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Resource allocation in a regional structure for the B.C. Ministry of Health Kaminsky, Barbara Anne 1982

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RESOURCE ALLOCATION IN A REGIONAL STRUCTURE FOR THE B.C. MINISTRY OF HEALTH BY BARBARA ANNE KAMINSKY B.A., The University of B r i t i s h Columbia, 1971 M.S.W., The University of B r i t i s h Columbia, 1973 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF ) MASTER OF SCIENCE / . i n THE FACULTY OF GRADUATE STUDIES (Health Services Planning) We accept this thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA September 19 82 £c) Barbara Anne Kaminsky, 19 82 In presenting t h i s thesis i n p a r t i a l f u l f i l m e n t of the requirements for an advanced degree at the University of B r i t i s h Columbia, I agree that the Library s h a l l make i t f r e e l y available for reference and study. I further agree that permission for extensive copying of t h i s thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. I t i s understood that copying or publication of t h i s thesis f o r f i n a n c i a l gain s h a l l not be allowed without my written permission. Barbara Kaminsky Department of Graduate Studies (Health Services Planning) The University of B r i t i s h Columbia 1956 Main Mall Vancouver, Canada V6T 1Y3 October 18, 1982 ABSTRACT One of the many aspects involved i n planning for regional-i z a t i o n i n the B.C. Health Ministry i s the development of a method of resource a l l o c a t i o n to the regions. This study des-cribes a number of alternative approaches to resource a l l o c a t i o n and organizes them according to th e i r type and degree of planning r a t i o n a l i t y . Four major types of r a t i o n a l i t y are i d e n t i f i e d : extension of the status quo, epidemiological, management and economic. Two recommendations — a short-range and a long-range ap-proach — are made to the Health Ministry. In the next several years, i t i s suggested that the p r i n c i p l e of per capita a l l o -cations to the regions be adopted. Coincident with this strategy should also be the development of a longer-range approach. An "epidemiological plus" method, using the equivalent of the econ-omist's GNP, i s recommended. These recommendations, while based i n part upon r a t i o n a l decision-making p r i n c i p l e s , are inex t r i c a b l y connected to one's values. Therefore, recommendations made i n this study need not be acceptable to the various parties involved i n the B.C. health care system. A major aspect to the implementation of any re-source a l l o c a t i o n method i s the manner i n which i t i s developed; A consultative approach involving the B.C. Health Ministry and service.providers i s advocated. For the sake of providing a s p e c i f i c a p p l i c a t i o n of implementation s t r a t e g i e s , the per c a p i t a method i s discussed w i t h p a r t i c u l a r reference to a n t i c i p a t i o n of problems, d e a l i n g with these problems, and the timing and phasing of change. The i m p l i c a t i o n s of e p i d e m i o l o g i c a l l y based resource a l l o -c a t i o n methods are discussed, both as regards the h e a l t h care system as w e l l as other government s e r v i c e s . TABLE OF CONTENTS Page ABSTRACT i i TABLE OF CONTENTS .. i v LIST OF TABLES v i i i LIST OF FIGURES . i x ACKNOWLEDGEMENTS x FOREWORD x i i i CHAPTER I: INTRODUCTION . . . . 1 A. Background 1 1. The B.C. Health Care System: A Brief Overview 1 2. Regionalization 4 3. Planning for Health Care Regionalization i n B.C 7 B. Purpose of the Study 15 1. Objective 15 2. Limits 17 C. Procedures Followed 18 CHAPTER I I : EXPERIENCES IN REGIONALIZATION AND RESOURCE ALLOCATIONS . 22 A. Other Health M i n i s t r i e s i n Canadian . . . . . . 22 1. Type 'a 1: Regional Structure/- •: Regional Resource A l l o c a t i o n Method . . . . 23 - i v -Page v 2. Type 'b 1: Non-Regional S t r u c t u r e / R e g i o n a l Resource A l l o c a t i o n Method . . . . 23 3. Type 'c': Regiona l Structure/Non-R e g i o n a l Resource A l l o c a t i o n Method . . . . 24 4. Type 'd': Non-Regional Structure/Non-R e g i o n a l Resource A l l o c a t i o n Method . . . . 26 5. A d v i s o r y Comments from Other Health M i n i s t r i e s . 27 B. Other M i n i s t r i e s i n B.C 28 1. R e g i o n a l i z a t i o n 29 2. Resource A l l o c a t i o n 31 C. The B.C. Health M i n i s t r y . . 33 1. D e s c r i p t i o n and E v a l u a t i o n o f the Current Resource A l l o c a t i o n Process . 33 2. C o n c l u s i o n : E x i s t e n c e of a Problem and a Need f o r Change 36 CHAPTER I I I : ALTERNATIVE APPROACHES TO RESOURCE ALLOCATION 40 A. Models i n Health Care P l a n n i n g 40 B. Hea l t h P l a n n i n g R a t i o n a l i t y w i t h i n the P o l i t i c a l - B u r e a u c r a t i c Environment 43 C. L i m i t s to R a t i o n a l i t y i n Health P l a n n i n g . . . . 43 1. R a t i o n a l Choice Models 45 2. B u r e a u c r a t i c Models 45 - v -Page 3. D e c i s i o n Process/Organized Anarchy Models . 46 4. P o l i t i c a l Models 47 D. A l t e r n a t i v e s i n Resource A l l o c a t i o n 48 1. Regiona l D i s t r i b u t i o n D e r i v e d from Current Funding L e v e l s . • 49 2. E p i d e m i o l o g i c a l Models . . . . 52 3. Management Models 80 4. Economic Models 10 4 CHAPTER IV: CHOICE 130 A. S e l e c t i o n o f a Resource A l l o c a t i o n Model f o r the B.C. Health M i n i s t r y 136 B. S e l e c t i o n of a Resource A l l o c a t i o n Method from the E p i d e m i o l o g i c a l Model 138 1. E s s e n t i a l Features of a Resource A l l o c a t i o n Method 138 2. D e s i r a b l e Features of a Resource A l l o c a t i o n Method . . . . 139 3. Time Frame 140 4. E v a l u a t i o n of E p i d e m i o l o g i c a l Methods i n R e l a t i o n to L i s t e d C r i t e r i a 140 C. Recommendations f o r the B.C. Health M i n i s t r y . . 142 1. Short-Run S t r a t e g y 142 2. Longer-Run S t r a t e g y 144 - v i -Page CHAPTER V: IMPLEMENTATION 146 A. Antic i p a t i o n of Problems 146 B. How to Deal with Problems 149 C. Timing and Phasing 156 CHAPTER VI: SUMMARY AND CONCLUSIONS 165 BIBLIOGRAPHY . . . . . . . . 169 APPENDICES: A. Glossary of Major Terms Used i n this Study 178 B. Proposed Regional Boundaries 180 C. Letters to P r o v i n c i a l Deputy Ministers of Health . . 181 D. Followup Letter 182 E. .Evaluation of Research Method Used i n the Study .' . . 185 F. A Theoretical Model for Non-Hospital Primary Health Care i n a Region 188 G. Diagram of a Microeconomic Model of the Health... Care System . . 189 H. The Vroom and Yetton Decision-Making Model 190 - v i i -LIST OF TABLES Table Page I. 19 81-82 Health Expenditures C l a s s i f i e d According to Proposed Regional Boundaries 39 I I . Relative Funding Levels of Health Regions 50 I I I . Impact of a Change to Per Capita Allocations . . . . 60 - v i i i -LIST OF FIGURES F i g u r e Page 1. Resource A l l o c a t i o n : A Systems Model . . . 12 2. Options f o r Resource A l l o c a t i o n i n a Regional S t r u c t u r e 41 3. T h e o r e t i c a l Linkages Between Resource A l l o c a t i o n and Expected R e s u l t s 5 4 4. H e a l t h Problems: D e f i n i t i o n s and Impacts 69 5. The Health P l a n n i n g C y c l e 81 6. Zero-Based Budgeting: Ranking of D e c i s i o n Packages . 9 8 7. T r a d i t i o n a l Economic D e p i c t i o n of A p p r o p r i a t e A l l o c a t i o n of H e a l t h Care Resources . 10 8 8. A l t e r n a t i v e R e l a t i o n s h i p s Between Health Care and H e a l t h Status 110 9. A n t i c i p a t e d Problems i n the Implementation of the Per C a p i t a Method 147 10. Implementation S t r a t e g i e s to Overcome A n t i c i p a t e d Problems i n the Per C a p i t a A l l o c a t i o n Method . . . . 152 - i x -ACKNOWLEDGEMENTS In many ways, this study i s a product of a l l the courses I have taken i n the Health Services Planning Program at the Uni-v e r s i t y of B r i t i s h Columbia. Therefore, a l l of my professors over the past two and one-half years can claim r e s p o n s i b i l i t y for some portion of this work. As well, insights into the bureaucratic and p o l i t i c a l aspects of health care have been obtained from numerous individuals pres-ently and/or formerly involved with the B.C. health care system. Without the p r a c t i c a l advice of these people, this study might have been an academic exercise — and l i t t l e else. While many people have influenced and guided me throughout the process of writing this material, several are deserving of s p e c i f i c mention. F i r s t of a l l , I must thank the members of my thesis committee. I p a r t i c u l a r l y wish to express my appreciation to Dr. Nancy Waxier who, as chairperson, provided supportive yet challenging d i r e c t i o n throughout the process of this study. I am also i n -debted to Dr. Vance M i t c h e l l and to Dr. Annette Stark for t h e i r respective areas of expertise i n management and health care plan-ning . Thanks are also given to Dr. Morris Barer, who provided guidance i n developing the economic aspects of this study. As - x -w e l l , I am g r a t e f u l to Dr. Robert Evans f o r a s s i s t a n c e i n t h i s area. Mr. P a u l P a l l a n i s a l s o thanked, not onl y f o r h i s comments and i n f o r m a t i o n r e g a r d i n g the B.C. Health M i n i s t r y , but f o r h i s c a r e f u l a n a l y s i s of the e n t i r e t h e s i s . In a d d i t i o n , Mr. Jack B a i n b r i d g e ' s i n s i g h t s i n t o the governmental process were i n -v a l u a b l e . I am a l s o s i n c e r e l y g r a t e f u l to those i n d i v i d u a l s i n the B.C. H e a l t h M i n i s t r y and the Richmond He a l t h Department who p r o v i d e d me w i t h the o p p o r t u n i t y to r e t u r n to s c h o o l on a f u l l - t i m e b a s i s . As w e l l , I have become i n c r e a s i n g l y g r a t e f u l to John Kenneth G a l b r a i t h , f o r i t i s he who i s c r e d i t e d w i t h s a y i n g t h a t there i s n o t h i n g so o v e r - r a t e d as o r i g i n a l i t y . Having begun my t h e s i s w i t h naive but e n t h u s i a s t i c hopes of a r r i v i n g a t an i n n o v a t i v e s o l u t i o n to the problem of resource a l l o c a t i o n i n a r e g i o n a l s t r u c t u r e , I l e a r n e d t h a t many of my " o r i g i n a l " ideas had i n f a c t been w r i t t e n by others — o f t e n more e l o q u e n t l y than I c o u l d hope to do. Furthermore, a deepening a p p r e c i a t i o n of the p l a n -ning process demonstrated to me t h a t unique ideas from one i n -d i v i d u a l seldom command the l e g i t i m a c y r e q u i r e d f o r s u c c e s s f u l implementation. Thus, my d e l u s i o n s o f c r e a t i v i t y have been cured, and G a l b r a i t h ' s words have eased the a s s o c i a t e d p a i n . F i n a l l y , I would a l s o l i k e to thank my husband John f o r h i s understanding and support. Having acknowledged the c o n t r i b u t i o n s made by a l l of these people, I of course take r e s p o n s i b i l i t y f o r the contents of t h i s t h e s i s . I b e l i e v e I was given good advice i n the development of t h i s m a t e r i a l , and hope t h a t those who c o n t r i b u t e d f e e l that t h e i r i n p u t has been used a p p r o p r i a t e l y . - x i i -Foreword The s e l e c t i o n o f resource a l l o c a t i o n i n a r e g i o n a l s t r u c t u r e as a t h e s i s t o p i c arose out of my summer c l e r k s h i p with the B r i t i s h Columbia H e a l t h M i n i s t r y i n 1981. That experience pro-v i d e d a unique o p p o r t u n i t y to observe the impact of o r g a n i z a t i o n -a l changes, as w e l l as to o b t a i n some i n s i g h t i n t o the philosophy and goals o f the new s e n i o r s t a f f i n the M i n i s t r y . I t soon became e v i d e n t t h a t c o n s t r a i n e d r e s o u r c e s , improved management p r a c t i c e s , and r e g i o n a l i z a t i o n were among the key i s s u e s of concern. A t the request of Paul P a l l a n , D i r e c t o r of Pla n n i n g and Development, and as p a r t of my c l e r k s h i p assignment, I wrote a background paper on resource a l l o c a t i o n i n a r e g i o n a l s t r u c t u r e . During the process of dev e l o p i n g t h i s paper, i t appeared t h a t , f o r a number of reasons, an expansion of t h i s t o p i c would be a d e s i r a b l e t h e s i s p u r s u i t . F i r s t , i t was both p r a c t i c a l and t i m e l y . The M i n i s t r y of H e a l t h was p l a n n i n g to implement a r e g i o n a l s t r u c t u r e , and the problem of resource a l l o c a t i o n had not y e t been r e s o l v e d . Second,, i t p r o v i d e d a breadth i n per-s p e c t i v e which would allow a s y n t h e s i s of much of the course content i n the Hea l t h S e r v i c e s P l a n n i n g Program. Concepts g a i n -ed from epidemiology, p l a n n i n g , p o l i c y , commerce, and economics c o u l d a l l be u t i l i z e d i n t h i s t h e s i s . T h i r d , the area of r e -source a l l o c a t i o n a t the macro l e v e l s a t i s f i e d my d e s i r e to - x i i i -expand my p e r s p e c t i v e of the h e a l t h care system. Having begun wit h a p a r t i c u l a r d i s c i p l i n a r y focus, I had made the t r a n s i t i o n to a program p e r s p e c t i v e . I now wished to have the o p p o r t u n i t y of e n l a r g i n g my focus somewhat f u r t h e r , to view h e a l t h care on a system-wide b a s i s . For a l l these reasons, then, resource a l l o c a t i o n w i t h i n a r e g i o n a l s t r u c t u r e f o r the B.C. Health M i n i s t r y was s e l e c t e d as the t o p i c of t h i s masters t h e s i s . A f t e r making t h i s s e l e c t i o n , i t was p a r t i c u l a r l y i n t e r e s t -i n g to f o l l o w the changing c l i m a t e i n the Health M i n i s t r y . When t h i s t o p i c was f i r s t s e l e c t e d , r e g i o n a l i z a t i o n was a major p r i o r i t y i n the M i n i s t r y . An implementation p l a n had been s t r u c k which t a r g e t e d January 1, 19 82 as the i n a u g u r a l date f o r a r e g i o n a l i z e d s e r v i c e d e l i v e r y system f o r community based h e a l t h programs. As the months el a p s e d , however, i t became i n c r e a s i n g -l y obvious t h a t r e g i o n a l i z a t i o n was not to u n f o l d a c c o r d i n g to t h i s ambitious t i m e t a b l e . A t the time of s u b m i t t i n g t h i s t h e s i s , the r e g i o n a l i z a t i o n p l a n f o r the B.C. M i n i s t r y of Health perhaps can be most euphe-m i s t i c a l l y r e f e r r e d to as u n c e r t a i n . Regardless of the f u t u r e d i r e c t i o n taken by the H e a l t h M i n i s t r y , t h i s t o p i c has served i t s purpose i n terms of s t i m u l a t i n g a l e a r n i n g process f o r me. Should i t prove u s e f u l to o t hers as w e l l , so much the b e t t e r . - x i v -CHAPTER I: INTRODUCTION A. BACKGROUND 1. The B.C. Health Care System; A Brief Overview The B r i t i s h Columbia Ministry of Health i s i n the process of planning a regional structure for administration and service delivery i n the health care system. The purpose of this study i s to analyze a number of methods of a l l o c a t i n g resources to the regions, and to make recommendations to the Ministry as to which methods are most appropriate for i t s use. Before addressing these s p e c i f i c areas, however, i t i s im-portant that a contextual framework be provided, o u t l i n i n g the major issues i n the B.C. health care system and i n the govern-ment at this time. In many ways, the B.C. health care system offers a great deal i n which we can take pride. To begin with, we are r i c h i n health resources. B.C. has the highest physician - population r a t i o of any province i n Canada, and ranks among the highest i n t o t a l per capita health expenditures"*". As well, the past four Based on 19 80 s t a t i s t i c s from Health and Welfare Canada. - 2 -years have witnessed the introduction of two major health care programs: Long Term Care and Denticare, the former often touted as being the best of i t s kind i n North America. From the perspective of government as a whole, i t i s clear that health i s given a high p r i o r i t y . With some 30 per cent of 2 the annual p r o v i n c i a l budget devoted to the Ministry of Health , i t has the d i s t i n c t i o n of being allocated the largest budget of any government ministry. The B.C. health care system also seems to be valued highly by the general public. If one can i n f e r s a t i s f a c t i o n on the basis 3 of the r e l a t i v e absence of complaints , i t would seem that con-4 sumers are generally s a t i s f i e d . According to the Minister of Health, few problems which are brought to his attention represent patients' concerns; instead, the contentious issues seem to be raised by service providers i n the health care system"*. ^Source: B.C. Government Estimates, 19 81-82. 3 One cannot v a l i d l y do so, but lacking any other more pre-cise and current measure of c l i e n t s a t i s f a c t i o n i n B.C. i t must s u f f i c e . 4 The notable exception to this i s the abortion issue. Contro-versy has heightened i n recent years concerning the approval of therapeutic, abortions in:.acute- -care . hospitals.*. 5 Verbal Communication, James Nielsen, B.C. Minister of Health, September 25th, 19 81. - 3 -These issues have generally centered on the problem of r a t i o n a l i z i n g scarce resources among competing i n t e r e s t s . Fees and s a l a r i e s never seem to be s a t i s f a c t o r y from the perspective of health care workers. Budgets for health f a c i l i t i e s are rarely approved at the l e v e l requested, and over-runs are not uncommon. Continued pressure i s exerted to ensure that B.C. hospitals do not f a l l behind i n the use of technology available to the health industry. Clearly, everyone wants either a bigger share of the health care pie, or simply a bigger pie. Over the past several years, enlarging this pie has proven to be the method selected by government to solve these problems. From 19 71 to 19 81 annual government health expenditures grew from 337 m i l l i o n to two b i l l i o n d o l l a r s — an increase of almost six hundred per cent^. Obviously, this has been an expensive means of de l i v e r i n g health care. I t i s now apparent that expansion at this rate of increase can no longer be afforded. Primarily as a r e s u l t of a s h o r t f a l l i n natural resource revenues, the B.C. government has taken the position of curbing government expenditures, i n order that the budget be balanced. With health care as the largest government spender, i t has become the major target of Treasury Board scrutiny, Source: B.C. Government Estimates, 1971-72 and 1981-82. N.B. 1971-72 figures include the Health Ministry as well as the Medical Services Plan, which at that time was under the P r o v i n c i a l Secretary. - 4 -and indeed, the recent major changes i n personnel at the senior 7 levels of the Health Ministry have been attributed to i n d i r e c t intervention by this body (Campbell, et a l . , 1981). F i s c a l problems i n health care should come as no surprise, however. The past decade has been characterized by a number of strong measures taken by other j u r i s d i c t i o n s , i n the hope of containing costs. Such examples include the 19 74 reorganization of the B r i t i s h National Health Service (Abel-Smith, 1976) , d r a s t i c budget cuts i n New York (B u l l e t i n of the N.Y. Academy of  Medicine, January 19 80), and the closure of acute hospital beds i n Ontario (Beaton-Mamak, 1976). Perhaps the only element of surprise i s that i t has taken so long for B.C. to experience problems of a s i m i l a r nature or magnitude. 