Priority setting: the biggest gap in Australian health planning?


The biggest problem affecting the planning of Australian health services is the failure to set priorities in a rational, informed and comprehensive way. Priority setting is about making choices based on resource limitations; not only choosing what to do but also what not to do.

To set priorities we need an initial debate to determine both the desired outcomes of health services, and the ‘principles’ on which decisions about these services should be made. Ideally these will be set by the Australian community itself. (This could be accomplished through citizens’ juries, as outlined in Let the people decide! Citizens’ Juries in Health, The Centre for Policy Development)

The following are examples of some principles that citizens might come up with:

· There is more to health care than simply maximising the health of the population Components other than health are important, including:

– Information

– Reassurance

– Opportunity for healthy choices

– Peace of mind for relatives as well as patients

– Access and equity

  • Care in the community is relatively highly valued
  • Those disadvantaged by socio-economic and cultural factors should enjoy positive discrimination, so not all nominally equal health gains would be valued equally
  • Making values explicit is a useful principle in its own right

How Not to Proceed

In priority setting, two common approaches are to be avoided: a reliance on goals and targets, and estimates of the ‘burden of disease’.

Goals and targets (e.g. all women over the age of 50 should be screened for breast cancer) were popular in the 1990s but are often set without reference to the resources available. When the budget is not sufficient to meet all the stated goals and targets implementation then becomes a matter of administrative discretion. But there is then no way to decide which goals are met in full, which are partially achieved, and which are to be abandoned altogether.

Burden of disease estimates‘ tell us, the size of one problem, say cancer, compared to the size of another, say heart disease. This approach implies that the bigger the apparent problem the more money we should throw at it.

The approach outlined below argues that we should instead throw money at the ‘best buys’, i.e. we should allocate resources where they can do the most good. Stated in these terms, the superiority of this approach is clear.

Thanks to Scratch.

How to Proceed

Each set of services (by disease group such as cancer, etc. or by client group such as aged care) sets up a Program Group. Each of these is told what it currently spends; this becomes its notional budget. Each group is then asked to address two questions:

  1. If your budget were to be cut by X per cent, what would you most willingly give up, and what losses (in terms of benefits such as health) would result?
  2. If your budget were expanded by X per cent, what extra services would you most want to provide and what extra ‘good’ would arise?

Decision makers are then in a position to decide which programs gain and which lose, based on the citizens’ principles.

This can be phrased slightly differently: “Assume all budgets will be cut by 5 per cent. So there is 5 per cent of the total budget on the table. Now, decide on the basis of the principles set by the citizens (as above) how that amount of money is to be redeployed.” The program groups then compete for that money on the basis of the evidence they provide. Some may get more than 5 per cent back, some less, some nothing. The process could be repeated annually.

Economic Tools

Priority setting involves first determining objectives/criteria/principles and then setting up decision-making mechanisms to meet competing objectives as well as possible. To perform this task economics provides some useful concepts.

  1. The idea of opportunity cost stems from the recognition that resources are limited, and thus choices must be made. Opportunity cost is the benefit foregone in choosing the best alternative use of resources. Within health care spending more on children means foregoing benefits on, for example, care of the elderly.
  2. The concept of the margin relates to change. Marginal cost and marginal benefit need to be compared to decide where to make the best incremental buys and the least damaging cuts.

In combination, opportunity cost and the margin lie at the heart of any rational priority setting approach. If more resources are spent on prevention and fewer on cure, what are the resultant changes – what are the costs and benefits of each marginal change? If fewer overall health care resources are available, what are the losses in marginal benefits from making the savings in, say community care relative to the hospital sector? (See this report on rational health decision-making.)

Priority setting normally embraces two ideas; efficiency and equity. Efficiency comes in two forms: operational efficiency which is about achieving individual objectives at the lowest possible cost and allocative efficiency which is about maximising benefit to society as a whole with the resources available.

Secondly there are concerns for equity. The Australian public services have equity as one of their goals, although it is often unclear how equity should be defined. Usually it is ‘equal access for equal need,’ but the definition can be clarified by citizens’ juries.

Back to Values and Principles

There are major value judgements involved in working with these ideas. Since concepts such as benefits and costs are value laden, overt recognition of this fact is necessary for people to be comfortable in working with them. Deciding whether to spend more on breast cancer or on cervical cancer, or more on cancer at the expense of cardio-vascular disease involves value judgments.

Yes, there are also technical judgements involved, but given that health, education, justice, etc. are all value laden concepts, decisions about which is better always require value judgements. It is for the community to establish these values. The cornerstone of this whole process is simple. If it is possible to move $100,000 from program A to program B and do more good, let’s do it!

One argument against moving resources only on the basis of maximising benefit is that there may be unacceptable equity effects. Any possible conflict between equity and efficiency must then be identified explicitly. One proposed way of dealing with this is to weight benefits to some groups (e.g. poor people) more highly than the benefits to others.

These are social issues and not professional ones. Hence the values to use in this broad, social, priority setting process must be those of the community. Technical judgements are also needed.

On equity, there are explicit formulae for allocating resources to health services on – for example – a geographical basis. However this is done, the normal mechanism involves some assessment of the differential needs of different populations (e.g. degree of sickness, remoteness, etc.). The principles and practice underlying such approaches are relatively straightforward but benefit considerably (again!) from being explicitly considered and spelt out.

Back to the People

Why is such explicit rational priority setting so lacking in Australia? The answer is that vested interests are at stake — especially those of the medical profession and medical specialists. Explicit priority setting sheds light not only on the good buys but also on the bad buys. The root problem here is the risk that certain groups of doctors may appear to be providing ‘bad buys.’

Interestingly, citizens in citizens’ juries have no problem in accepting that resources are scarce and that priority setting is needed. Together with their capacity to set priorities with the intent of serving broad community interest, this makes their involvement both obvious and necessary

Leave a Comment