The exclusion of externalities may bias program ranking in unpredictable ways, leading to a non-optimal allocation of resources. Consideration of externalities also raises a number of distributional issues for the evaluation of health services and highlights the important of developing economic evaluation methods that are consistent with the conceptual basis for allocating resources.

Geographically-decentralized planning and management in health care: Some informational issues and their implications for efficiency

Geographically decentralized planning and management is an emerging theme within the health sector in many OECD countries. Advocates of decentralization argue that providing greater authority to local decision-making bodies can improve both the technical and allocative efficiency with which health care systems operate. Using concepts drawn from organizational theory and the economics of organizations, we examine the potential of centralized and decentralized planning and management structures to be efficient in light of the informational problems that must be overcome to allocate resources efficiently. We focus in particular on the need to integrate information regarding: (1) the effectiveness and efficiency of alternative clinical interventions and of alternative ways organize the delivery of health care; (2) the needs, values, and preferences in the population; and (3) local circumstances that affect delivery of care across regions. Informational concerns suggest that decentralized structures have greater potential to be efficient. We then briefly discuss some principles for the design of decentralized structures to aid in realizing these potential efficiency gains.

A discrete choice experiment investigating preferences for funding drugs used to treat orphan diseases: an exploratory study

Policy debate about funding criteria for drugs used to treat rare, orphan diseases is gaining prominence. This study presents evidence from a discrete choice experiment using a convenience sample of university students to investigate individual preferences regarding public funding for drugs used to treat rare diseases and common diseases. This pilot study finds that: other things equal, the respondents do not prefer to have the government spend more for drugs used to treat rare diseases; that respondents are not willing to pay more per life year gained for a rare disease than a common disease; and that respondents weigh relevant attributes of the coverage decisions (e.g. costs, disease severity and treatment effectiveness) similarly for both rare and common diseases. The results confirm the importance of severity and treatment effectiveness in preferences for public funding. Although this is the first study of its kind, the results send a cautionary message regarding the special treatment of orphan drugs in coverage decision-making.

Physician Labour Supply in Canada: A Cohort Analysis

This paper employs a cohort analysis to examine the relative importance of different factors in explaining changes in the number of hours spent in direct patient care by Canadian general/family practitioners (GPs) over the period 1982-2003. Cohorts are defined by year of graduation from medical school. The results for male GPs indicate that there is little age effect on hours of direct patient care, especially among physicians aged 35-55, there is no strong cohort effect on hours of direct patient care, but there is a secular decline in hours of direct patient care over the period. The results for female GPs indicate that female physicians on average work fewer hours than male physicians, there is a clear age effect on hours of direct patient care, there is no strong cohort effect, and there has been little secular change in average hours of direct patient care. The changing behaviour of male GPs accounted for a greater proportion of the overall decline in hours of direct patient care from the 1980s through the mid-1990 s than did the growing proportion of female GPs in the physician stock.

Inequity in publicly funded physician care: what is the role of private prescription drug insurance?

This study examines the impact that private financing of prescription drugs in Canada has on equity in the utilization of publicly financed physician services. The complementary nature of prescription drugs and physician service use alongside the reliance on private finance for drugs may induce an income gradient in the use of physicians. We use established econometric methods based on concentration curves to measure equity in physician utilization and its contributors in the province of Ontario. We find that individuals with prescription drug insurance make more physician visits than do those without insurance, and the effect on utilization is stronger for the likelihood of a visit than the conditional number of visits, and stronger for individuals with at least one chronic condition than those with no conditions. Results of the equity analyses reveal that the most important contributors to the pro-rich inequity in physician utilization are income and private prescription drug insurance, while public insurance, which covers older people and those on social assistance, has a pro-poor effect. These findings highlight that inequity in access to and use of publicly funded services may arise from the interaction with privately financed health services that are complements to the use of public services.

A Needs-based Approach to Resource Allocation in Health Care

health-care policy in Canada and the existing methods of allocating health-care resources at the provincial level. We argue that while federal policy has focussed on arrangements for the payment of providers of services and prohibiting the application of user charges, little attention has been paid at either the federal or provincial level to what criteria should be used to allocate resources in ways consistent with the stated objectives. Current approaches to resource allocation implicitly assume that individual providers (physicians, hospital administrators) are both able and willing to allocate health-care resources in line with the stated objectives. We show that this is likely to be difficult to achieve, particularly given the methods used currently for funding providers and institutions. An alternative approach to allocating health-care resources is derived which is population-, as opposed to provider-, based and relates resource shares to the relative needs for health care among communities. The proposed approach provides a practical method of aligning the stated objectives of both federal and provincial health-care policies with the management of scarce health-care resources. Policy issues arising from the adoption of the proposed approach are discussed.

The Effects of Co-payments within Drug Reimbursement Programs

Prescription drug expenditures are one of the fastest rising components of provincial health care spending. One of the primary responses of provincial governments to rising drug expenditures has been to introduce or increase beneficiary co-payment requirements. This paper examines the evidence regarding the effects of co-payments on drug program expenditures, the appropriateness of drug utilization, and the efficiency with which prescription drug markets operate. Although drug co-payments can reduce drug program expenditures, they can only do so by compromising other program goals. Alternative policies are then discussed that may help contain costs without compromising, and in some instances even improving, drug therapy.

The cost-effectiveness of cash versus lottery incentives for a web-based, stated-preference community survey

We present the results of a randomized experiment to test the effectiveness and cost-effectiveness of response incentives for a stated-preference survey of a general community population. The survey was administered using a mixed-mode approach, in which community members were invited to participate using a traditional mailed letter using contact information for a representative sample of the community; but individuals completed the survey via the web, which exploited the advantages of electronic capture. Individuals were randomized to four incentive groups: (a) no incentive, (b) prepaid cash incentive (

Ethics, economics, and public financing of health care

2), (c) a low lottery (10 prizes of

Medical necessity, benefit and resource allocation in health care.

25) and (d) a high lottery (2 prizes of