2. Regionali zation a) D e f i n i t i o n and Models The concept of r e g i o n a l i z a t i o n of health services has been discussed and written about a great deal since i t was introduced i n the Dawson Report i n Great B r i t a i n i n 19 40. While there i s no consensus as to a d e f i n i t i o n of this term, the s a l i e n t points with which most health care planners would agree include: These changes represent a s h i f t from a c l i n i c a l to a managerial model of bureaucratic leadership. - 5 -i) a method of structuring health care on a geo-graphical basis, at an intermediate l e v e l (e.g., between l o c a l and p r o v i n c i a l or state l e v e l s ) , i i ) the intent of such a structure being the optimal a l l o c a t i o n and use of health care resources. Van der Zwaan (19 80) and Saward (19 76) have i d e n t i f i e d two models of reg i o n a l i z a t i o n — the d i r e c t patient care model, and the planning and coordinating model. The former i s character-ized by i t s emphasis upon c l i e n t needs and c i t i z e n p a r t i c i p a t i o n . I t therefore implies r a d i c a l changes to our current health care organizational system. The planning and coordinating model, how-ever, i s less of an i d e o l o g i c a l departure from present practice, i n that i t i s focussed on service providers rather than c l i e n t s , and i t s chief concerns are e f f i c i e n c y and cost control. Those who are developing a regional structure for health care may or may not choose to state e x p l i c i t l y which of the two models they are following. Much, of course, depends upon the p o l i t i c a l ideology of the governing party, the perceived strength of various p r a c t i t i o n e r pressure groups, and the i n t e r e s t i n c i t i z e n involvement i n decision making. Regardless of whether or not the choice of model i s made e x p l i c i t , i t can be inf e r r e d from the methods u t i l i z e d to implement re g i o n a l i z a t i o n i n any given area. - 6 -b) Regionalization and Resource A l l o c a t i o n Four p o s s i b i l i t i e s e x i s t regarding the i n t e r r e l a t i o n s h i p s between a regional organization for health care and the method used for resource a l l o c a t i o n . These are shown i n the 2 x 2 i l -l u s t r a t i o n below: STRUCTURE Regional Non-regional Resource A l l o c a t i o n Method Regional Non-Regional Type 'a' refers to a health care system i n which services are organized on a regional basis, with health care resources also r a t i o n a l i z e d on a regional basis. I t i s with t h i s type of region-a l resource a l l o c a t i o n and organization that the present study i s primarily concerned. Other combinations, however, are indeed possible and (as w i l l be discussed i n Chapter II) e x i s t i n other j u r i s d i c t i o n s . Type 'b' i l l u s t r a t e s that resources could be allocated on a region-a l basis without the existence of a formal regional organization. Conversely, as shown i n type 'c', one might have health care regionalized, yet not allocate resources according to regional boundaries. Lastly, type 'd' refers to the absence of regional-- 7 -i z a t i o n , both from an organizational as well as a resource a l l o c a t i o n perspective. 3. Planning for Health Care Regionalization i n B.C. a) Goals In the summer of 19 81, the B.C. Ministry of Health began planning a regional structure for health programs under the Ministry's d i r e c t control. Its draft paper e n t i t l e d Regional- i z a t i o n of Health Care i n B.C. does not attempt to define what i s meant by reg i o n a l i z a t i o n , but i t a r t i c u l a t e s an ambitious goal for this system. The major goal of r e g i o n a l i z a t i o n i s to provide e f f i c i e n t and e f f e c t i v e h e a l t h s e r v i c e s w i t h i n a geographic area of the province. R e g i o n a l i z a t i o n addresses t h i s goal by d e c e n t r a l -i z i n g management a u t h o r i t y to the lowest l e v e l of d e c i s i o n making — c o n s i s t e n t w i t h the need to maintain o v e r a l l f i n a n c i a l c o n t r o l , e q u i t a b i l i t y of resource a l l o c a t i o n and maintenance of accept-able l e v e l s of q u a l i t y throughout the h e a l t h care system (p. 6) . Coincident with the development of regio n a l i z a t i o n plans, the Ministry of Health developed four o v e r a l l p r i o r i t i e s for g 19 82-83 . In summary these are: B.C. Ministry of Health, Memorandum, July 14, 1981, S. Dubas, Associate Deputy Minister of Health. i) containment of costs — to keep cost increases within the health care system to a minimum; i i ) optimization of exis t i n g resources -- to make more e f f i c i e n t and e f f e c t i v e use of i t s current resources; i i i ) r a t i o n a l i z a t i o n of services — to improve equity i n access to health services; and iv) improved management c a p a b i l i t i e s — to improve the management s k i l l s of personnel i n the Health Ministry, and to modify the organizational structure through regio n a l i z a t i o n and functional rather than d i s c i p l i n a r y management. I t i s important to r e a l i z e that these p r i o r i t i e s have not been e x p l i c i t l y rank ordered by the Ministry. Rather, i t i s implied that a l l p r i o r i t i e s are of equal>importance. Nevertheless, there can be no doubt that cost containment i s the major preoccupation of the Health Ministry at the current time. This undoubtedly places some constraints i n terms of the degree to which other p r i o r i t i e s might be achieved. b) Resource A l l o c a t i o n i n a Regional Structure Among the many issues which must be addressed i n the process of developing a regional structure i s that of resource a l l o c a t i o n to the regions. I t i s possible to d i s t i l l four major concepts relevant to resource a l l o c a t i o n , based on the Ministry's o v e r a l l p r i o r i t i e s and i t s paper on reg i o n a l i z a t i o n . In summary, region-- 9 -a l i z a t i o n seeks to d i s t r i b u t e resources i n a manner which i s both r a t i o n a l and equitable, and which w i l l r e s u l t i n e f f i c i e n t and e f f i c a c i o u s health service delivery. Each of these four goals i s described b r i e f l y as follows: i) R a tionality Rationality i n the health care system implies that decision-making and a c t i v i t i e s are purposeful, consistent, and are the r e s u l t of consideration of a number of alternatives. Central to this concept i s the existence of unity i n the goals or mission of the organization (Pfeffer, 19 81). Most people consider themselves to be r a t i o n a l ; thus, i t would not appear an onerous task to develop a l o g i c a l method of resource a l l o c a t i o n with which a l l reasonable persons could agree. Unfortunately, any quest for such a consensus i s naive, primarily because of the d i f f e r e n t frames of reference held by the various d i s c i p l i n e s and programs i n health care. What i s r a t i o n a l to an administrator i s unlikely to be seen as r a t i o n a l to the c l i n i c i a n , the p o l i t i c i a n , or the economist. Take, as an example, the use of acute care beds. From the point of view of a h o s p i t a l administrator, i t i s r a t i o n a l to maintain the h o s p i t a l at f u l l occupancy as frequently as possible, with perhaps an attempt made to obtain generous lengths of stay for patients, i n order to reduce the i n t e n s i t y of the s t a f f ' s workload. Surgeons, however, are l i k e l y to wish an increase i n acute beds as well as a decrease i n length of stay, i n order to maximize the number of patients upon whom operations can be per-- i n -formed, and f o r whom b i l l i n g s can be rendered. C o n s t r u c t i o n of a new h o s p i t a l has g e n e r a l l y p r o v i d e d rewards f o r p o l i t i c i a n s from t h e i r c o n s t i t u e n t s ; t h e r e f o r e , the p o l i t i c a l p e r s p e c t i v e would suggest the need to o b t a i n as many beds as p o s s i b l e f o r a give n r i d i n g . An economist might suggest t h a t the number of beds be determined by c o s t - e f f e c t i v e n e s s a n a l y s i s , and t h a t s e v e r a l a l t e r n a t i v e modes of care (e.g., day surgery, c l i n i c s , etc.) be con s i d e r e d . Each of the above viewpoints i s r a t i o n a l w i t h i n i t s own ... frame of r e f e r e n c e . These d i f f e r e n t types of r a t i o n a l i t y u l t i -mately can be t r a c e d to the d i f f e r e n t value bases, p e r s p e c t i v e s , and p r i o r i t i e s h e l d by the p a r t i e s concerned. None of these viewpoints i s i n h e r e n t l y more r a t i o n a l than another. The type of r a t i o n a l i t y s e l e c t e d f o r a l l o c a t i n g resources by the Hea l t h M i n i s t r y should a t some p o i n t be based upon an e x p l i c i t p r i o r i z a t i o n of the other s t a t e d o b j e c t i v e s of r e g i o n -a l i z a t i o n , i . e . , e q u i t y , e f f i c i e n c y , and e f f i c a c y . I t i s u n l i k e -l y t h a t a l l three can be o p t i m i z e d s i m u l t a n e o u s l y ; t r a d e - o f f s w i l l be r e q u i r e d . .'.ii) E q u i t y E q u i t y i n resource a l l o c a t i o n i m p l i e s t h a t f a i r (though not n e c e s s a r i l y equal) shares of resources be d i s t r i b u t e d to the r e g i o n s . The c h i e f concern i n developing an e q u i t a b l e system i s to ensure t h a t resources are p r o v i d e d to those r e g i o n s i n g r e a t -e s t need. D e f i n i n g and measuring need, however, i s not as simple - 11 -a process as may i n t u i t i v e l y appear. Need, l i k e happiness, means d i f f e r e n t t h i ngs to d i f f e r e n t people. (See Chapter I I I f o r a more d e t a i l e d d i s c u s s i o n of the concept of need i n health.) From a systems p e r s p e c t i v e , e q u i t y i n resource a l l o c a t i o n p l a c e s a major emphasis upon i n p u t , r a t h e r than output, outcome, or b e n e f i t (see F i g u r e 1). i i i ) E f f i c i e n c y E f f i c i e n c y i n resource a l l o c a t i o n seeks to maximize output f o r a g i v e n l e v e l of i n p u t ("the b i g g e s t bang f o r the buck"), or c o n v e r s e l y , to minimize c o s t s f o r a giv e n l e v e l of output. T h e o r e t i c a l l y speaking, outcomes and b e n e f i t s are not c r i t i c a l to the concept of e f f i c i e n c y . Having s e l e c t e d g o als f o r a pro-gram, the c h i e f concern i n e f f i c i e n c y i s to optimize the process of a t t a i n i n g these g o a l s . N e v e r t h e l e s s , there i s l i t t l e value i n b e i n g e f f i c i e n t a t an i n a p p r o p r i a t e or i n e f f e c t i v e a c t i v i t y . E f f i c i e n c y i s a t b e s t a l i m i t e d v i r t u e . E f f i c i e n c y should not be confused w i t h c o s t containment. Cost containment merely seeks to m a i n t a i n expenditures a t a p a r t i c u l a r p o i n t , be i t h o l d i n g the l i n e a t e x i s t i n g l e v e l s , or at a s m a l l percentage i n c r e a s e or decrease. The main i s s u e i s the bottom l i n e ( i . e . , d o l l a r s spent) as opposed to any measure of value f o r money spent. - 12 -Figure 1: Resource A l l o c a t i o n : A Systems Model INPUT Resources — who gets what and how much. Major concern — EQUITY — l i n k i n g input to need. OUTPUT Units of service provided or u t i l i z e d . Major concern — EFFICIENCY — l i n k i n g input to output. OUTCOME Attainment of program goals. Major concern -- EFFECTIVENESS — l i n k i n g input and output to outcome. BENEFIT Ultimate value to society. Major concern — EFFICACY -- l i n k i n g input, output, and outcome to benefit. Adapted from Ernest W. Saward, ed., The Regionalization of  Personal Health Services (New York: Milbank Memorial Fund, 1976) , p. 164. - 13 -iv) E f f i c a c y In order that resource a l l o c a t i o n i n health care s a t i s f y the c r i t e r i o n of e f f i c a c y , i t must f i r s t be e f f e c t i v e , i . e . , programs should a t t a i n t h e i r goals. Subsumed under this general concept are a number of other c h a r a c t e r i s t i c s of health program delivery including adequacy, appropriateness, and a v a i l a b i l i t y . (See Appendix A for a glossary of terms used i n this study.) In addition to being e f f e c t i v e , health programs should u l t i -mately have a p o s i t i v e value to the general society. Individuals should be able to consider themselves "better o f f " i n some sense:,, as a r e s u l t of these programs. v) Other Objectives While the stated agenda of the Health Ministry i s to meet the objectives of r a t i o n a l i t y , equity, e f f i c i e n c y , and e f f i c a c y , i t must also be acknowledged that i n times of f i s c a l r e s t r a i n t , r e g i o n a l i z a t i o n may serve other useful purposes. Deciding which among competing interests w i l l be funded i s a d i f f i c u l t and sometimes unpleasant task. Regionalization permits a structure to develop whereby government services are closer to the people. This may allow for better q u a l i t y decision-making, i n that regional bodies w i l l have more information about th e i r area than a central body i s l i k e l y to have. I t i s also important to appreciate, how-ever, that r e g i o n a l i z a t i o n serves the additional function of pro-viding a buffer between individuals and/or groups v i s - a - v i s the - 14 -the p r o v i n c i a l government. This can be p a r t i c u l a r l y instrumental i n absorbing or deflecting flak which may develop when contro-v e r s i a l decisions are made. Having looked at some of the e x p l i c i t and possible i m p l i c i t objectives of r e g i o n a l i z a t i o n , i t i s also h e l p f u l to c l a r i f y what objectives are not deemed c r i t i c a l by the B.C. Health Ministry. The health care l i t e r a t u r e on r e g i o n a l i z a t i o n which p r o l i f e r a t e d i n the early 19 70s strongly emphasized the need for public par-t i c i p a t i o n i n decision-making. There i s no mention of such a 9 process i n the Regionalization of Health Care i n B.C. report . c. Development of Regional Boundaries Seven health regions have been planned. The rationale behind the setting of the boundaries as i l l u s t r a t e d i n Appendix B was largely pragmatism. Each region required a large enough populat-ion (minimum approximately 200,000) to serve as a planning unit for comprehensive health services. As well, there was a desire to minimize the amount of disruption of current service units (e.g., Health Units and Regional Hospital D i s t r i c t s ) . In essence then, most regions were formed by combining e x i s t i n g smaller service delivery or administrative components. This was a deliberate omission rather than an unconscious oversight. C i t i z e n p a r t i c i p a t i o n i s viewed by senior Ministry s t a f f as a long-range developmental goal of r e g i o n a l i z a t i o n . (Verbal Communication, Paul Pallan, Director of Planning and Development, B.C. Ministry of Health, January 19, 1982). - 15 -This i s a system-oriented approach to development of regional boundaries, i n that i t emphasizes the mechanism used for planning or organizing services. I t provides l i t t l e guidance, however, as to how resources should be divided among the regions. No epidemiological data, for instance, were used to develop s p e c i f i c health p r o f i l e s for each region, and thence to determine the amount and type of resources to be allocated to each program. d. B.C.'s Im p l i c i t Model of Regionalization Although the B.C. Health Ministry has no written documen-tation regarding i t s conceptual model for r e g i o n a l i z a t i o n , one can deduce that the planning and coordinating model has the pre-dominant emphasis. The great concern for f i s c a l r e s t r a i n t , the lack of c i t i z e n involvement, and the manner i n which boundaries have been proposed, are a l l strong indicators of this approach. Thus, while the Ministry states the need for meeting four object-ives i n r e g i o n a l i z a t i o n ( i . e . , r a t i o n a l i t y , equity, e f f i c i e n c y , and e f f i c a c y ) , i t would appear that e f f i c i e n c y — or more pre-c i s e l y cost containment — i s of major import. B. PURPOSE OF THE STUDY 1. Objective The present study seeks to analyze various approaches to resource a l l o c a t i o n , and to recommend to the B.C. Health Ministry the methods most appropriate f o r the planned r e g i o n a l 'Structure. - 16 -In doing so, other j u r i s d i c t i o n s ' experiences i n r e g i o n a l i z a t i o n and resource a l l o c a t i o n w i l l be reviewed, and the B.C. Health Ministry's current a l l o c a t i o n process w i l l be evaluated. Recom-mendations w i l l be made regarding the most appropriate a l l o c a t i v e t o o l to be used by the Ministry, and implementation issues w i l l also be discussed. An attempt i s made to address resource a l l o c a t i o n from two frames of reference: that of the health care planner and that of the administrator. Deciding upon the method or tool to be u t i l i z e d i n the health resource a l l o c a t i o n process i s the plan-ner's f i e l d of expertise. Planning becomes espe c i a l l y necessary when free market mechanisms are lacking, as i n the health care system"^. However, i n order for a plan to be f e a s i b l e , i t s im-plementation must also be considered. Some planners i n f a c t recognize the interdependence of these issues, and emphasize the need to incorporate both i n the o v e r a l l planning process. Andreas Faludi (1973), for example, d i f f e r e n t i a t e s between theory i n planning ( i . e . , the plan) and theory of planning ( i . e . , im-plementation) . Generally speaking, however, such p r a c t i c a l con-cerns have been seen more as the r e s p o n s i b i l i t y of the adminis-trator than of the planner. In addressing the problem of resource a l l o c a t i o n i n a regional structure, this study attempts to r e f l e c t both a planning and an administrative perspective. Economists point out that there are two fundamental methods of d i s t r i b u t i n g goods and services — the free market system or a centralized, planned economy. Neither i s generally practiced i n i t s pure form. - 17 -2. L i m i t s I t should be noted t h a t there are f o u r major l e v e l s of resource a l l o c a t i o n p e r t i n e n t to r e g i o n a l i z a t i o n i n h e a l t h c a r e : a) F e d e r a l - P r o v i n c i a l : T r a n s f e r payments under E s t a b l i s h e d Program Funding (EPF) from the f e d e r a l government to the p r o v i n c e s r e p r e s e n t a s i g n i f i c a n t (and c u r r e n t l y contentious) p o r t i o n of the funding f o r h e a l t h c a r e i b) Intragovernmental: The l e g i s l a t i v e process determines what p o r t i o n of the p r o v i n c i a l government purse i s to be devoted to h e a l t h care. I t s share of the p r o v i n c i a l budget r e l a t i v e to other M i n i s t r i e s i s determined by p r i o r i t i e s s e t by the Cabinet. The a b s o l u t e l e v e l of h e a l t h funding i s dependent upon government revenues and budgetary p o l i c i e s — both of which are i n f l u e n c e d by p r e v a i l i n g economic c o n d i t i o n s . c) From the Health M i n i s t r y to the r e g i o n s : Once He a l t h o b t a i n s i t s p o r t i o n of government resources i t then decides upon the method of a l l o c a t i o n to the r e g i o n s . I t i s t h i s i n t e r m e d i a t e l e v e l of resource a l l o c a t i o n t h a t t h i s study seeks to address i n some d e t a i l . d) From the regions to the s e r v i c e s : Having o b t a i n e d i t s share of H e a l t h M i n i s t r y r e s o u r c e s , the r e g i o n must then determine i t s method of a l l o c a t i o n to v a r i o u s pro-grams, s e r v i c e s , agencies and the l i k e . D e t a i l s con-c e r n i n g a l l o c a t i o n a t the r e g i o n a l l e v e l are beyond the scope of t h i s study. - 18 -Another l i m i t a t i o n i s the extent of quantitative d e t a i l to be provided. As w i l l be more f u l l y explained i n subsequent - . chapters, i t would be imprudent, presumptuous and probably i n -accurate for any one i n d i v i d u a l to present a formula or a series of calculations to determine a d e f i n i t i v e amount or l e v e l of funding for each region. At least as important as the choice of al l o c a t i v e tool i s the manner i n which i t i s i d e n t i f i e d , developed, and implemented. This study seeks to a s s i s t the process of im-plementation, not to impede i t . Having established the l i m i t s i n the scope of this study, i t behooves the writer to c l a r i f y her l e v e l of aspiration. Offer-ing recommendations to the Health Ministry i s done with the knowledge that there i s no perfect method of resource a l l o c a t i o n , nor i s there any problem-free implementation strategy. That which i s offered, however, represents an e f f o r t to ameliorate the e x i s t i n g system. C. PROCEDURES FOLLOWED The methodology employed i n this study i s not directed to hypothesis testing nor to c o r r e l a t i o n a l analysis. I t can only be considered as research i n a broader sense, such as defined by Emory (19 80, p. 17) as "any organized inquiry c a r r i e d out to provide information for the solution of a problem". In order to obtain the information required for this problem-solving provess, two main strategies were employed: - 19 -1. L i t e r a t i v e review: Several subject areas were ex-plored. The major areas included r e g i o n a l i z a t i o n i n health care, epidemiology, public administration, economics, management, and health planning; and 2. Interviews and correspondence with experts i n the f i e l d : A number of individuals with experience i n regiona l i z a t i o n , resource a l l o c a t i o n , and health planning were contacted for the i r insights into re-source a l l o c a t i o n i n a regional structure. In general, those who were available i n the Lower Mainland-Victoria area were interviewed on a face-to-face basis, or by telephone. Individuals i n other provinces or countries were contacted by correspondence. The selection of whom to contact was based on information obtained from the l i t e r a t u r e review and on suggestions made by the thesis committee and others i n the B.C. Health Ministry. As well, i n an e f f o r t to obtain information from a l l provinces i n Canada, a form l e t t e r was sent to each Deputy Minister of Health (or equivalent, for names of M i n i s t r i e s vary somewhat throughout the country). As two other Health Services Planning students were also conducting theses i n the area of region a l i z a t i o n , we j o i n t l y sent these l e t t e r s , requesting that the Deputy Minister provide us with further contacts for each of our i n d i v i d u a l topic areas (see Appendix C). - 20 -Responses from the Deputy Ministers or t h e i r s t a f f were most h e l p f u l . In some provinces, i t was evident that reg i o n a l i z a t i o n had not been developed to the extent implied by this study's topic. Consequently further correspondence was not required. Most provinces, however, i d e n t i f i e d contact persons who could provide more detailed information concerning resource a l l o c a t i o n i n a regional structure. These were pursued by means of another l e t t e r , accompanied by a protocol of six questions (see Appendix D). Respondents were requested to answer these questions on a blank cassette tape, which was enclosed with the l e t t e r . (See Appendix E for more information concerning the f e a s i b i l i t y of the methods of data collection.) The material obtained from the l i t e r a t u r e review and survey of expert opinion provided the foundation for development of v a r i -ous alternative methods for resource a l l o c a t i o n i n a regional structure. These were categorized on the basis of d i s c i p l i n e and value orientation. Each alternative was analyzed and evaluated as to i t s ap-propriateness for resource a l l o c a t i o n to regions i n the B.C. Health Ministry. Recommendations were then made regarding which methods should be implemented i n the short and the longer run. Selection of these methods were based on two factors: value base and application of the Kepner-Tregoe problem solving model (1965, pp. 48-50). B r i e f l y , this model i s comprised of the following steps: - 21 -1. Define the problem. 2. Develop a l t e r n a t i v e s o l u t i o n s to the problem. 3. E s t a b l i s h o b j e c t i v e s of the d e c i s i o n ( c r i t e r i a ) , and c l a s s i f y them as to importance. D i f f e r e n t i a t e between "musts" (those which are e s s e n t i a l to the d e c i s i o n ) and "wants" (those which are d e s i r a b l e ) . 4. E v a l u a t e the a l t e r n a t i v e s i n r e l a t i o n to the e s t a b l i s h e d o b j e c t i v e s . 5. S e l e c t the b e s t a l t e r n a t i v e ( s ) , i . e . , t h a t which s a t i s f i e s a l l the "musts" and the most "wants". 6. A n t i c i p a t e p o s s i b l e adverse consequences of implementing the d e c i s i o n . Assess these consequences i n terms of r e l a t i v e s e r i o u s n e s s and p r o b a b i l i t y . 7. S t r a t e g i z e methods to c o n t r o l these p o s s i b l e d i f f i c u l t i e s . F i n a l l y , having recommended a l t e r n a t i v e methods of resource a l l o c a t i o n and having o u t l i n e d implementation s t r a t e g i e s , f u r t h e r i m p l i c a t i o n s of resource a l l o c a t i o n and r e g i o n a l i z a t i o n i n h e a l t h care were c o n s i d e r e d . - 22 -CHAPTER I I ; EXPERIENCES IN REGIONALIZATION AND RESOURCE ALLOCATIONS A. OTHER HEALTH MINISTRIES IN CANADA In attempting to analyze reg i o n a l i z a t i o n and resource a l l o -cation for the B.C. Health Ministry, some perspective i s gained through an appreciation of circumstances i n Health M i n i s t r i e s i n other Canadian provinces. Health M i n i s t r i e s do not necessarily follow an i n t e r n a l l y consistent administrative/planning structure or resource a l l o -cation method. Nevertheless, most can be readi l y categorized according to the fou r f o l d i l l u s t r a t i o n presented^on page 6, and r e p l i c a t e d below: Structure Regional Non-Regional Resource A l l o c a t i o n Method Regional Non-Regional The data obtained from the protocol of questions sent to each Health Ministry (Appendix D) constituted the basis for the following analysis. - 23 -1. Type 'a': Regional Structure/Regional Resource A l l o c a t i o n Method At this point i n time, there i s no province i n Canada whose Health Ministry reports both a regional structure and a regional method of resource a l l o c a t i o n . Some provinces appear to be moving i n this d i r e c t i o n , but have not yet adopted structures and a l l o -cation methods j u s t i f y i n g a type 'a' c l a s s i f i c a t i o n . 2. Type 'b': Non-Regional Structure/Regional Resource A l l o c a t i o n Method New Brunswick appears to be the sole province i n Canada whose Department of Health endeavours to allocate resources on a regional basis without the existence of a formal regional organizational or planning structure. Ministry o f f i c i a l s use six "natural" regions to guide funding decisions, and these regions are based on service u t i l i z a t i o n and r e f e r r a l patterns. Only public health and mental health programs have s p e c i f i c regional administrative structures i n place. A formal regional structure for a l l health services has not been developed because of concerns from both the government and service providers re-garding the introduction of another layer of bureaucracy into the health system. In 19 78, Zero-Based Budgeting was introduced i n New Bruns-wick's Department of Health. Also i n that year, i t s Hospital Resource A l l o c a t i o n Committee advocated a formula be used for - 24 -a l l h o s p i t a l funding. This formula was composed of age-adjusted population figures, with an allowance for in t e r r e g i o n a l trans-fe r s , and excluding such categories as t e r t i a r y care, education, c a p i t a l expenditures, and p s y c h i a t r i c hospitals. While this formula was never adopted o f f i c i a l l y , i t has been used to develop targets and guidelines for h o s p i t a l and nursing home funding, as well as for physician manpower planning. 3. Type 'c': Regional Structure/Non-Regional Resource A l l o c a t i o n Method Ontario and Quebec are c l e a r l y examples of type 1c', while Manitoba, Saskatchewan and Alberta are hybrids of types 'c' and 'a 1. Ontario's D i s t r i c t Health Councils began to be phased i n during the 19 70s. There are now 25 councils i n the province, and their mandate i s to act i n an advisory capacity to the Health Ministry for the planning and coordination of health services i n each region. While the D i s t r i c t Health Councils (DHC) provide information on needs and p r i o r i t i e s for service, they have no authority i n the determination or d i s t r i b u t i o n of funds. Ontar-io's Ministry of Health does not allocate resources on a regional basis; rather, each program and service i s considered independ-ently with an attempt to relate funding to M i n i s t e r i a l p r i o r i t i e s . In recent years, a number of DHCs have a r t i c u l a t e d the desire to wield more power i n the resource a l l o c a t i o n process. I t w i l l be i n t e r e s t i n g to observe the impact that this w i l l have i n a l l o -cation to and within the regions i n Ontario i n the future. - 25 -Quebec's Ministry of Social A f f a i r s (MAS) administers both health and s o c i a l services. Eleven regions e x i s t throughout the province, with each region having an administrative council con-s i s t i n g of elected and appointed members whose role i s one of co-ordinating services i n the region. Funding for ex i s t i n g services i s r a t i o n a l i z e d on h i s t o r i c a l precedent. Allocations made i n 19 70-71 are used as the base, augmented by an annual percentage increase. The MAS indicates that the current system has resulted i n considerable regional i n e q u a l i t i e s , with some areas (notably Montreal) being more favoured than others. For the past year, two regions have been p i l o t i n g global funding for exis t i n g pro-grams i n the i r regions. The administrative councils i n these regions soon w i l l be responsible for reviewing the budgets of the acute hospitals, although the extent of t h e i r decision-making powers remains unclear. Eventually, the plan i s to allocate global budgets to a l l regions i n the province. The MAS indicates that i n time a population-based system of resource a l l o c a t i o n w i l l be necessary, as the h i s t o r i c a l base i s no longer a r e a l i s t i c r e f l e c t i o n of need. Manitoba's Ministry of Health has decentralized i t s health services to eight p r o v i n c i a l regions. Recent l e g i s l a t i o n has made provision f o r the establishment of autonomous e n t i t i e s to be responsible for a l l health and s o c i a l services within a par-t i c u l a r region. A l l o c a t i o n of resources to the regions i s based on such considerations as workload, nature of caseload, type of caseload, and geography. A formula approach i s not used i n re-source a l l o c a t i o n . - 26 -Saskatchewan Health follows a regional structure for com-munity health and p s y c h i a t r i c services; however, the boundaries for the regions of these two programs are not coterminous. There i s no regional structure for h o s p i t a l services. As regards re-source a l l o c a t i o n , there i s no s p e c i f i c formula employed to de-termine the l e v e l of resources committed to each region; never-theless, consideration i s given to a number of factors including population and h i s t o r i c a l data regarding service u t i l i z a t i o n . Alberta's health system i s separated into two j u r i s d i c t i o n s : S o c i a l Service and Community Health, and the Department of Hospital and Medical Care. In the l a t t e r case, d i s t r i c t boards are provided with global budgets for hospitals and care f a c i l i t i e s . Resources are allocated with demographic c h a r a c t e r i s t i c s of the region i n mind, but no formula per se i s u t i l i z e d . S ocial Service and Community Health i s i n the process of developing a new fund-ing formula for i t s 27 Local Health Authorities, based on per capita figures and population densities, the intent of which i s to improve equity and consistency. Local elected boards are responsible for the administration of these programs, subject to the f i n a n c i a l and program standards set by the Department of So c i a l Service and Community Health. 4. Type 'd': Non-Regional Structure/Non-Regional Resource A l l o c a t i o n Method The remaining Maritime provinces of Prince Edward Island, Nova Scotia, and Newfoundland can be considered as examples of - 27 -type 1 d 1 systems. While v a r i o u s programs are o r g a n i z e d w i t h i n l o c a l boundaries, none of these p r o v i n c e s has a u n i f i e d boundary system f o r a l l s e r v i c e s . Resources are not a l l o c a t e d r e g i o n a l l y , and more than one of these p r o v i n c e s i n d i c a t e d t h a t p o l i t i c a l v a r i a b l e s were s t r o n g determinants of h e a l t h care funding. Nova S c o t i a r e p o r t e d t h a t i t had c o n s i d e r e d phasing i n per c a p i t a fund-i n g , e s p e c i a l l y f o r h o s p i t a l s . However, when i t was l e a r n e d t h a t such a system would l e a d to l a y o f f s of h o s p i t a l s t a f f , the con-cept was abandoned. 5. A d v i s o r y Comments from Other Health M i n i s t r i e s Of the nine p r o v i n c e s responding to the survey, f o u r e l e c t e d to respond to the s i x t h q u e s t i o n i n the p r o t o c o l , i n which t h e i r advice was sought r e g a r d i n g resource a l l o c a t i o n to r e g i o n s . Suggestions i n c l u d e d : any resource a l l o c a t i o n method should encompass a l l h e a l t h care s e r v i c e s , n ot j u s t s p e c i f i c p o r t i o n s (e.g., h o s p i t a l s e r v i c e s ) . - changes i n resource a l l o c a t i o n may need to be phased i n over time. - r a t i o n a l resource a l l o c a t i o n r e q u i r e s some f l e x i b i l i t y i n implementation i n order to be r e a l i s t i c . Notwith-s t a n d i n g t h i s need f o r f l e x i b i l i t y , a g r e a t d e a l of p o l i t i c a l w i l l i s r e q u i r e d i f a r a t i o n a l method i s to succeed. - 28 -any funding formula should be kept simple, and should be developed with f i e l d input. resource a l l o c a t i o n should be based on population needs and accurate supporting data, rather than on h i s t o r i c a l precedent or p o l i t i c a l pressure. improvements are needed i n data systems i n order that governments can make more informed decisions regarding resource a l l o c a t i o n . B. OTHER MINISTRIES IN B.C. Compared to other governments i n Canada, B.C. has lagged i n the development of both regional structures for service delivery or planning, and resource a l l o c a t i o n methods beyond the t r a d i t i o n -a l , incremental approach. As noted above, several provinces have pursued the reg i o n a l i z a t i o n of health services, a few for as long as a decade. In addition, the federal government and many pro-vinces s h i f t e d , some time ago, from incremental budgeting to Planned Program Budgeting Systems approaches i n resource a l l o -cation. (See Chapter III for a more detailed description of PPBS.) This change i n budgeting was primarily i n response to recommendations contained i n the 19 6 2 Royal Commission on Govern-ment Organization (The Glassco^Report), which advocated a longer range perspective to resource a l l o c a t i o n , such as i n f i v e year plans. As well, i t noted that Treasury Board's evaluation of programmes should provide the basis for i t s annual review of departmental estimates of expenditures. - 29 -While these changes were occurring i n most Canadian govern-ments, B.C. remained impervious to such developments. I t was not u n t i l the late 19 70's that this province began to adopt a more goal-oriented approach to resource a l l o c a t i o n , and to de-velop regional structures for government services. While resource a l l o c a t i o n methods and r e g i o n a l i z a t i o n are related concepts, i t i s h e l p f u l to discuss each separately. 1. Regionali zation Regionalization, as a method of d e l i v e r i n g and planning government services, was introduced i n a number of B.C. m i n i s t r i e s , largely because the P r o v i n c i a l Cabinet believed that this type of structure would improve organizational and management capa-b i l i t i e s i n government. I t was seen as a method of streamlining service delivery, thereby improving e f f i c i e n c y as well as re-sponsiveness to the public''"*1'. During the late 1970's, most B.C. ministries adopted some type of regional structure for administration or service delivery. In the case of ministries which were newly created (e.g., Lands, Parks, and Housing), developing a regional structure was r e l a t i v e -ly straightforward. There was no established structure which required a l t e r a t i o n , nor were there strong vested interests i n Verbal Communication, John Kelly, former Deputy Minister, B.C. Treasury Board, November 25th, 19 81. - 30 -the s t a t u s quo. Other m i n i s t r i e s (e.g., Human Resources) faced somewhat g r e a t e r c h a l l e n g e s , i n t h a t there a l r e a d y e x i s t e d a l a r g e bureaucracy which was accustomed to a more c e n t r a l i z e d s t r u c t u r e . Nonetheless, by 19 81, the M i n i s t r i e s o f Highways, M u n i c i p a l A f f a i r s , Environment, F o r e s t s , Lands, and Parks and 12 Housing, Human Resources and the At t o r n e y - G e n e r a l had r e g i o n -a l i z e d , to v a r y i n g degrees and wit h v a r i o u s boundary l i n e s be-tween r e g i o n s . J u s t as B.C. has been an anomaly v i s - a - v i s s e v e r a l other governments i n Canada, so has the Hea l t h M i n i s t r y d i v e r g e d from the norms of other m i n i s t r i e s i n the p r o v i n c e . U n t i l r e c e n t l y , i t has not been i n t e r e s t e d i n r e g i o n a l i z a t i o n , nor indeed i n any major a l t e r a t i o n s to i t s a d m i n i s t r a t i v e s t r u c t u r e o r management s t y l e . P a r t of t h i s r e l u c t a n c e can be t r a c e d h i s t o r i c a l l y to the fragmented r o o t s of the Hea l t h M i n i s t r y . The areas which p r e s e n t -l y comprise the M i n i s t r y of Hea l t h were not amalgamated u n t i l the 19 70's. In pr e v i o u s decades, these f u n c t i o n s were separated i n t o f o u r m i n i s t r i e s : the M e d i c a l S e r v i c e s Commission, Mental Health, P u b l i c Health, and H o s p i t a l Insurance. Each of these m i n i s t r i e s had i t s own mandate, f i n a n c i a l mechanism, o r g a n i z a t i o n a l s t r u c t u r e and deputy m i n i s t e r . Thus i t took some time f o r narrow t e r r i -t o r i a l i t y to g i v e way to a more u n i f i e d p e r s p e c t i v e i n the M i n i s t r y . The remaining m i n i s t r i e s of Energy, Labour, Tourism, E d u c a t i o n , Consumer and Corporate A f f a i r s , and the P r o v i n c i a l S e c r e t a r y a l l have r e l a t i v e l y s m a l l a d m i n i s t r a t i v e cores. As such, r e g i o n a l i z a t i o n may not be as important i n these j u r i s -d i c t i o n s as i n the o t h e r s . - 31 -I t was not u n t i l such development occurred that r e g i o n a l i z a t i o n could be considered as fe a s i b l e . With the recent changes i n the senior Health Ministry s t a f f , i t would appear that the time i s now more p r o p i t i t i o u s than even before for r e g i o n a l i z a t i o n . 2. Resource A l l o c a t i o n With the adoption of regional structures, ministries i n B.C. also began to allocate various amounts and types of the i r re-sources according to regional boundaries. In the case of such min i s t r i e s as Forestry and Lands, Parks, and Housing, region-a l i z a t i o n of resources consisted rather simply of a l l o c a t i n g administrative s t a f f to the regions. Major f i s c a l decisions concerning project funding, however, remain at the di s c r e t i o n of the central bureaucratic s t a f f and p o l i t i c i a n s i n V i c t o r i a . Other mi n i s t r i e s have developed more e x p l i c i t formulae for determining the d i s t r i b u t i o n of service delivery s t a f f . Notable among these i s Human Resources, which allocates s o c i a l work and f i n a n c i a l assistance workers to the regions by cal c u l a t i n g the target population for i t s services. Family support s t a f f , as an example, are allocated by assessing the regions on the basis of several factors. Beginning with the base factor of the region's share of the t o t a l p r o v i n c i a l family population, adjustments are made to account for family service factors, target family popu-l a t i o n factors, target c h i l d population factors, and target environmental c h a r a c t e r i s t i c s . - 32 -S t i l l o ther m i n i s t r i e s have s p e c i f i c l e g i s l a t i o n which d i r e c t s resource a l l o c a t i o n . M u n i c i p a l A f f a i r s has two main acts by which these d e c i s i o n s are governed — the Revenue Sharing A c t and the Sewage F a c i l i t i e s A s s i s t a n c e A c t . Grants are given to m u n i c i p a l i t i e s i n the regions on the b a s i s of p o p u l a t i o n f i g u r e s and average p r o p e r t y assessments. This f i n a n c i n g covers the costs o f many of the o p e r a t i n g c o s t s i n the m u n i c i p a l i t i e s . In a d d i t i o n to p r o v i d i n g g r a n t s , M u n i c i p a l A f f a i r s i s c u r r e n t l y d e v e l o p i n g r e g i o n a l o f f i c e s w i t h p l a n n i n g s t a f f i n many areas of B.C. Thus, there e x i s t s e v e r a l methods by which resources can be r a t i o n a l i z e d w i t h i n a r e g i o n a l s t r u c t u r e . Each m i n i s t r y i s , o f course, unique; a b l u e p r i n t f o r resource a l l o c a t i o n taken from one m i n i s t r y i s u n l i k e l y to prove workable i n another. Yet, of a l l of the B.C. M i n i s t r i e s which have r e g i o n a l i z e d , Human Re-sources can be viewed as the- most s i m i l a r to Health i n terms of s i z e and purpose. The f a c t t h a t the M i n i s t r y o f Human Resources a l l o c a t e s i t s s o c i a l s e r v i c e s t a f f a c c o r d i n g to t a r g e t p o p u l a t i o n c h a r a c t e r i s t i c s ( i . e . , those deemed to be i n need of Human Re-sources i n t e r v e n t i o n ) thus should be of c o n s i d e r a b l e r e l e v a n c e to the Hea l t h M i n i s t r y . - 33 -C. THE B.C. HEALTH MINISTRY 1. Description and Evaluation of the Current Resource  A l l o c a t i o n Process Any attempt to measure the current system against the four objectives of r a t i o n a l i t y , equity, e f f i c i e n c y , or e f f i c a c y w i l l lead to discouraging r e s u l t s . The health care system has "muddled through" i n an incremental manner. Ty p i c a l l y , resources are d i s t r i b u t e d on the basis of l a s t year's allocations plus other considerations (e.g., growth i n population, i n f l a t i o n , addition of new programs, e t c . ) . At the present time, resources are not allocated or even categorized on a regional basis. Instead, budgets focus on the "needs" of i n s t i t u t i o n s and p r a c t i t i o n e r s , with the.Hon' s share of resources devoted to Hospital Programs (53 per cent) and the 13 Medical Services Plan (23 per cent) V i r t u a l l y without exception, those involved i n resource a l l o c a t i o n i n the Health Ministry lament the li m i t e d amount of perceived discretionary funds available. Once the major funds are'.allocated each year to e x i s t i n g programs, there i s l i t t l e remaining for consideration of new programs or services. I t i s largely due to this problem that the Health Ministry i s noted Source: B.C. Government Estimates, 1981-82. - 34 -for the inconsistencies between i t s philosophy and funding. While the Ministry of Health's stated objectives emphasize preventative rather than curative services, i t s resources are allocated primar-i l y to the l a t t e r . This d i f f i c u l t y i n changing the status quo i s c h a r a c t e r i s t i c of most government budgetary procedures. As Wildavsky (19 80) observed of the American system: Well over 90 per cent of the budget, as a l l students of the subject know, i s usually not subject to change. In hard times, this budgetary base i s maintained; i n easy times i t i s expanded. The r e s u l t i s a pattern of continuous increases only occasionally interrupted by maintenance of the status quo (pp. 117-8) . A s i m i l a r point has been made by one of the Chief Medical O f f i c e r s of the B r i t i s h health system. He described resource a l l o c a t i o n as "the use of l a s t year's budget with a b i t added here and a b i t taken o f f there. We never ask ourselves the big questions" (J. H. F. Brotherston i n Latham and Newberry, 1970, p. 131) . Rational planning i n health resource a l l o c a t i o n has been limited and inconsistently applied. A few programs — generally those which have been i n i t i a t e d i n recent years — have adminis-tered resources according to an e x p l i c i t and openly shared formula. The a l l o c a t i o n of assessor and f a c i l i t y s t a f f i n g i n the Long Term Care Program i s an example of such an approach. Other programs use funding c r i t e r i a i n a more guarded fashion. Hospital Programs, for instance, has a p r o f i l e for each acute h o s p i t a l , from which - 35 -i t develops budget g u i d e l i n e s f o r each h o s p i t a l . T h i s i n f o r m a t i o n , however, i s not n e c e s s a r i l y p r o v i d e d to the h o s p i t a l s . S t i l l o t her programs have no d i s c e r n i b l e c r i t e r i a f o r funding. In s h o r t , there i s no c o n s i s t e n c y i n the a p p l i c a t i o n of c r i t e r i a f o r resource a l l o c a t i o n to the v a r i o u s programs i n the B.C. h e a l t h care system. v Recently, e f f o r t s have been made to improve the e n t i r e budget-ary process i n the H e a l t h M i n i s t r y , through the i n t r o d u c t i o n of c e r t a i n Zero-Based Budgeting (ZBB.);..Ltechniques^.. Although ZBB has a l r e a d y been implemented i n v a r y i n g degrees i n o t h e r B.C. m i n i s -t r i e s , H ealth r e s i s t e d such managerial and f i s c a l i n i t i a t i v e s f o r some y e a r s . The new s e n i o r bureaucrats i n the Health M i n i s t r y have a c l e a r commitment to o b t a i n i n g g r e a t e r f i s c a l c o n t r o l , and ZBB i s seen as an important t o o l i n a c h i e v i n g t h i s o b j e c t i v e . To date, however, the a p p l i c a t i o n of ZBB i n Health has progressed l i t t l e beyond the buzzword stage. To summarize then, h e a l t h resources g e n e r a l l y have been a d m i n i s t e r e d on a r e a c t i v e r a t h e r than a p r o a c t i v e b a s i s . C l i n i -c i a n s , v a r i o u s p r o f e s s i o n a l and i n t e r e s t groups, and the p u b l i c have clamoured f o r funds to support s e r v i c e s they b e l i e v e to be necessary ( i . e . , " a l l o c a t i o n by d e c i b e l " ) , w i t h l i t t l e apparent r e c o g n i t i o n of the impact t h e i r requests have upon government exp e n d i t u r e s , user fees and taxes. P o l i t i c i a n s , as gatekeepers of the p u b l i c purse, have the mandate to ensure t h a t s o c i e t y ' s w e l f a r e i s maximized, y e t the p o l i t i c a l i m p e r a t i v e i s such t h a t - 36 -"extrabudgetary" considerations occur during the process of re-source a l l o c a t i o n . Marginal constituencies, proximity to e l e c t i o n years, intra-cabinet bargaining are only a few examples of the complexities involved. F i n a l l y , once resources have been d i s -tributed, bureaucratic i n e r t i a becomes a potent factor. While many and perhaps most public servants i n the Health Ministry wish to provide the best health care possible to the population of B.C., their perception as to how this might be best achieved i s i n e x t r i c a b l y linked to the size of t h e i r t e r r i t o r i e s . Stated most simply, bureaucrats generally seek to increase the size of t h e i r bureaux (Breton, 1974). 2. Conclusion; Existence of a Problem and a Need for Change In summary then, the current method of resource a l l o c a t i o n can be accurately described as process rather than system budget-ing (Schick, 1969). I t i s fragmented, and does not lend i t s e l f 14 to major modifications . Government perceives that the Health Ministry has been poorly managed — that i t s expenditures are out of control. With a government firmly committed to the p r i n c i -ple of a balanced budget, resource a l l o c a t i o n must be improved coincident with r e g i o n a l i z a t i o n . The Ministry of Health i s not unique i n this regard. Other M i n i s t r i e s could and have written s i m i l a r descriptions of the conditions i n their area. - 37 -While i t i s simple enough to reach the conclusion that change i s necessary, i t i s considerably more d i f f i c u l t to s t r a t e -gize how such change might occur. I t i s a truism that i f change were easy, i t would have already been accomplished. Thus far, development beyond the process-oriented system of a l l o c a t i o n has not occurred, i n part because of the method by which expenditures are categorized ( i . e . , on a program b a s i s ) . Attempts to weigh the r e l a t i v e merits of hospital programs versus community services (or any other dichotomy which one may wish to use) tend to de-generate into rather heated arguments regarding l i f e and death — arguments generally noted for t h e i r paucity of f a c t u a l analysis and/or t h e i r reliance upon emotional, motherhood statements. Changing the categories by which an organization i s managed and i t s resources allocated can a l t e r the type of perceptions and comparisons which are made between categories (Wildavsky, 196 4; Glennerster, 1975). A change to regional categorizations would hi g h l i g h t geo-15 graphical rather than program comparisons . Thus, i f certain regions of B.C. were shown to be comparatively disadvantaged i n terms of health resources, redressing geographical imbalances would l i k e l y become a major issue i n resource a l l o c a t i o n . With Programs and regions are only two types of categorizations i n health care. Others include d i s c i p l i n e (e.g., medicine, nursing, physiotherapy, e t c . ) , disease type, or c l i e n t age (e.g., infant, youth, adolescent, young adult, middle years, the e l d e r l y ) . Again, one's choice of categorization should be predicated upon the purpose for which the data w i l l be used. - 38 -tiie current organization and budget categories of the Health Ministry, i t i s not r e a d i l y apparent i f these are such geo-graphical differences. I t i s evident then that the f i r s t step toward developing a regional resource a l l o c a t i o n tool i s to categorize e x i s t i n g allocations on a regional basis. The 19 81-82 expenditures for the Health Ministry have been r e c l a s s i f i e d from t h e i r e x i s t i n g program categories to the proposed regional categories i n Table I. This re-categorization i n i t s e l f does not indicate whether or not the current funding system i s equitable to a l l regions. Never-theless, i t does provide a framework within which additional analysis can be undertaken f r u i t f u l l y . - 39 -Table I: 19 81-82 Health Expenditures C l a s s i f i e d According to Proposed Regional Boundaries REGION TOTAL EXPENDITURES 1 - North 2 - Central I n t e r i o r 3 - Okanagan-Kootenay 4 - Lower Mainland 5 - Vancouver 6 - Vancouver Island and Coast 7 - Capital Region D i s t r i c t $ 102,521,359 101,528,419 196,969,729 278,789,489 697,192,520 127,968,877 197,439,559 TOTAL $ 1,702,409,952 Sources: Ministry of Health, Municipal Health Departments, and Greater Vancouver Mental Health Service. Note that these expenditures do not represent t o t a l Ministry of Health expenditures, as they only include those items which can be categorized region-a l l y . They do not, for example, cover the costs of central o f f i c e or headquarters functions i n V i c t o r i a . - 40 -CHAPTER II I ; ALTERNATIVE APPROACHES TO RESOURCE ALLOCATION A. MODELS IN HEALTHCARE PLANNING No single d i s c i p l i n e i s uniquely endowed with an a l l - i n c l u s i v e knowledge of health care planning. Various d i s c i p l i n e s can and have made contributions to the area of health resource a l l o c a t i o n . Thus i t i s e s s e n t i a l that policy makers adopt a generalist per-spective, and consider the d e s i r a b i l i t y and f e a s i b i l i t y of numerous approaches. Figure 2 i l l u s t r a t e s the framework of analysis to be de-veloped i n the remainder of this study. Three types of health planning models (or r a t i o n a l i t y ) are i d e n t i f i e d , and these are related to s p e c i f i c areas of study — epidemiology, management and economics. As well, varying levels or degrees of r a t i o n a l i t y are plotted on this schema. A l l models presented i n this paradigm are, to varying degrees, based on r a t i o n a l planning p r i n c i p l e s . Rational planning has been defined as the application of s c i e n t i f i c method — however crude -- to policy-making. What thi s means i s that conscious e f f o r t s are made to increase the v a l i d i t y of p o l i c i e s i n terms of the present and anticipated future of the environment (Faludi, 1973, p. 1). - 41 -Figure 2 : Options for Resource A l l o c a t i o n i n a Regional Structure TYPE OF HEALTH PLANNING RATIONALITY D i s c i -p l i n e Epidemiology Management Economics Value basi s A . •rt rrt (0 S O •rt 4J Pi tn a •rt w a) 0) J-i u c Equity "Epidemiological p l u s " indexes 1^  Epidemiological i n d i c a t o r s t S o c i a l Indicators Ideal resource/ population r a t i o s t U t i l i z a t i o n s t a t i s t i c s t Per c a p i t a a l l o c a t i o n E f f i c i e n c y / e f f e c t i v e n e s s PPBS/ZBB Management by Objectives Team Management or Management by Consensus A E f f i c i e n c y / e f f i c a c y C o s t - u t i l i t y Cost-effectiveness Cost-benefit Cost-minimization t Economic modelling Regional d i s t r i b u t i o n derived from current funding l e v e l s Current incremental process-oriented system ( a l l o c a t i o n by decibel) P o l i t i c a l - b u r e a u c r a t i c environment - 42 -Two d i s t i n c t concepts are implied i n this d e f i n i t i o n . F i r s t , a l o g i c a l problem-solving process i s used i n decision-making. Second, a s p e c i f i c impact or goal i s the target of planning i n -tervention. Thus, i t i s both the process and the intention which distinguishes r a t i o n a l planning from other types of planning. Before enlarging upon the paradigm i l l u s t r a t e d i n Figure 2, i t i s useful to summarize b r i e f l y the role of models i n planning. B a s i c a l l y , a model i s a p a r t i c u l a r method of structuring r e a l i t y , which f a c i l i t a t e s description, prediction, and/or control of a phenomenon. The use of models i s one of the fundamental pre-cepts of the s c i e n t i f i c method. Models categorize and summarize data, simplifying (and hence distorting) complex r e a l i t y into that which can be comprehended. Therein l i e s both t h e i r strength and weakness. In an applied setting such as the B.C. Health Ministry, a model should be judged more on i t s u t i l i t y than on i t s t h e o r e t i c a l foundation or conceptual elegance. Thus, when considering models for resource a l l o c a t i o n i n a regional structure, health care planners are well advised to r e f r a i n from wearing the blinders of a single d i s c i p l i n e . Rather, consideration should be given to many options, and selection should be made on the basis of what appears to be both desirable and f e a s i b l e . - 43 -B. HEALTH PLANNING RATIONALITY WITHIN THE POLITICAL-BUREAUCRATIC ENVIRONMENT The health planning models of epidemiology, management, and economics cannot be viewed i n i s o l a t i o n from the ambient p o l i t i c a l -bureaucratic environment. Many planners view p o l i t i c s and the bureaucracy as constraints i n the system. On the other hand, to the degree that a planner can understand these viewpoints and present information i n an e f f e c t i v e manner, these constraints may become opportunities which expedite the achievement of a p a r t i c u l a r goal. This p o l i t i c a l - b u r e a u c r a t i c awareness then i s esp e c i a l l y relevant i n assessing the f e a s i b i l i t y and str a t e g i z i n g the implementation of any plan. C. LIMITS TO RATIONALITY IN HEALTH PLANNING Many planners would approach resource a l l o c a t i o n from an e s s e n t i a l l y r a t i o n a l point of view. Many planners, however, would be wrong, for r a t i o n a l i t y i n health planning i s generally more rhe t o r i c than r e a l i t y . While an appreciation of the need for a certain l e v e l of r a t i o n a l i t y i s h e l p f u l , i t i s even more important that i t s l i m i t s be appreciated. Although we may not wish to admit i t , we humans have f i n i t e capacities for handling information, p a r t i c u l a r l y concerning complex issues. Thus, rather than engaging i n r a t i o n a l and formal problem-solving we are more l i k e l y to opt for the f i r s t s a t i s -- 44 -factory a l t e r n a t i v e . We s a t i s f i c e rather than optimize (March and Simon, 195 8; Lindblom, 1959). Further, any group decision i s the product of various interests and co a l i t i o n s (Cyert and March, 1963). The Health Ministry and the health care system are not united as to goals and objectives, but are joined together by means of a delicate and at times uneasy c o a l i t i o n . Yet another reason for lim i t e d r a t i o n a l i t y i s related to the public and p o l i t i c a l nature of health care. I t has been observed that one of the basic features of a democracy i s the balancing of c o n f l i c t i n g forces through compromise and trade-offs (Wildavsky, 1964; Schick, 1969; Banfield, i n Faludi, 1973). No single group i s l i k e l y to be e n t i r e l y s a t i s f i e d with the results of such a process, but most groups w i l l f e e l that i t i s the best that could be achieved under the circumstances. P f e f f e r (19 81) has suggested that organizations can be categorized into four basic decision-making modes — r a t i o n a l , bureaucratic, decision process/organized anarchy, and p o l i t i c a l power. I t would appear that the health care system has elements of a l l four of these processes, depending on which part i n the system one wishes to analyze. Each of these four modes warrants further discussion: TV. 45 -1. R a t i o n a l Choice Models: S p e c i f i c goals and o b j e c t i v e s are pursued by means of a s c i e n t i f i c , p r o b l e m - s o l v i n g approach. T h i s model assumes the e x i s t e n c e of a con-s i s t e n t s e t of g o a l s , development and e v a l u a t i o n (based on information) of a l t e r n a t i v e s to achieve these g o a l s , and s e l e c t i o n of a course of a c t i o n which maximizes r e s u l t s as r e l a t e d to o b j e c t i v e s . In p u b l i c bureaucra-c i e s , the g o a l i s t h a t of the o r g a n i z a t i o n ' s m i s s i o n . A p p l y i n g t h i s model to the B.C. h e a l t h care system works f a i r l y w e l l a t the s e n i o r l e v e l s of the bureaucracy. The new A s s i s t a n t Deputy M i n i s t e r s are committed to an a r t i c u l a t e d s e t of goals and p r i o r i t i e s f o r the H e a l t h M i n i s t r y . T h e i r attempts to r e s t r u c t u r e the M i n i s t r y along f u n c t i o n a l and r e g i o n a l l i n e s , as w e l l as t h e i r i n t r o d u c t i o n of Zero-Based Budgeting (ZBB) techniques serve as examples of such an approach. 2. B u r e a u c r a t i c Models: The s a l i e n t f e a t u r e of t h i s method of decision-making i s i t s r e l i a n c e on e s t a b l i s h -ed r u l e s and procedures. Instead of i n v e s t i n g con-s i d e r a b l e resources i n search of i n f o r m a t i o n to develop and to e v a l u a t e a l t e r n a t i v e s , precedents, p o l i c y manuals, and the l i k e p r o v i d e the programmed response f o r most s i t u a t i o n s which may a r i s e . Most of the s t a f f i n the B.C. Health M i n i s t r y and i n the l a r g e h e a l t h i n s t i t u t i o n s operate e s s e n t i a l l y a c c o r d i n g to t h i s model. T h e i r d e c i s i o n s g e n e r a l l y c o n s i s t of a p p l y i n g p o l i c i e s - 46 -and procedures developed by more s e n i o r s t a f f , or by f o l l o w i n g the d i r e c t i o n of a s u p e r v i s o r . 3. D e c i s i o n Process/Organized Anarchy Models: No goals are presumed to e x i s t i n these o r g a n i z a t i o n s ; thus a c t i o n which .occurs i s n e i t h e r g o a l - d i r e c t e d , con-s i s t e n t , nor p r e d i c t a b l e . T h i s model has been r a t h e r v i v i d l y r e f e r r e d to as the garbage can approach, where " d e c i s i o n p o i n t s are o p p o r t u n i t i e s i n t o which v a r i o u s problems and s o l u t i o n s are dumped by o r g a n i z a t i o n a l p a r t i c i p a n t s " ( P f e f f e r , 1981, p. 26). No de a d l i n e s f o r a c t i o n are i m p l i e d ; r a t h e r , problems are worked on u n t i l they appear to be s o l v e d . These s o l u t i o n s seem to be the r e s u l t of chance as much as of any • other p r o c e s s . The garbage can model has been a p p l i e d to u n i v e r s i t i e s and to u n i v e r s i t y p r e s i d e n t s (Cohen and March, 1974). S i m i l a r l y , i t c o u l d be argued t h a t s e n i o r s t a f f i n the Health M i n i s t r y g e n e r a l l y operate a c c o r d i n g to these p r i n c i p l e s . Despite the e x i s t e n c e o f a s e t of M i n i s t r y goals and o b j e c t i v e s , i t does not appear t h a t the m a j o r i t y of d e c i s i o n s i n Health have been govern-ed by these g o a l s . As w e l l , there has been l i t t l e development of management i n f o r m a t i o n systems which would permit d e c i s i o n -making to be data based. - 47 -4. P o l i t i c a l Models: Actions i n p o l i t i c a l models are the products of bargaining and compromise. When the preferences of the various s o c i a l actors are i n con-f l i c t , i t i s the power of these actors which determines the outcome. Perhaps one of the more v i s i b l e signs of p o l i t i c a l decision-making i n the B.C. health care system i s the existence of the Health Sciences complex at the University of B r i t i s h Columbia. The development of both an acute care hospital and an extended care unit was met with extensive c r i t i c i s m from many health care p r a c t i t i o n e r s and planners. Nevertheless the complex was con-structed. Observers of the p o l i t i c a l system would suggest that this was a settlement of a p o l i t i c a l debt owing to a certain Cabinet Minister, whose departure from the L i b e r a l Party enhanced the strength of the Socreds. Clearly the r a t i o n a l model i s only one of several models operational i n the health care system. I t i s es s e n t i a l that health care planners and administrators have an appreciation for a l l of these models, and that the appropriate type and l e v e l of r a t i o n a l i t y i s selected for use, depending on the circumstances involved. Figure 2 positions models at d i f f e r e n t levels of r a t i o n a l i t y , based on the degree to which the method i s l i k e l y to r e s u l t i n resource a l l o c a t i o n consistent with i t s underlying value base. Therefore, the paradigm i s meant to be applied s p e c i f i c a l l y to - 48 -resource a l l o c a t i o n i n h e a l t h care. I f the purpose to which the models were used was changed, i t may w e l l be t h a t one would wish to rank the methods d i f f e r e n t l y . D. ALTERNATIVES IN RESOURCE ALLOCATION F i g u r e 2 p l o t s the c u r r e n t process - o r i e n t e d system of resource a l l o c a t i o n a t a low l e v e l of r a t i o n a l i t y . T h i s , of course, r e f l e c t s a p a r t i c u l a r viewpoint or b i a s , i . e . , t h a t resource a l l o c a t i o n must be based on an e x p l i c i t g o a l , r e l a t e d to need or end r e s u l t . One need not accept t h i s approach, however. I t might be argued, and c o n v i n c i n g l y so, t h a t the c u r r e n t system a l l o c a t e s resources w i t h a minimum of a d m i n i s t r a t i v e costs and w i t h a minimum of c o n f l i c t . Such f e a t u r e s , however, are p r i m a r i l y concerned w i t h implementation r a t h e r than w i t h substance. The p o s i t i o n h e r e i n advocated i s t h a t f e a s i b i l i t y should not be the paramount concern when d e s i g n i n g an a l l o c a t i o n system. Rather, i t i s a c o n s t r a i n t w i t h i n which one's choices are made. One should begin by s e l e c t i n g the value base deemed to be of g r e a t e s t importance to resource a l l o c a t i o n , and then b u i l d a methodology w i t h i n the t e c h n i c a l and o p e r a t i o n a l l i m i t s of the system. As the c u r r e n t a l l o c a t i o n process l a c k s such a value base, i t has thus been p l a c e d a t a low l e v e l of r a t i o n a l i t y . - 49 -Three types of r a t i o n a l i t y presented i n the diagram relate to s p e c i f i c d i s c i p l i n e s and value bases. Each of these major typologies can be further divided into several a l l o c a t i o n methods having varying degrees of r a t i o n a l i t y . As well, a fourth option — that of regional d i s t r i b u t i o n derived from current funding levels — i s i d e n t i f i e d . B r i e f l y , the four alternatives for resource a l l o c a t i o n are: 1. regional d i s t r i b u t i o n derived from current funding levels — based on extension of the status quo; 2. epidemiological models -- based on equity regarding the health needs of population groups; 3. management models -- based on e f f i c i e n c y and e f f e c t -iveness of programs or services; and 4. economic models -- based on e f f i c i e n c y and e f f i c a c y from a society-wide perspective. Each of these alternatives w i l l be described and evaluated i n . the remainder of this Chapter. In so doing, however, i t i s important to r e - i t e r a t e that these types of r a t i o n a l i t y must be considered within the general context of the p o l i t i c a l and bureaucratic environments of the health care systems. 1. Regional D i s t r i b u t i o n Derived From Current Funding Levels Having determined the present l e v e l of funding to services and programs i n each of the regions (as per Table I, page 39) , the B.C. Health Ministry could opt to hold a l l regions at t h e i r current percentages of the p r o v i n c i a l t o t a l , as shown i n Table I I . - 50 -TABLE I I : RELATIVE FUNDING LEVELS OF HEALTH REGIONS 19 81-82 PERCENTAGE OF TOTAL REGION EXPENDITURE REGIONAL EXPENDITURES 6.0 6.0 11.6 16 . 4 41.0 and Coast 127,968,877 7.5 7 Capital Region D i s t r i c t 197,439,559 11.6 1 North $ 102,521,359 2 Central Int e r i o r 101,528,419 3 Okanagan-Kootenay 196,969,729 4 Lower Mainland 278,789,489 5 Vancouver 697,192,520 6 Vancouver Island $ 1,702,409,952 100.1% Any changes i n allocations would be done on an across-the-board basis for a l l regions. For example, a l l regions might be held at a f i v e per cent increase per year. In essence, this would provide a method of sustaining the status quo. This method has several advantages. I t i s quick and i n -expensive to administer; few planning i n i t i a t i v e s would be re-quired of the Health Ministry. Current r e l a t i v e funding levels are already known, and i t i s a simple arithmetic task to hold - 51 -these ra t i o s constant over time. At a time of f i s c a l r e s t r a i n t , freezing o f f e r s a crude but e f f e c t i v e method of cost control. The means by which these costs are controlled, however, presents some d i f f i c u l t y . Retaining current ra t i o s provides no assurance that resources are allocated on the basis of equity, e f f i c i e n c y or e f f i c a c y . On the contrary, i t ensures that any e x i s t i n g i n e q u i t i e s w i l l be continued, and offers no incentive to improve the e f f i c i e n c y or e f f i c a c y of service delivery. Retaining current r a t i o s exemplifies an accountant's rather than a planner's strategy for a l l o c a t i n g resources. I t i s r i g i d and a r b i t r a r y , i n that regions are not considered on the basis of t h e i r i n d i v i d u a l needs. Yet, despite these problems, such a strategy i s not without precedent i n the B.C. health care system. One can r e c a l l that i n the late 70's, Bob McClelland (then Minister of Health i n B.C.) informed acute care hospitals that t h e i r budgets would be held at a f i v e per cent increase per year. S i m i l a r l y , the B.C. government has i n s t i t u t e d a number of tempo-rary h i r i n g freezes i n the public service, i n an e f f o r t to reduce government expenditures. Perhaps the main reason that this method has been imple-mented successfully i n the past i s that i t provides a facade of fairness. A l l regions, i t can be maintained, are treated a l i k e . The flaw i n this l o g i c , of course, i s that i t assumes that a l l regions begin from an equitable base. I f , however, some regions appear less equal than others, retention at current levels freezes i n these r e l a t i v e disadvantages. - 52 -As a long range s t r a t e g y , t h i s approach does not appear d e s i r a b l e . However, i t has some v i r t u e i n terms of a stop gap measure. R e g i o n a l i z a t i o n i s a complex p r o c e s s . O b t a i n i n g an a p p r o p r i a t e resource a l l o c a t i o n method i s l i k e l y to r e q u i r e con-s i d e r a b l e time and energy. Holding r a t i o s c o n s t a n t would pr o v i d e the M i n i s t r y w i t h a p r e l i m i n a r y s t r a t e g y u n t i l such time as a more r a t i o n a l system c o u l d be developed. Thus, w h i l e i t i s f a r from i d e a l , i t cannot be summarily dism i s s e d . 2. E p i d e m i o l o g i c a l Models The e p i d e m i o l o g i c a l model of resource a l l o c a t i o n r e s t s on the premise t h a t p o p u l a t i o n c h a r a c t e r i s t i c s should govern the d i s t r i b u t i o n of h e a l t h r e s o u r c e s . T r a d i t i o n a l l y , epidemiology has concerned i t s e l f w i t h the d i s t r i b u t i o n of d i s e a s e and d i s -a b i l i t y . In more r e c e n t y e a r s , however, epidemiology has begun to address i t s e l f to h e a l t h s t a t u s as a p o s i t i v e measure. Ac c o r d i n g to the e p i d e m i o l o g i c a l model, a p p r o p r i a t e a l l o -c a t i o n of h e a l t h resources would be governed by the needs of the p o p u l a t i o n i n the r e g i o n s . Needs are l i k e l y to d i f f e r from r e g i o n to r e g i o n , and the method of a l l o c a t i o n should be s e n s i -t i v e to these v a r i a t i o n s . Such a concept i s h a r d l y n o v e l . Ap-p r o x i m a t e l y a century ago i t was noted t h a t there were r e g i o n a l d i f f e r e n c e s i n h e a l t h s t a t u s : " I f we compare the northern d i v i s i o n w i t h the more s o u t h e r l y d i v i s i o n s i n the U n i t e d S t a t e s , the comparison i s most f a v o r a b l e to the former, and by r i c o c h e t to Canada" (Hingston, 1884, p. 111). - 53 -Today, epidemiologists apply somewhat more sophisticated approaches to assessing regional needs for health resources. The health status of each region can be measured by means of a 17 number of indexes or indicators . Resources can then be a l l o -cated according to r e l a t i v e need, i . e . , proportionately more resources to those with a comparatively poor health status, less to those with a better health status. I n t u i t i v e l y , this reasoning can be appealing. As i l l u s -trated i n Figure 3, this approach rests upon a number of ap-parently sound assumptions. More resources are allocated for health care to a region which has been assessed as having a r e l a t i v e l y poor health status. These resources then produce more units of health programs, which are u t i l i z e d by the target groups who are deemed to be i n need. F i n a l l y , the outcome i s the improved health status of the region's population as a whole. While this chain of assumptions has a certain face v a l i d i t y , there are a number of links i n this chain which require further analysis. To begin with, i t i s extremely d i f f i c u l t to develop an accurate method of measuring the health status or health needs The Clearinghouse on Health Indexes notes that " i n the health f i e l d the terms 'index 1 and 'indicator 1 have been used interchangeably . . . The Clearinghouse has adopted the follow-ing d e f i n i t i o n : a health index i s a measure which summarizes data from two or more components and which purports to r e f l e c t the health status of an i n d i v i d u a l or defined group". - 54 -Figure 3: Theoretical Linkages Between Resource A l l o c a t i o n and Expected Results INPUTS More resources allocated for health care Mr-Region X Having been assessed as having a r e l a t i v e l y poor health status OUTPUT More units of health service provided and u t i l i z e d by those deemed to be i n need (target groups) OUTCOME Improved health status of region's population - 55 -of a population group. Our current l e v e l of knowledge regarding such measurement leaves a great deal of scope for improvement. We have no widely accepted, comprehensive measure of health status; at best, we obtain indicators or indexes from which we deduce general health status. These indexes tend to emphasize negative aspects of health such as disease, d i s a b i l i t y , d i s -comfort, and the l i k e , rather than measuring po s i t i v e aspects of health. Another d i f f i c u l t y involved i n need evaluation concerns the types of needs which should be rewarded with health care re-sources. From a humanitarian viewpoint, any human suffering or dysfunction represents a need or a problem which should be ameliorated. R e a l i s t i c a l l y , however, i t can be argued that need for health resources should only be met on the basis of our current s k i l l and knowledge i n health care. We should not there-fore provide resources to meet needs unless we have interventions which have been demonstrated as having a pos i t i v e impact on these problems. Once resources are allocated, there i s no safeguard that they w i l l be directed to programs intended to improve the health status of the region's population. Resources may be used for programs demonstrated to be e f f i c a c i o u s , or they may be used for programs having no evidence of e f f i c a c y . One might adopt a sanguine attitude and assume that regions w i l l develop over time the capacity to u t i l i z e t h e i r resources i n an optimal manner, but this i s not central to the epidemiological model. - 56 -Yet another d i f f i c u l t y i n the e p i d e m i o l o g i c a l approach to resource a l l o c a t i o n i s e n s u r i n g t h a t programs w i l l be u t i l i z e d by those who are deemed to be i n need or a t r i s k . Those i n v o l v e d i n the area of p u b l i c h e a l t h are w e l l aware t h a t i n d i v i d u a l s who are i n the g r e a t e s t need of a program are f r e q u e n t l y the most d i f f i c u l t to reach; thus programs may become r e d i r e c t e d to those groups which are e a s i e r to i n v o l v e . Perhaps a more fundamental concern r e g a r d i n g t h i s approach i s the b a s i c assumption t h a t there are constant r e t u r n s on h e a l t h care investment. I t seems reasonable to expect t h a t i n c r e a s e d h e a l t h expenditures and u t i l i z a t i o n w i l l r e s u l t i n p r o p o r t i o n a t e improvements i n h e a l t h s t a t u s . U n f o r t u n a t e l y , we have no em-p i r i c a l data i n support of t h i s h y p o t h e s i s . On the c o n t r a r y , s t u d i e s which have compared the h e a l t h s t a t u s of v a r i o u s popu-l a t i o n s have found no p a r t i c u l a r r e l a t i o n s h i p between h e a l t h care expenditures or u t i l i z a t i o n , and h e a l t h s t a t u s (Maxwell, 1974; Petersen, e t a l . , 1967). While t h i s may simply be a f u n c t i o n of the crudeness of our c u r r e n t h e a l t h s t a t u s measures, one cannot d i s c o u n t the p o s s i b i l i t y t h a t a f t e r a c e r t a i n p o i n t , a d d i t i o n a l h e a l t h expenditures produce l i t t l e i f any improvement i n h e a l t h s t a t u s . Instead, h e a l t h s t a t u s may w e l l be more i n -f l u e n c e d by expenditures or i n t e r v e n t i o n s i n "non-health" areas. Such a p o s i t i o n has some t h e o r e t i c a l f o u n d a t i o n . A b r i e f h i s -t o r i c a l a n a l y s i s i s h e l p f u l i n t h i s regard. - 57 -U n t i l the 19 30s, the chief cause of improvements i n health were improvements i n the environment. From the 19 30s to the 1950s, the chief contributors to better health were drugs and new s u r g i c a l techniques. In the 1960s the revolution i n p s y c h i a t r i c drugs took place and e f f e c t i v e treatment of mental i l l -ness became possible for the f i r s t time. The same period saw the introduction of r e a l l y e f f e c t i v e drugs against high blood pressure. Today, the major sources of further improvement appear once more to be environmental^. The wheel has come f u l l c i r c l e (Culyer, 1976, p. 52). Consequently, from a government perspective, i t can be maintain-ed that marginal benefits, i n health can be best achieved by marginal increases i n ministries other than Health (e.g., En-vironment, Human Resources, or Education), or by a general improvement i n the economy. This analysis, while v a l i d from the viewpoint of a health care planner, misses much of the p o l i t i c a l aspect of resource a l l o c a t i o n . Most Canadians have grown to consider that health care i s one of t h e i r basic ri g h t s . As such, t h e i r major pre-occupation i s with equity regarding inputs -- everyone should obtain his or her f a i r share of health resources (Fein, 1972). E q u i t y , however, i s much l i k e beauty -- i t l i e s i n the eye of the beholder. Rather than engaging i n a p h i l o s o p h i c a l debate regarding a d e f i n i t i o n of e q u i t y , we can gain some understanding of t h i s concept by r e c a l l i n g that h e a l t h i s n e i t h e r randomly nor I would also suggest the i n c l u s i o n of l i f e s tyle modi-f i c a t i o n s as a s i g n i f i c a n t source of further improvement i n health status. - 58 -uniformly d i s t r i b u t e d i n the population. Instead, i t has been correlated with age, socio-economic status, and sex (General Household Survey i n Great B r i t a i n , 19 71; Anderson, et a l . , 19 80; Martini, et a l . , 1978; the U.S. National Health Interview Survey and Social Security Survey of the Disabled, 1966; the Canada Health Survey, 1981). Therefore, equity i n health resource a l l o -cation would not provide regions with equal shares, but with shares commensurate with their need. A number of methods have been developed to a s s i s t i n measur-ing health care needs of populations. Figure 2, i t w i l l be re-c a l l e d , traces out six types of approaches within the general epidemiological framework. These methods are, i n increasing order of r a t i o n a l i t y : per capita a l l o c a t i o n , u t i l i z a t i o n sta-t i s t i c s , i d e a l resource-population r a t i o s , s o c i a l indicators, epidemiological indicators, and "epidemiological plus" indexes. Each of these i s addressed i n more d e t a i l as follows: a) Per Capita A l l o c a t i o n This i s the simplest method of resource a l l o c a t i o n i n the hierarchy of equity-based models. Need at this point i s defined merely i n terms of gross population figures. Therefore regions would be allocated resources as a d i r e c t function of the size of t h e i r population. Similar to the method of retaining e x i s t i n g funding l e v e l s , the per capita a l l o c a t i o n approach i s simple, quick, inexpensive, - 59 -and has the appearance of being f a i r . I t a l s o has a high degree of l e g i t i m a c y , i n that other M i n i s t r i e s i n B r i t i s h Columbia and other Health M i n i s t r i e s i n Canada provide resources on a per c a p i t a b a s i s . Table I I I i l l u s t r a t e s the impact which a s t r i c t per c a p i t a a l l o c a t i o n method would have on the e x i s t i n g funding system. C e r t a i n regions (e.g., Region 1 - North) would gain considerably through t h i s process. More problematic, however, are the i m p l i -c a t i ons t h i s method would have on such regions as 5 - Vancouver and 7 - C a p i t a l Region D i s t r i c t . D r a s t i c cutbacks i n a l l o c a t i o n s to these regions are not l i k e l y to be accepted e a s i l y or grace-f u l l y by t h e i r s e r v i c e p r o v i d e r s or c l i e n t s , nor by p o l i t i c i a n s and bureaucrats devoted to these c o n s t i t u e n c i e s . Controversy could c e r t a i n l y be expected. While per c a p i t a a l l o c a t i o n s would r e s u l t i n changes i n the r e l a t i v e a l l o c a t i o n s to the regions, i t i s u n l i k e l y that these changes would be s u f f i c i e n t to r e f l e c t r e g i o n a l d i f f e r e n c e s i n age, sex, and socio-economic s t a t u s . As noted e a r l i e r , these c h a r a c t e r i s t i c s are c o r r e l a t e d c l o s e l y w i t h the h e a l t h status of a given p o p u l a t i o n . Thus, a more p r e c i s e instrument than head counting would be d e s i r a b l e . Another b a s i c shortcoming i n the per c a p i t a method i s that i t assumes that regions are completely s e l f - r e l i a n t i n the pro-v i s i o n of h e a l t h s e r v i c e s . I t does not make any s p e c i a l p r o v i s i o n - 60 -TABLE I I I : IMPACT OF A CHANGE TO PER CAPITA ALLOCATIONS REGION 19 81-82 PERCENTAGE ACTUAL 19 81-82 PER CAPITA PROVINCIAL CHANGE EXPENDITURE PER CAPITA BY REGION AVERAGE + or -1 North $ 406. 2 Central Int e r i o r 474. 3 Okanagan - Kootenay 426 . 4 Lower Mainland 433. 5 Vancouver 882. 6 Vancouver Island and Coast 482. 7 Cap i t a l Region D i s t r i c t 793. 33 $ 592.21 t 45.7 66 592.21 t 24.8 78 592.21 t 38.8 53 592.21 + 36.6 67 592.21 - 32.9 75 592.21 t 22.7 15 592.21 - 25.3 - 61 -for expensive t e r t i a r y care which, i n certain cases, would be extremely i n e f f i c i e n t to o f f e r i n a l l regions of B.C. As a rule, such costly programs are presently located i n the major centres of Vancouver and V i c t o r i a . Adjustments i n per capita allocations thus should be made for crossboundary patient flow for s p e c i a l -ized services. The per capita method also f a i l s to d i f f e r e n t i a t e between regions which may have greatly d i f f e r e n t costs i n service delivery. For example, i t may be more costly to provide certain services i n geographically diffuse regions than i n more concentrated urban centres. Again, some fine tuning of the per capita method would be needed i f such differences i n costs e x i s t . S i m i l a r l y , some adjustment i n a per capita approach i s necessary to provide for teaching f a c i l i t i e s for health care workers. As well, the differences between regions i n terms of depreciation of major c a p i t a l stock (e.g., acute care hospitals) must be taken into account. In summary then, the per capita a l l o c a t i o n method i s at best a rudimentary method of equitable resource a l l o c a t i o n . Its lack of precision, however, i s o f f s e t considerably by i t s f e a s i -b i l i t y and legitimacy. As such, i t i s s i m i l a r to the status quo retention approach, i n that i t warrants consideration as an interim strategy. - 62 -b) U t i l i z a t i o n S t a t i s t i c s S t a t i s t i c s regarding the use of resources i n the health care system (e.g., bed-days i n acute care, number of physician v i s i t s , number of s u r g i c a l procedures performed, etc.) o f f e r one method of deducing health care need. The immediate problem which arises, however, i s that such data are ambiguous i n int e r p r e t a t i o n . Do high u t i l i z a t i o n rates i n one region suggest that i t s population i s less healthy than those i n other regions, and as a consequence deserve more resources? Possibly so; however, quite the con-verse might also be v a l i d . Not a l l of those i n need of care i n f a c t u t i l i z e health re-sources. S i m i l a r l y not a l l of those who u t i l i z e care are i n need of i t (Hulka, 1978). U t i l i z a t i o n i s based i n part upon c l i e n t -related c h a r a c t e r i s t i c s , such as perceptions concerning i l l n e s s and the health care system (Becker and Maiman, 1975). As well, the supply or a v a i l a b i l i t y of resources influences u t i l i z a t i o n (Evans, 1973). Therefore, those regions with a poor health status but with comparatively few health resources and with limited ex-pectations of health care e f f i c a c y , may underutilize health care. If such i s the case, the implication for resource a l l o c a t i o n would be to increase allocations to regions which are under-u t i l i z e r s , with a s p e c i f i c emphasis upon health education and program promotion. The chief problem, then, with u t i l i z a t i o n s t a t i s t i c s i s t h e i r equivocal s i g n i f i c a n c e . Yet, despite this d i f f i c u l t y , they cannot - 63 -be immediately d i s c o u n t e d . F i r s t of a l l , they are f a i r l y r e a d i l y a t t a i n a b l e — a t l e a s t f o r e x i s t i n g programs. However, one can r e a d i l y see t h a t u t i l i z a t i o n f i g u r e s are b i a s e d i n favour of e s t a b l i s h e d r a t h e r than newly i n t r o d u c e d or proposed programs, f o r s e r v i c e s which are not y e t developed have d i f f i c u l t y i n g e n e r a t i n g s t a t i s t i c s r e g a r d i n g p o t e n t i a l u s e r s . A major s t r e n g t h of u t i l i z a t i o n s t a t i s t i c s i s the c r e d i b i l i t y d e r i v e d from q u a n t i f i c a t i o n , and t h e i r d i r e c t l i n k with s p e c i f i c r e s o u r c e s . G e n e r a l l y , per c a p i t a f i g u r e s , f o r example, do not p r o v i d e guidance as to which h e a l t h programs should be funded. U t i l i z a t i o n data, on the o t h e r hand, can develop s p e c i f i c program r e l a t e d data which, though perhaps q u e s t i o n a b l e as to v a l i d i t y , are p r a c t i c a l and e a s i l y understood. Indeed, due to these prag-matic advantages, u t i l i z a t i o n f i g u r e s have been used s u c c e s s -f u l l y by a number of h e a l t h program a d m i n i s t r a t o r s f o r e i t h e r expanding e x i s t i n g programs or adding new programs. c) I d e a l Resource/Population R a t i o s A t the p r e s e n t time, s e v e r a l d i f f e r e n t p a r t s of the h e a l t h care system u t i l i z e s p e c i f i c r a t i o s f o r p l a n n i n g resource de-velopment. For i n s t a n c e , H o s p i t a l Programs uses 4.25 beds per 1,000 p o p u l a t i o n as a t a r g e t f o r acute bed p l a n n i n g . The Long Term Care Program s p e c i f i e s the r a t i o of f a c i l i t y beds per popu-l a t i o n over 65, 75 and 85 years of age r e s p e c t i v e l y . The problem w i t h these types of r a t i o s i s t h a t they have been developed i n -- 6 4 -dependently o f one another; thus, the system as a whole i s not r a t i o n a l . A l o g i c a l e x t e n s i o n of these piecemeal approaches would be to c o n s i d e r the h e a l t h care system i n i t s e n t i r e t y , and to develop a p p r o p r i a t e r a t i o s f o r each major resource i n the r e g i o n s . T h i s would be a t e c h n i c a l p lanner's dream come t r u e . I t would p r o v i d e an e x c e l l e n t o p p o r t u n i t y to experiment with such i n t e r e s t i n g techniques as computer s i m u l a t i o n , and c o n s i d e r a b l e time, e n e r g i e s , and money c o u l d be devoted to f i n e t u n i n g t h i s type of formula. In the f i n a l a n a l y s i s , any such formula would l i k e l y be h i g h l y complex, y e t a r b i t r a r y . As h e a l t h care needs are r e l a t i v e r a t h e r than a b s o l u t e , there c o u l d never be a " c o r r e c t " method of a r r i v i n g a t these numbers. N e v e r t h e l e s s , such q u a n t i -f i a b l e data have an aura of l e g i t i m a c y , and thus can be defended. d) S o c i a l I n d i c a t o r s Drawing on the c o r r e l a t i o n between h e a l t h s t a t u s and demo-g r a p h i c c h a r a c t e r i s t i c s , those who advocate the s o c i a l i n d i c a t o r s approach to resource a l l o c a t i o n (Warheit, Buhl,..and B e l l , 19 79) do so on the b a s i s t h a t such s o c i a l , economic and/or demographic data as GNP per person or unemployment r a t e s are s u f f i c i e n t l y powerful proxy measures of h e a l t h need. The s o c i a l i n d i c a t o r s approach has the advantage of r e l a t i v e -l y good data a v a i l a b i l i t y , f o r many of these s t a t i s t i c s can be ob t a i n e d from the census. T h e r e f o r e , t h i s method of a l l o c a t i o n - 65 -would not be exceedingly expensive to implement, and could be developed i n a comparatively short period of time. The greatest problem with s o c i a l indicators, however, i s that they are not universally accepted by those i n the health care system. The dominant paradigm i n health care remains that of the medical model, which places a greater emphasis on the external c h a r a c t e r i s t i c s of the disease process rather than on the s o c i a l c h a r a c t e r i s t i c s of the i n d i v i d u a l with the health problem. Therefore, while the s o c i a l i n d i c a t o r method might have some empirical v a l i d i t y , i t i s not l i k e l y to be accepted by the medical profession, nor by the public i n general. e) Epidemiological Indices The foregoing approaches to resource a l l o c a t i o n have used population-based s t a t i s t i c s and, as such, have been grouped under the general heading of epidemiological models. "True" epidemio-l o g i c a l approaches, however, u t i l i z e s t a t i s t i c s concerning the d i s t r i b u t i o n of general health status, functional l i m i t a t i o n , disease, or death. These various types of measures warrant i n d i v i d u a l consideration as regards t h e i r a p p l i c a b i l i t y to resource a l l o c a t i o n i n a regional structure. i) Mortality Comparing regions on t h e i r rates of mortality i s perhaps the most commonly used epidemiological indicator. To be meaning-- 66 -f u l , regions should not be compared on th e i r crude death rates, for these figures are largely dependent on the age d i s t r i b u t i o n of the population — the greater the proportion of older people, the higher the crude death rate. For this reason, such figures need to be standardized i n some fashion. This can be accomplish-ed by ca l c u l a t i n g each region's standardized mortality rate, age-s p e c i f i c mortality rate, preventable years of l i f e l o s t (PYLL), l i f e expectancy (predicted m o r t a l i t y ) , proportional mortality (Swaroop and Uemura, 1957), or unnecessary deaths (Guralnick and Jackson, 1967). The main advantages to using mortality figures are the a v a i l a b i l i t y of data and the unambiguousness of the condition. V i t a l S t a t i s t i c s D i v i s i o n registers v i r t u a l l y a l l deaths i n the province, and the region i n which the deceased resided can be readily derived from such records. The disadvantages of using mortality figures, however, are considerable. I t i s generally agreed that while mortality figures provided meaningful measures of health status when large proportions of the population were devastated by infect i o u s diseases ( p a r t i c u l a r l y those i n the early years of l i f e ) , they are less appropriate i n current times where our chief health problems are chronic i l l n e s s e s i n l a t e r l i f e . Assessing quantity of l i f e i s i n s u f f i c i e n t ; q uality of l i f e i s also important. Another shortcoming of m o r t a l i t y f i g u r e s i s the v a l i d -i t y of c l i n i c a l o p i n i o n concerning cause of death. In c e r t a i n i n s t a n c e s (e.g., c a l c u l a t i n g unnecessary de a t h s ) , i t i s e s p e c i a l l y important t h a t the cause of death be a s c e r t a i n e d with some degree of accuracy. Yet, i t i s apparent t h a t p r a c t i t i o n e r s gene ally, .do not concern themselves with p r e c i s i o n i n t h i s area, p a r t i c u l a r l y when i t concerns the e l d e r l y p a t i e n t (Grimes and L i t t g e , 19 70) . Furthermore, i t i s d i f f i c u l t to know which of the v a r i o u s m o r t a l i t y i n d i c e s would be the most a p p r o p r i a t e f o r the purpose of r e g i o n a l resource a l l o c a t i o n . I t i s l i k e l y t h a t d i f f e r e n t i n d i c e s w i l l l e a d to d i f f e r e n t a l l o c a t i o n r e s u l t s . For example, i f c e r t a i n t r a c e r c o n d i t i o n s are used (e.g., n e o n a t a l and i n f a n t death), c o n s i d e r a b l e d i f f e r e n c e s among regions would be dete c t e d (Tonkin, 1979). I f more g e n e r a l measures are used (e.g., s t a n d a r d i z e d m o r t a l i t y rates) r e g i o n s might w e l l appear more s i m i l a r to one another. Notwithstanding these d i f f i c u l t i e s , i f i t i s g e n e r a l l y found t h a t c u r r e n t a l l o c a t i o n s to the regions bear l i t t l e r e -l a t i o n to m o r t a l i t y r a t e s (however measured) — or i f there i s 19 a r e l a t i o n s h i p t h a t i t i s i n v e r s e r a t h e r than d i r e c t — then Such f i n d i n g s are w i t h i n the realm of p r o b a b i l i t y , and were r e p o r t e d i n the U.K. i n 1974 (Noyce, e t a l ) . - 68 -the use of m o r t a l i t y data would be a s u f f i c i e n t l y powerful means of r e d i r e c t i n g h e a l t h r e s o u r c e s . While t h i s method may be f a r from p e r f e c t , i t may be a good p o i n t from which to begin f u r t h e r refinement of methods. i i ) M o r b i d i t y Measuring the r a t e of i l l n e s s i n a r e g i o n ' s p o p u l a t i o n can be done by means of three data sources, or some combination t h e r e o f : p r o f e s s i o n a l o p i n i o n and/or r e c o r d s , i n d i v i d u a l s e l f -r e p o r t , and mass s c r e e n i n g . Each of these data sources r e f l e c t s a d i f f e r e n c e i n the method of o b t a i n i n g i n f o r m a t i o n , as w e l l as i n i t s u n d e r l y i n g d e f i n i t i o n of i l l n e s s . Furthermore, each would r e s u l t i n a d i f f e r e n t number and type of cases d i s c o v e r e d and e v e n t u a l l y u t i l i z i n g h e a l t h care s e r v i c e s (see F i g u r e 4). P r o f e s s i o n a l Opinion and/or Records: T h i s category of data im-p l i c i t l y d e f i n e s i l l n e s s as those episodes or c o n d i t i o n s which come to the a t t e n t i o n of the h e a l t h care system. In B r i t i s h Columbia, i n f o r m a t i o n i s a v a i l a b l e concerning symptoms and diagnoses from such sources as c l i n i c a l r e c o r d s , the H e a l t h S u r v e i l l a n c e R e g i s t r y , the M e d i c a l S e r v i c e s Commission, and h o s p i t a l d i scharge summaries. T h i s i n f o r m a t i o n i s more d i f f i c u l t to access than m o r t a l i t y data, and i s not u s u a l l y c o l l e c t e d i n a manner which lends i t s e l f to e p i d e m i o l o g i c a l a n a l y s i s of a 20 p o p u l a t i o n . However, assuming f o r the moment t h a t the data Some of these data (e.g., c l i n i c a l records i n p h y s i c i a n s ' o f f i c e s ) are not g e n e r a l l y c o l l e c t e d by government a t a l l . - 69 -F i g u r e 4: H e a l t h P r o b l e m s : D e f i n i t i o n s a n d I m p a c t s IN COMMUNITY IN HEALTH CARE SYSTEM P r o f e s s i o n a l d e f i n i t i o n i n s y s t e m = u t i l i z a t i o n o f h e a l t h s e r v i c e s n o t i n s y s t e m A l l h e a l t h p r o b l e m s I n d i v i d u a l s e l f -r e p o r t d e f i n i t i o n i n s y s t e m n o t i n s y s t e m u t i l i z a t i o n o f h e a l t h s e r v i c e s Mass s c r e e n i n g d e f i n i t i o n i n s y s t e m n o t i n s y s t e m u t i l i z a t i o n o f h e a l t h s e r v i c e s - 70 -could be obtained, there remains some doubt as to the r e l i a b i l i t y and v a l i d i t y of such information. Hospital discharge summaries are not e n t i r e l y accurate (Corn, 19 80), the Health Surveillance Registry makes no pretension to completeness (Colls, 19 78), and medical plan b i l l i n g information i s imprecise and d i f f e r s con-siderably from medical records (Studney and Hakstian, 1981). Inter-rater r e l i a b i l i t y of diagnostic information has also been shown to be problematic. Physicians disagree among them-selves as to diagnostic assessment of patients (Koran, 1975). Also, differences have been found between physicians' perceptions and i n d i v i d u a l s e l f - r e p o r t s , e s p e c i a l l y as regards symptoms and 21 d i s a b i l i t i e s (Meltzer and Hochstim, 1970) As morbidity data are based on u t i l i z a t i o n figures they present much the same types of d i f f i c u l t i e s as those c i t e d under u t i l i z a t i o n s t a t i s t i c s . They are incomplete i n some ways, i n that they include only those individuals who have had contact with the medical i n s t i t u t i o n s and medical p r a c t i t i o n e r s . Areas with few medical resources, however, may underuse care. Similar-l y , i f an area has an oversupply of resources, the data w i l l suggest a high rate of morbidity. Obviously, morbidity data are not independent of the a v a i l a b i l i t y of health care resources. This i s not the place to enter into a debate as to which of the two types of data i s more v a l i d . The f a c t that they d i f f e r i s s u f f i c i e n t to pose conceptual problems. - 71 -Another problem regarding morbidity figures i s that they are not generally reported i n a manner which indicates the prevalence or severity of problems. Data from current records report the number of contacts with the health care system and the cause for these contacts i s usually categorized according to the Internation-a l C l a s s i f i c a t i o n of Diseases. While there have been some attempts made to refine e x i s t i n g diagnostic c l a s s i f i c a t i o n (e.g., the "staging method" developed by Gonella and Goran, 1975), these have not been adopted by p r a c t i t i o n e r s . Thus, i t i s extremely d i f f i c u l t to translate the various s t a t i s t i c s into a common de-nominator for the purpose of o v e r a l l comparison between regions. In addition to the use of c l i n i c a l opinion and records as described above, other methods of obtaining professional input for determining need have been advocated. A panel of experts, for example, can be requested to provide t h e i r opinion as to the r e l a t i v e needs of each region (Warheit, B u l l and B e l l , 19 78). S i m i l a r l y , Kilimo (19 79) has suggested that physicians can extra-polate from e x i s t i n g u t i l i z a t i o n figures i n order to guestimate true need. Nevertheless, as the foundation for these methods rests more upon opinion than on empiricism, t h e i r v a l i d i t y can hardly be taken seriously i n a r a t i o n a l planning model. Individual Self-report: The concept of i l l n e s s as perceived by the i n d i v i d u a l , not the professional, forms the foundation of the i n d i v i d u a l s e l f - r e p o r t method. I t emphasizes the subjective, personal aspects of i l l n e s s . - 72 -Individual self-reports could be obtained by interviewing or mailing questionnaires to a sample of each region's population. In addition to providing some of the information available from professional records (e.g., episodes of h o s p i t a l i z a t i o n or v i s i t s to a physician), t h i s method can also provide more general data concerning chronic i l l n e s s , d i s a b i l i t y , reduced functioning, or general feelings of well-being. Examples of instruments which have been used to measure i n d i v i d u a l self-reports of health status include the Cornell Medical Index, the Canada Health Survey, and the Kaiser-Permanente Patient Inventory Questionnaire. Data derived from s e l f - r e p o r t appear to be less dependent on the supply of services than are those derived from professional opinion or records. As well, they appear to be more comprehensive, p a r t i c u l a r l y as regards mental or psychological health. One of the major problems c i t e d with reference to i n d i v i d u a l s e l f - r e p o r t i n g i s the poor r e l i a b i l i t y of such data. I t has been found, for example, that individuals are not consistent i n the information they report concerning t h e i r health (Collen, et a l . , 1969). Also, as noted previously, professional opinion and s e l f - r e p o r t are not always i n agreement, and neither i s an i n d i c a t i o n of the true need for health care. From the p r a c t i c a l viewpoint, the most f r u s t r a t i n g character-i s t i c of i n d i v i d u a l self-reports i s cost. I t i s noteworthy that - 73 -the Canada Health Survey was disbanded before completion due to budgetary r e s t r i c t i o n s , but not before some s i x m i l l i o n d o l l a r s i n costs has been incurred. While the B.C. Health Ministry has never conducted a p r o v i n c i a l health survey, i t has been con-servatively estimated that approximately one m i l l i o n dollars 22 would be required for such an undertaking . In times of eco-, nomic recession, such surveys are generally perceived as f r i v o -lous use of scarce funds. The irony of course i s that as re-sources become increasingly scarce, the greater the need for data on which to make informed decisions regarding a l l o c a t i o n s . Mass Screening; I l l n e s s , i n the mass screening approach, i s de-fined as abnormalities or pathology which are measured by tests administered to large numbers of people (often a population seen as being at r i s k for a p a r t i c u l a r health problem). These tests are frequently, but not always, aided by the use of technology. Some contend that mass screening i s the most objective and comprehensive method of evaluating health status. I t i s viewed as e s p e c i a l l y important i n detecting morbidity i n i t s p r e c l i n i c a l stages and as such i s promoted by many who advocate prevention i n health care. To be t r u l y comprehensive, however, screening would need to be multiphasic. The costs of such a program would be enormous, and i t would appear that i t s proponents must rel y Written Communication, J. L. Fry, Deputy Minister, Health and Welfare Canada, December 30, 19 81. - 74 -more on f a i t h i n quality of results than i n j u s t i f y i n g the costs involved (Campbell, 19 71). I t i s clear, however, that one cannot trust the v a l i d i t y of mass screening completely. A l l tests are subject to some error, be they fal s e positives or (even more of a concern) fal s e nega-ti v e s . Therefore, while mass screening might provide more com-plete and accurate data than either professional opinion or i n -div i d u a l s e l f - r e p o r t s , i t i s not a perfect method. There are further problems with the mass screening approach. E t h i c a l concerns can be raised regarding the d e s i r a b i l i t y of i n -creasing the anxiety of individuals who may be assessed as having pathology but who experience no symptoms. Even more problematic are those cases where screening leads to the detection of a previously undetected problem for which there i s no cure or treatment. Physician acceptance and patient compliance would also be l i k e l y to present problems. While some may embrace the oppor-tunity for screening, others may be concerned about pote n t i a l negative e f f e c t s , or may simply f e e l that i t i s not s u f f i c i e n t l y important to u t i l i z e . Therefore, as a means of measuring health status of regions, the mass screening approach seems more f a n t a s t i c than feasible at the present time. - 75 -i i i ) Functional Limitation The functional approach to health status measurement does not conceptualize health i n terms of morbidity or of problems with the body's component parts (e.g., heart or l i v e r ) . Instead, i t emphasizes behavioural factors, and assesses the i n d i v i d u a l from a h o l i s t i c perspective. The Index of A c t i v i t i e s of Daily L i v i n g (Katz, 1963), the Sickness Impact P r o f i l e (Gilson, et a l , 1975), the index developed by Fanshel and Bush (19 73), and the Functional Limi-tation Scale are examples of the functional approach. These measures can be obtained from either c l i n i c a l opinion or s e l f - r e p o r t and thus present many of the advantages and disadvantages l i s t e d i n section i i above. iv) Combination Indices Attempts have been made to develop a combined index or summary indicator of mortality, morbidity, d i s a b i l i t y , and functional status. The quest for a health status equivalent of the economists' GNP has sparked the i n t e r e s t and imagination of numerous in d i v i d u a l s . There are a variety of combination indices including the G, K, and Q indexes (Chen, 1976), Credoc (in Levy, 1973), the H Index (Chiang, 1965), the Gross National Health Product (Chen, 1979), the Gross National Health D e f i c i t (Linder, 1966), Sull i v a n (1971), and Kisch, et a l (1969). I t i s h e l p f u l , for i l l u s t r a t i v e purposes, to look at one of these indices i n greater d e t a i l : - 76 -Su l l i v a n (19 71) proposed a single index of mortality and morbidity that represents a valuable s o c i a l i n d i -cation . . . The index i s based on the concept of "expectation of l i f e free of d i s a b i l i t y " and i s com-puted by subtracting from the l i f e expectancy the probable duration of bed d i s a b i l i t y and a b i l i t y to perform a c t i v i t i e s according to cross-sectional data from the [U.S.] National Health Survey. With a con-ventional expectation of l i f e at b i r t h for a l l persons i n the United States i n 1965 of 70.2 years, the approximate expectation of l i f e free of d i s -a b i l i t y was 6 4.9 years (Chen and Bush, i n Mushkin and Dunlop, 1979, pp. 24-25). Most combination indices have considerable appeal i n that they reduce comprehensive data from various sources into a single number which i s simple to communicate, although not necessarily understood by those who might refer to i t . More precise analysis of the assumptions behind these indexes and of the a r b i t r a r y weightings assigned to variables may lead one to have some doubt as to their v a l i d i t y . This, however, i s not unique to health care. Similar problems are evident i n economic indicators, yet th e i r use i s widespread. These types of measures serve the purpose of providing a simple and concise measure which can be used for general comparative purposes. The state of the art i n health care planning, however, i s such that we are probably not yet ready for such a r a t i o n a l approach to resource a l l o c a t i o n . Most of the combination indices require data which are not readily available i n the B.C. system. Therefore, one can conclude that these types of measures hold some promise for the future, but are not p r a c t i c a l at this point i n time. - 77 -v) I n d i c a t o r s o f R i s k The H e a l t h H a z a r d A p p r a i s a l (HHA) i s p e r h a p s t h e most w e l l - k n o w n o f t h e r i s k measurement t o o l s . D e v e l o p e d by R o b b i n s and H a l l ( 1 9 7 0 ) , t h i s s e l f - a d m i n i s t e r e d q u e s t i o n n a i r e o b t a i n s i n f o r m a t i o n c o n c e r n i n g t h e i n d i v i d u a l ' s l i f e s t y l e and h i s t o r y . The HHA t h e n p r e d i c t s t h e p r o b a b i l i t y o f d e a t h f r o m e a c h o f t h e t w e l v e m a i n c a u s e s o f d e a t h f o r h i s / h e r age and s e x g r o u p . As w e l l , i t e s t i m a t e s t h e amount o f p e r s o n a l r i s k r e d u c t i o n w h i c h w o u l d be p o s s i b l e i f m o d i f i c a t i o n s were made i n l i f e - s t y l e . U s i n g t h e HHA f o r t h e p u r p o s e o f c l i n i c a l a s s e s s m e n t i s i n i t s e l f c o n t r o v e r s i a l . A p p l y i n g i t t o t h e a r e a o f r e s o u r c e a l l o c a t i o n r a i s e s e v e n g r e a t e r c o n c e r n s . F i r s t o f a l l , one c o u l d a r g u e t h a t r e s o u r c e a l l o c a t i o n s h o u l d a d d r e s s c u r r e n t r a t h e r t h a n f u t u r e n e e d s . Thus, u n l e s s t h e p o p u l a t i o n o f a r e g i o n i s p r e s e n t l y e x p e r i e n c i n g h e a l t h p r o b l e m s , r e s o u r c e s s h o u l d n o t be i n c r e a s e d . N e v e r t h e l e s s , a c a s e c o u l d be made f o r r e s o u r c e a l l o c a t i o n on t h e b a s i s o f p r e -v e n t i o n . U n f o r t u n a t e l y , t h e h e a l t h c a r e s y s t e m has d e m o n s t r a t e d l i m i t e d s u c c e s s i n a l t e r i n g t h e l i f e - s t y l e f a c t o r s most i m p o r t a n t i n t h e HHA ( e . g . , o v e r - e a t i n g and p o o r n u t r i t i o n , s m oking, ex-c e s s i v e u s e o f a l c o h o l and l a c k o f e x e r c i s e ) . Thus t h e v a l i d i t y o f u s i n g t h e HHA as a method o f r e s o u r c e a l l o c a t i o n i s q u e s t i o n -a b l e i n d e e d . - 78 -7Another problem c o n c e r n i n g the use o f the HHA i s the a c c u r a c y o f r e s p o n s e s . Because o f the s e n s i t i v i t y o f the i n f o r -mation..in the q u e s t i o n n a i r e , i t i s q u i t e p o s s i b l e t h a t many r e -spondents might r e f u s e t o answer the q u e s t i o n s o r t o p r o v i d e s o c i a l l y a c c e p t a b l e r a t h e r than a c c u r a t e r e s p o n s e s . F u r t h e r m o r e , the HHA i s n o t p a r t i c u l a r l y o r i e n t e d t o d e t e c t i n g o c c u p a t i o n a l o r c e r t a i n r e c r e a t i o n a l h a z a r d s , nor i s i t s v a l i d i t y g e n e r a l i z a b l e t o non-Caucasian p o p u l a t i o n s ( S p a s o f f and McDowell, 19 81) . L i k e any o t h e r i n d i v i d u a l s e l f - r e p o r t s u r v e y , the c o s t o f the HHA would be enormous, and thus l i k e l y t o be seen as p r o -h i b i t i v e by government. f) " E p i d e m i o l o g i c a l P l u s " Models V a r i a t i o n s and e m b e l l i s h m e n t s on the e p i d e m i o l o g i c a l models have been d e v e l o p e d which seek t o enhance v a l i d i t y and/or p r a c t i -c a l i t y by combining e p i d e m i o l o g i c a l d a t a w i t h o t h e r p e r t i n e n t i n f o r m a t i o n . The R o l e I d e n t i f i e r R a t i n g Method proposed i n Phase I I o f the B.C. H o s p i t a l R o l e Study i s one such example. I n a d d i t i o n to c o n s i d e r i n g e p i d e m i o l o g i c a l o r q u a s i - e p i d e m i o l o g i c a l i n d i c e s ( e . g . , p o p u l a t i o n , age, e t h n i c i t y , crude b i r t h and f e r t i l i t y r a t e s ) , i t a l s o t a k e s i n t o a c c o u n t u t i l i z a t i o n p a t t e r n s (e.g., trauma r i s k and h o s p i t a l i z a t i o n r i s k i n age c o h o r t s ) , geo-g r a p h i c a l c o n d i t i o n s , h e a l t h manpower, p o p u l a t i o n s c a t t e r , and draw i n p o p u l a t i o n f l o w . - 79 -S i m i l a r l y , the U n i t e d Kingdom a l l o c a t e s most of i t s h e a l t h resources by working towards t a r g e t s developed by the Resource A l l o c a t i o n Working Party (RAWP). These t a r g e t s are composed of i n d i v i d u a l formulae i n the f o l l o w i n g areas: n o n - p s y c h i a t r i c i n -p a t i e n t care, day and o u t p a t i e n t s e r v i c e s , community s e r v i c e s , ambulance s e r v i c e s , a d m i n i s t r a t i o n , mental i l l n e s s h o s p i t a l i n -p a t i e n t s e r v i c e s , and mental handicap h o s p i t a l i n - p a t i e n t care. Community s e r v i c e t a r g e t s , to c i t e one example, are based on the p o p u l a t i o n of each r e g i o n , weighted to r e f l e c t the n a t i o n a l p a t t e r n of u t i l i z a t i o n of community s e r v i c e s by age, a d j u s t e d f o r the s t a n d a r d i z e d m o r t a l i t y r a t i o s f o r . e a c h r e g i o n . As w e l l , p o p u l a t i o n f i g u r e s are a d j u s t e d to r e c o g n i z e the e x t e n t of any cross-boundary flow of p a t i e n t s , a p a r t i c u l a r l y important con-s i d e r a t i o n f o r s p e c i a l i z e d or t e r t i a r y c a r e . Where data are a v a i l a b l e , the RAWP a l s o recommended t h a t weighting f u r t h e r r e -f l e c t sex u t i l i z a t i o n p a t t e r n s and c o s t weighting f o r v a r i o u s c o n d i t i o n s (Department of Health and S o c i a l S e c u r i t y , 1976). The t a r g e t s developed by these formulae are then compared wit h c u r r e n t a l l o c a t i o n l e v e l s , and w i t h each s u c c e s s i v e year r e g i o n s are brought c l o s e r to t h e i r t a r g e t s . The experience of the U.K. i s of some i n t e r e s t . As might be expected, the regions which s u f f e r e d the g r e a t e s t r e d u c t i o n i n a l l o c a t i o n s were l a r g e urban centres where the p o p u l a t i o n i s d e c l i n i n g (Royal Commission on the N a t i o n a l Health S e r v i c e , 1978). London, and i t s t e a c h i n g 23 h o s p i t a l s i n p a r t i c u l a r , has l o s t a c o n s i d e r a b l e amount of ..its T h i s o c c u r r e d d e s p i t e an i n c r e a s e d allowance p r o v i d e d f o r t e a c h i n g h o s p i t a l s -- s e r v i c e increments f o r t e a c h i n g (SIFTS). - 80 -r e l a t i v e advantage i n the past few years. I t remains to be seen i f the B r i t i s h can continue this l e v e l i n g between regions over the longer range. 3. Management Models Management can be defined as "the process of planning, organizing, leading, and c o n t r o l l i n g the e f f o r t s of organization-a l members and the use of other organizational resources i n order to achieve stated organizational objectives" (Stoner, 1978, p. 7). Resource a l l o c a t i o n plays a key role i n a l l of these aspects of management; however, i t i s es p e c i a l l y h e l p f u l to highlight i t s function i n l i n k i n g s t r a t e g i c planning to implementation (see Figure 5). Resource a l l o c a t i o n provides the means whereby a plan can be r e a l i z e d . The value bases of management models, as noted e a r l i e r , are e f f i c i e n c y and effectiveness, i . e . , achieving program goals with the lowest possible expenditure. While these are important c h a r a c t e r i s t i c s of any health care system, i t should be emphasized that management models, by themselves, do not provide a framework which ensures that goals w i l l be formulated appropriately. On what foundation should goals be based — h i s t o r i c a l precedents, epidemiological data, p o l i t i c a l expedience? The management model begs this sort of question. Notwithstanding this fundamental problem, the management model has become the dominant paradigm at senior levels i n the - 81 -Figure 5: The Health Planning Cycle Environment Values and c o n s t r a i n t s A S i t u a t i o n a n a l y s i s Interactions between] the system and i t s environment. Evaluation Continuous evaluation of stages of implementation and of outcomes i n r e l a t i o n to objectives! 7K Implementation Execution of plan and c o l l e c t i o n of monitoring data Objectives P o l i c i e s , goals and o b j e c t i v e s . P r i o r i t y decisions 1 S t r a t e g i c Planning Programmes, l i k e l y outcomes, f e a s i b i l i t i e s , cost. Operational choice. Operational Plan A l l o c a t i o n of  resources and au t h o r i t y Timetabling. Design of monitoring systems. Environment E f f e c t s upon c l i e n t s and upon adjacent (e.g. housing, education) systems Adapted from E.G. Knox. Epidemiology i n Health Care Planning. Oxford U n i v e r s i t y Press, 1979, p. 13. - 82 -B.C. Health Ministry. I t i s therefore mandatory that any review of resource a l l o c a t i o n should address i t s e l f i n some d e t a i l to this approach. Management models of resource a l l o c a t i o n can be subdivided int o three main approaches: team management or management by consensus, management by objectives, and planned program budget-ing systems/zero-based budgeting. a) Management by Consensus Management by consensus, or team management, was an approach advocated by Robert Blake and his associates, and was popular i n the late 1960s and early 19 70s. The management by consensus ap-proach emphasizes the need for organizational members to set goals and to allocate resources cooperatively as a group. This repre-sents a considerable departure from the t r a d i t i o n a l h i e r a r c h i c a l decision-making process which i s c h a r a c t e r i s t i c of most bu--reaucracies. When management by consensus i s successful, one can expect both a high qua l i t y of decision and a high degree of acceptance and commitment on the part of organizational members. The goal of [team] management, then, i s to unleash p a r t i c i p a t i o n and to ex p l o i t involvement i n the planning of work so that a l l who shoulder concern for production can f i n d the opportunity to think through and to develop a basis of e f f o r t which r e f l e c t s the best available thinking. In this way, a l l team members f e e l responsible for getting the job done i n the best possible manner (Blake and Mouton, 1964, p. 147). - 83 -A consensual approach does not assume that a l l parties w i l l reach spontaneous and harmonious agreement. Instead, consider-able c o n f l i c t , bargaining and compromise would be the l i k e l y methods of reaching an accord. A c r i t i c a l feature of management by consensus i s not so much the amount of agreement or disagreement i n any organization, but rather, the levels at which agreement can be obtained (Gelfand and Walker, 1980). I t i s necessary, as a minimum, that i n d i -viduals at the senior levels of the organization agree upon major p r i o r i t i e s i n resource a l l o c a t i o n . Once this basic agreement i s achieved, the organization as a whole has a high l i k e l i h o o d of obtaining general cohesiveness of purpose. Management by consensus i s not without precedent at senior government levels i n B r i t i s h Columbia. The Ministry of Human Resources, for example, uses this approach with i t s regional managers i n planning t h e i r manpower allocations throughout the province. I t i s viewed by Human Resources as an e f f e c t i v e means of overcoming c o n f l i c t s between managers who must compete for 24 scarce resources Application of this method i n the Health Ministry appears more d i f f i c u l t than i n many other organizations. The health care Verbal Communication, E. L. Northup, Assistant Deputy Minister, Human Resources, June 24, 19 81. - 84 -f i e l d i s extremely d i f f u s e . One must f i n d a strategy which would be workable not only with Ministry s t a f f , but also with the medical profession and the major QUANGOS (quasi-autonomous non-govern-mental organizations). This i s a mammoth task. One might well be able to obtain the involvement of the senior Health Ministry s t a f f (e.g., Assistant Deputy Ministers and Regional Managers) and representatives of other major groups (e.g., B.C. Medical Association and the B.C. Health Association), but this i n no way would guarantee agreement with other parts of the system. Any individuals or groups who are omitted from this process are l i k e -l y to question the v a l i d i t y of such decisions. I t i s quite con-ceivable that resources would be allocated by means of horse-trading, with any p a r t i c u l a r decision being a product of previous c o a l i t i o n s and present power arrangements, i . e . , who owes whom a favour. Management by consensus assumes that those involved i n decision-making can tolerate a certain degree of ambiguity and c o n f l i c t . Of p a r t i c u l a r importance are the interpersonal and group s k i l l s of the person who coordinates this process. Other-wise, consensus management can regress to chaotic management. Should t h i s combination of attributes not be available within the Health Ministry, the use of an external f a c i l i t a t o r might be considered. Another d i f f i c u l t y inherent i n the consensual.method i s the limited power of central authority. If each i n d i v i d u a l i n the - 85 -decision-making groups i s considered equal, senior Health Minis-try s t a f f may not be able to retain s u f f i c i e n t control over re-sources. While this may be precisely the point i f one wishes to implement team management, i t i s not l i k e l y to be regarded by Treasury Board as a sound method of f i s c a l control. One must also acknowledge that management by consensus i s a time consuming exercise. Considerable energies must be devoted not only to substantive problem-solving, but also to group pro-cess. Thus, i f a quick decision i s required, i t i s d i f f i c u l t to obtain by such a method. In fact, variations of this approach (e.g., committees and task forces) have been used or perhaps abused by government to such an extent that many perceive con-sensus management as a s t a l l i n g technique. Therefore, even i f one might assume that the motivation of the Health Ministry was well-intentioned, i t may not be regarded by others i n a p o s i t i v e manner. b) Management by Objectives Since Peter Drucker coined the term "management by ob-_ 25 j e c t i v e s " (MBO) i n 1954, a large number of organizations have implemented -- or have endeavoured to implement -- this ap-proach. The key feature of an MBO system i s the development of Variations of MBO have been referred to by d i f f e r e n t names. Examples include management by results and goals management. Despite these differences i n terminology, they a l l describe e s s e n t i a l l y i d e n t i c a l systems. - 86 -a c l e a r l y defined set of objectives for each manager, which i s i n turn well integrated with the rest of the organization. Performance of managers and thence the entire organization i s measured i n r e l a t i o n to these goals. The process of developing these goals i s of c r i t i c a l s i g n i f i c a n c e . Each manager should have major r e s p o n s i b i l i t y for developing goals pertinent to his/her area. This results i n the manager being more highly motivated to meet those goals than i s the case where goals are determined by more senior s t a f f . As well, because the success-f u l development of an MBO system necessitates dialogue between managers and subordinates, communication within the organization can be greatly enhanced. MBO p r i n c i p l e s have been established i n a number of organ-i z a t i o n s , primarily for the purpose of performance appraisal of managers. I t can also be used, however, as a means of budgeting resources and evaluating program r e s u l t s . Applying MBO p r i n c i p l e s i n Health would involve the Ministry and the major parties i n the health care system j o i n t l y defining i t s mission or purpose, i t s goals and objectives, and ordering 2 6 these i n some p r i o r i t y . Regions, i n turn, would be rewarded on the basis of program effectiveness ( i . e . , the extent to which they meet program goals) and e f f i c i e n c y ( i . e . , the largest impact with the fewest resources). Thus, resource a l l o c a t i o n would be t i e d to goals and to performance. Much of this process has already been completed by the Health Ministry. - 87 -MBO has been widely used i n business organizations. Schuster and K i n d a l l , for example, reported that approximately 50 per cent of the companies surveyed i n 19 74 indicated that they u t i l i z e d some form of MBO. The health care f i e l d , however, has been some-what slower in'applying MBO p r i n c i p l e s than have other areas. This i n part i s due to the lack of c l e a r l y defined products i n health care. I t i s easy enough for a manufacturing company to aim at producing more widgets at a cheaper price, but t r a n s l a t i n g this type of quantified goal statement into health care poses considerably greater challenges. As well, this production orien-tation d i f f e r s ..greatly from the c l i n i c a l o rientation character-i s t i c of most health care administrators. This does not mean, however, that medical/professional s t a f f w i l l not support an ob-jectives oriented system. When MBO i s shown to be a system for improving health care services and for increasing output from scarce resources, profession-als react p o s i t i v e l y (Laverty and Laverty, 19 76, p. 26) . This slow acceptance of MBO i n health care, may i n the long run, be f o r t u i t o u s . MBO was implemented with a f a d - l i k e enthusi-asm i n the past decade. Many expected i t to be a panacea to a l l organizational problems, and predictably, were disappointed when such miracles did not materialize. Today, expectations of MBO are c l e a r l y more moderate and r e a l i s t i c — and perhaps achievable. One i n t e r e s t i n g application of MBO i n health care has been evolving i n the Vancouver Health Department over the past several - 88 -years (Weinstein, 1980 and 1981). Outcome-Oriented Management (or OOM) emphasizes the need for clear and agreed upon program outcomes or objectives. I t i s viewed as a powerful tool not only for planning, budgeting, and evaluation, but for organizational and personal development as well. I t i s also acknowledged as a gradual developmental process. Setting objectives, planning programs, and evaluating impacts are time consuming a c t i v i t i e s i n any environment, and p a r t i c u l a r l y so i n a health delivery set-ting where c l i n i c i a n s are accustomed to thinking i n terms of services or a c t i v i t i e s , rather than outcomes. Applying MBO p r i n c i p l e s to budget allocations has only begun i n a modest fashion i n the Vancouver Health Department. This i s based on the premise that the MBO philosophy must f i r s t be successfully understood and implemented i n less controversial areas. Then, once i t s basic p r i n c i p l e s are accepted, Outcome-Oriented Manage-ment can be applied to more contentious issues such as resource a l l o c a t i o n . At the present time, the Vancouver Health Depart-ment has hired an external consulting group to a s s i s t i n the 27 evaluation of OOM This incremental approach to MBO implementation may overcome some of the problems which have plagued other organizations. I t i s worth noting that MBO though widely practiced i n many organ-Verbal and Written Communication, Malcolm Weinstein, Director of Health Planning, Vancouver Health Department, October 27, 19 81, and February 23, 19 82. - 89 -iz a t i o n s , has often produced disappointing r e s u l t s . Schuster and K i n d a l l estimated that only about ten per cent of those companies u t i l i z i n g MBO had done so successfully. These i n v e s t i -gators, as well as others (Weitzul, 19 81; Carrol and Tosi, 1973), attribute this poor performance to f a i l u r e on the part of senior managers to understand, implement, and accept the fundamental philosophical foundations of MBO. Clearly, MBO i s doomed to f a i l u r e at the outset when top management wants to apply i t as a s u p e r f i c i a l "personnel program" and i s not r e a l l y committed to the theory Y assumptions about human nature, or when management has not created and, i n truth, does not wish to create the kind of demanding but open results-oriented environment i n which management by objectives can be of value (Schuster and K i n d a l l , 1974, pp. 10-11). In attempting to implement MBO p r i n c i p l e s i n the Health Ministry, i t would appear the incremental approach used i n the Vancouver Health Department would be an appropriate example to follow. Thus, a number of years of organizational development would be required before resources would be allocated on the basis of e f f i c i e n c y and effectiveness of goal attainment. MBO might therefore be worth consideration as a long-range strategy, but not for the immediate future. Other problems, however, are not as e a s i l y solved i n con-sidering the application of MBO to resource a l l o c a t i o n i n the Health Ministry. To begin with, measuring outcomes or e f f e c t i v e -ness of programs i s d i f f i c u l t , and frequently does not provide the p o s i t i v e feedback that many c l i n i c i a n s expect. While program - 90 -evaluators a s p i r e to o b t a i n "hard data" i n the sense of q u a n t i -t a t i v e outcome measures of performance, the r e a l i t y i s t h a t we g e n e r a l l y o b t a i n s t a t i s t i c s which merely describe output, perhaps w i t h s u b j e c t i v e commentary added f o r r h e t o r i c a l purposes. Some ( M c A u l i f f e , 19 79) would suggest t h a t measurement of program outcomes i s i n a p p r o p r i a t e , and t h a t process i s the more v a l i d measure of program e f f e c t i v e n e s s . This has e s s e n t i a l l y been the p e r s p e c t i v e taken by most peer reviews of q u a l i t y of h e a l t h care (Brook and Appel, 19 73). Due to the m u l t i p l i c i t y of f a c t o r s a f f e c t i n g c l i e n t outcomes, judgment as to the e f f e c t i v e -ness of h e a l t h care i n t e r v e n t i o n s should be based on the degree to which accepted standards of p r a c t i s e were employed. This l i n e of argument i s w e l l understood by h e a l t h care p r a c t i t i o n e r s . Those w i t h perhaps a more c y n i c a l p e r s p e c t i v e , however, might hear echoes of the r a t h e r poor joke about the s u c c e s s f u l operation which un f o r t u n a t e l y r e s u l t e d i n the p a t i e n t ' s death. Needless to say, measuring e f f e c t i v e n e s s i n h e a l t h care i s not without controversy. Another d i f f i c u l t y i n implementing MBO i s ensuring t h a t goals s e l e c t e d are appropriate. Program goals may w e l l be achieved, but the c l i e n t s may not be b e t t e r o f f as a r e s u l t of t h i s i n t e r -v e n t i o n . Health planners d i s t i n g u i s h between these two concepts by the use of s p e c i f i c terminology. E f f e c t i v e n e s s r e f e r s , r a t h e r narrowly, to the achievement of program goals, w h i l e e f f i c a c y r e f e r s to the degree to which the program does more good than - 91 -harm. One example of this d i s t i n c t i o n i s the a b i l i t y of modern medicine to save the l i v e s of victims of devastating accidents. At f i r s t glance, this appears to be a p o s i t i v e feature of our health care system. Nevertheless, i f the r e s u l t of some of these interventions i s a l i f e t i m e of severe physical l i m i t a t i o n and psychosocial maladjustment, i t i s a moot point as to whether the intervention was a success or a f a i l u r e . Measuring e f f i c i e n c y i s yet another problem inherent i n applying MBO to health care. H i s t o r i c a l l y , human service enter-prises have tended to eschew the goal of e f f i c i e n c y , on the assumption that i t i s a n t i t h e t i c a l to q u a l i t y . Certainly, this has been an expensive attitude. When resources for health care were r e l a t i v e l y more available, perhaps we could afford to think (or feel) this way. Times have changed. There are more programs and service providers competing for health care d o l l a r s than ever before. We are now beginning to appreciate the need to address e f f i c i e n c y ; however, we have yet to develop s u f f i c i e n t l y so-p h i s t i c a t e d information systems which would c l e a r l y i d e n t i f y those programs which operate i n an e f f i c i e n t manner. Deciding upon how e f f i c i e n c y can be rewarded i s another problem associated with applying a management by objectives model to resource a l l o c a t i o n i n the Health Ministry. Should programs or services which demonstrate an a b i l i t y to reduce costs be re-warded by allowing them to retain a certain percentage of t h e i r savings? Would this be perceived as equitable v i s - a - v i s those programs which may have less f a t to trim? Do the perceptions of - 92 -these "trimmer" and perhaps less powerful programs matter? The answers to these questions w i l l be based, not only upon one's commitment to MBO, but upon one's philosophy and values i n gen-e r a l . They are thorny issues indeed. Understandably, the re-sults expected from applying MBO must be perceived as being much greater than these problems; otherwise, the Health Ministry w i l l continue to demur from making such hard choices. Yet another d i f f i c u l t y i n applying MBO to health care i s the dilemma of not funding programs which are neither e f f e c t i v e , e f f i c i e n t , nor e f f i c a c i o u s . If the r e s p o n s i b i l i t y for provision of a service has been s p e c i f i c a l l y mandated to the Health Minis-try, i t may have l i t t l e choice ( i f not l e g a l l y , then p o l i t i c a l -ly) as to whether or not to finance such programs. Programs of dubious value could not be cut o f f from funding; instead, the Ministry would need to look at other options for improving per-formance. The upgrading of managers, either through r e c r u i t -ment or ret r a i n i n g , might be one such approach. However, the pattern of most professionals i s to favour the Lower Mainland, V i c t o r i a , and I n t e r i o r areas. I t may prove d i f f i c u l t to at-t r a c t and r e t a i n high c a l i b r e program managers and s t a f f i n less desirable areas (sometimes referred to facetiously as those areas beyond Hope). In summary then, MBO p r i n c i p l e s applied i n the Health Minis-try for the purpose of resource a l l o c a t i o n would be feasible only i n the longer term. Its emphasis on effectiveness and e f f i c i e n c y - 93 -requires a major reorientation on the part of individuals i n the health care system. In order to achieve t h i s , continued support by senior Ministry s t a f f and by the Health Minister would be required. 2 c) Planned Program Budgeting Systems and Zero-Based Budgeting At the r i s k of over-simplifying, Planned Program Budgeting Systems (PPBS) and Zero-Based Budgeting (ZBB) can be viewed as s p e c i f i c applications of MBO p r i n c i p l e s to resource a l l o c a t i o n . Both budgeting systems assume that a set of objectives has been p r i o r i z e d i n the organization. From these objectives, resources are allocated on the basis of the predicted a b i l i t y of expendi-tures i n designated areas to produce desired r e s u l t s . PPBS and ZBB are discussed i n greater d e t a i l as follows: Five steps i n the PPBS process can be i d e n t i f i e d : 1. Specify and analyze basic objectives i n each major area of a c t i v i t y . 2. Analyze the outcomes of a given program i n l i g h t of the s p e c i f i e d objectives. 3. Measure the t o t a l cost of the program for several years ahead. 4. Analyze the alternative methods or programs which can achieve the stated objectives. 5. Select the combination of alternatives which w i l l r e s u l t i n the most e f f e c t i v e and e f f i c i e n t a t t a i n -ment of organizational goals (Stoner, 1978, p. 607). At this point, the d i s t i n c t i o n between management models and economic models begins to blur. Much of the discussion i n this section w i l l also be relevant to economic models, such as cost-benefit and cost-effectiveness analysis. - 94 -PPBS has i t s roots i n the public sector. I t began i n 1961 in the U.S. Defense Department, and was widely used i n both the United States and B r i t i s h governments; however, by the early 70s, i t s popularity began to wane considerably (Dennison, 1979). While never adopted by the B.C. Health Ministry, i t was strongly advocated i n the 1973 Foulkes Report (recommendation 47). PPBS i s an at t r a c t i v e management to o l . I t i s simple — at le a s t i n theory — and presents a r a t i o n a l method of tackling the very complex web of decision-making i n the resource a l l o c a t i o n process. Providing resources on the basis of congruence with organizational goals i s a method whose l o g i c i s d i f f i c u l t to f a u l t . I t i s seen by many, not only as a means whereby resources can be r a t i o n a l i z e d , but also as a f a c i l i t a t i n g mechanism for communication and planning i n the organization (Button, 1979). PPBS's a b i l i t y to counter the bureaucratic imperative of per-29 petual growth i s seen as perhaps the greatest advantage to using this system (Boyd, 1979). Yet, PPBS has not proven to be highly successful. Despite a strong commitment to implement this process throughout the U.S. government, i t had limited acceptance beyond the Department of Wildavsky (19 80, p. 27) has v i v i d l y r e f e r r e d to t h i s as the "Dinosaur Syndrom" whereby problems i n bureaucracies are solved by " i n c r e a s i n g the s i z e of programs without simultaneously i n c r e a s i n g the i n t e l l i g e n c e of those who design and administer them. " - 95 -Defense. Many of the problems associated with the MBO approach (as discussed above) are equally applicable to PPBS. Stoner, however, attributes the major cause of the PPBS f a i l u r e to organizational resistance. What were some of the reasons for the f a i l u r e to implement what appears to be an improved approach to budgeting? The most important reason was proba-bly the opposition of the agencies and departments involved. Such resistance to change seems to de-velop whenever a new program i s introduced without p r i o r consultation with those affected by the change . . . In the case of PPBS, President Johnson's insistence that the approach be put to immediate use gave the various agencies and Congress too l i t t l e time to prepare for i t . Thus, agency heads and members of Congress were only vaguely aware of the advantages and techniques of the system they were supposed to supervise. Furthermore, the Federal Budget Bureau t r i e d to implement the Defense Depart-ment's version of the system throughout the executive branch, even though that version's language and pro-cedures were not completely appropriate for c i v i l i a n agencies. If those agencies had been allowed to develop th e i r own version of PPBS, i t might have been more successful (pp. 607-608). Speculating the cause o f r a system's f a i l u r e i s , at best, an inexact science. Was i t the method i t s e l f which was a f a i l u r e , or was i t the implementation strategy? While Stoner's analysis sounds convincing, one must not overlook the p o s s i b i l i t y that the PPBS system might impose too r i g i d a framework on a human service area. Dennison (19791 has suggested that PPBS i s most suited to those f i e l d s which are r e l a t i v e l y i n s u l a r , have a low public p r o f i l e and follow a strong hierarchy. - 96 -Objectives, i f c l e a r l y stated, are often controversial and inevitably challenged. Levels of success r e s u l t -ing from programmes are extremely d i f f i c u l t to monitor as many benefits are non-quantifiable. Therefore, a PPBS which i s e f f e c t i v e i n a defense department w i l l not necessarily and, indeed, i s highly unlikely to be so i n say an education [or a health] domain (pp. 2 7 7-278) . I t i s l i k e l y that the greatest obstacles to the successful implementation of PPBS are the volumes of paper, the hours of time, and ultimately the great expenses involved. Developing objectives, measuring costs and outcomes, and analyzing a l t e r n -ative methods of achieving objectives can be done neither quick-ly nor cheaply. Many organizations modify or s h o r t - c i r c u i t the PPBS process, i n the hope of saving time and money. This cost saving, however, may be more apparent than r e a l . The p r o b a b i l i t y of obtaining successful results from a truncated version of PPBS i s doubtful. Zero-based budgeting -- another application of MBO p r i n c i p l e s to resource a l l o c a t i o n — also began i n the public sector. In 1964, ZBB was introduced i n the U.S. Department of Agriculture; however, i t met with l i m i t e d success. In 1969, Peter Pyhrr implemented this method i n Texas Instruments, and captured the attention of Jimmy Carter, then Governor of Georgia, with an a r t i c l e he wrote on ZBB i n the Harvard Business Review. The State of Georgia then engaged Pyhrr's services as a consultant, and i t became the f i r s t government to implement this system of budgeting. The use of ZBB spread to various other government - 97 -j u r i s d i c t i o n s and i n 19 77 Carter introduced i t throughout the U.S. federal government (Dill o n , 1979). Recently, the B.C. Ministry of Health has introduced ZBB concepts to i t s central o f f i c e s t a f f . Hence, i t would seem a natural progression that ZBB be extended and applied on a regional basis for health care regions i n the province. Pyhrr (.19 73) outlines two basic steps i n the ZBB process: 1. Developing "decision packages": A decision package i d e n t i f i e s a discrete a c t i v i t y , function or operation i n an organization. I t allows management to compare di f f e r e n t ways of performing the same function, or d i f f e r e n t levels of e f f o r t (or degrees of success) i n achievement of service goals. Several alternatives for each a c t i v i t y are developed. 2. Ranking decision packages: Each program, service, or region develops a hierarchy of decision packages. Beginning with the minimum l e v e l of e f f o r t necessary to achieve the most basic elements of the program's objectives, increments are then added, each demon-st r a t i n g the additional amount of resources required to produce increments i n outcomes. Management then ranks a l l decision packages i n order of p r i o r i t y . If the absolute l e v e l of funding i s predetermined, then a l l packages are funded u n t i l the l i m i t i s reached (see Figure 6). Conversely, i f a s p e c i f i c l e v e l of - 98 -F i g u r e 6: Zero-Based Budgeting: Ranking of D e c i s i o n Packages PACKAGE D e c i s i o n Packages 1 Ranked 2 i n Descending 3 Funded packages Order 4 5 6 7 8 Funding l e v e l Unfunded packages 9 - 99 -s e r v i c e or program i s d e s i r e d , t h i s process can i d e n t i f y the amount of resources r e q u i r e d to o b t a i n t h i s l e v e l of s e r v i c e . Perhaps the g r e a t e s t s t r e n g t h of the ZBB system i s i t s a b i l i t y to emphasize choices a v a i l a b l e to resource a l l o c a t o r s . In any budget year, a l l programs or regions are brought back.to zero-base and must j u s t i f y , not why they should have as much or more resources as i n the l a s t f i s c a l p e r i o d , but r a t h e r , why they should have any resources a t a l l . Thus, the burden of proof i s on those seeking the funds to j u s t i f y what they have done i n the p a s t and can do i n the f u t u r e with v a r i o u s l e v e l s of funding. This zero-based approach d i f f e r s g r e a t l y from i n c r e m e n t a l budgeting, where the focus of a t t e n t i o n i s on any changes i n resource requests (e.g., new programs or expansion of e x i s t i n g programs). Thus, ZBB should allow a l l programs to be c o n s i d e r e d on the b a s i s of t h e i r m e r i t , r a t h e r than on the b a s i s of the l e n g t h of time they have been o p e r a t i o n a l . I t i s t h i s f e a t u r e t h a t allows the dynamism which i s necessary i f an o r g a n i z a t i o n i s to remain v i a b l e . In almost every o r g a n i z a t i o n , whether i t be business or government, there are bound to be departments or f u n c t i o n s t h a t are e a t i n g up funds but have l o s t t h e i r s i g n i f i c a n c e e i t h e r through obsolescence or i n e f f i c i e n c y , but continue to s u r v i v e simply because t h e i r budget al l o t m e n t s have been a u t o m a t i c a l l y c a r r i e d over from one year to the next, ad i n f i n i t u m . The im-mediate purpose of zero-base budgeting i s to c o r r e c t such i n e q u i t i e s (McGinnis, 1976, p. 91). - 100 -The goals of ZBB are indeed l a u d a b l e ; i t attempts to pro-v i d e a method of enhancing the e f f e c t i v e n e s s and e f f i c i e n c y of programs. A number of government agencies and i n s t i t u t i o n s have implemented t h e i r v e r s i o n s of ZBB, and t e s t i m o n i a l s r e g a r d i n g .. i t s success abound. The f o l l o w i n g serves as one example of the enthusiasm which t h i s technique has spawned: What has Zero Base Budgeting accomplished f o r t h i s h o s p i t a l ? I t has p r o v i d e d s e n i o r management with d e t a i l e d i n f o r m a t i o n concerning the money needed to accomplish c l e a r and s p e c i f i c goals and o b j e c t i v e s . I t s p o t l i g h t s redundancies and i n d i c a t e s d u p l i c a t i o n o f e f f o r t among departments. I t focuses d o l l a r s needed on programs r a t h e r than on a percentage i n -crease which i s i n d i c a t e d by i n f l a t i o n . I t p r o v i d e s management wit h an o p p o r t u n i t y to draw comparisons along o r g a n i z a t i o n a l l i n e s as to the r e s p e c t i v e p r i o r i t i e s which r e q u i r e funding. F i n a l l y , i t allows a performance a u d i t to determine which ac-t i v i t y o r o p e r a t i o n d i d perform as planned. C l e a r -l y , Zero Base Budgeting p r o v i d e s a corner stone f o r a s t r o n g and dynamic o r g a n i z a t i o n (Sane, 1979, p. 12). Perhaps ZBB does i n f a c t produce these types of e x c i t i n g r e s u l t s . On the other hand, i t i s p o s s i b l e t h a t o r g a n i z a t i o n s have jumped on the bandwagon of p o p u l a r i t y surrounding t h i s technique, and impute g r e a t e r achievements to i t than are warrant-ed. I t i s i n t e r e s t i n g to r e c a l l the State of Georgia's e x p e r i -ences with ZBB. Though o f t e n c i t e d as the example f o r others to emulate i n r e a l i t y Georgia d i d not use a zero-based approach. Instead 80 per cent of the p r e v i o u s year's budget was taken as the benchmark, from which f u r t h e r increments r e q u i r e d j u s t i f i -c a t i o n . Thus, i t would be more accurate to r e f e r to t h i s as 80-based budgeting. - 101 -Another finding from the Georgia experience could cause one to doubt whether a l l programs were evaluated equally and object-i v e l y . I t would seem that, while the process of resource a l l o -cation may have been changed somethat, there was l i t t l e resultant change i n actual a l l o c a t i o n s . In 19 74, 13 heads of the Georgia departments were interviewed, and only two went so far as to say that zero-base budgeting "may" have led to a r e a l l o c a t i o n of resources . . . None of the 32 budget analysts .. reported that the system involved a "large" s h i f t i n g ; 21 said there was no apparent s h i f t i n g and four were uncertain (Anthony, 1977, p. 26). If one i s corrent i n assuming that the allocations were i n -equitable before ZBB was employed there i s no reason to believe that this technique has ameliorated this problem i n any way. I f , on the other hand, one interprets this as proof that previous allocations were e s s e n t i a l l y correct, then i t seems d i f f i c u l t to j u s t i f y the introduction of such a cumbersome and expensive tech-nique as ZBB for resource a l l o c a t i o n . Simpler methods would have s u f f i c e d . One might suggest, however, that i f ZBB i s implemented i n a "true" zero fashion, more appropriate and perhaps r a d i c a l s h i f t s i n resource a l l o c a t i o n would r e s u l t . The complexity of implementing ZBB i n an organization as large as the Health Ministry i s mind-boggling, to say the least. To begin with, the ranking of the numerous decision packages i n the health care system would be extremely time consuming. Even more problematic, however, would be achieving any measure of consistency i n p r i o r -- 102 -i z a t i o n (Tourangeau, 19 77). Although the o v e r a l l goals of the Ministry could be used as a basic reference point for such de-cisions, i t i s clear that application of these goals to any l e v e l of decision package p r i o r i z a t i o n would be subject to the biases of those involved i n the ranking process. There would be a large number of l e v e l s of decision-making i n the Ministry as a whole, and a variety of biases would be introduced at each of these l e v e l s . I t i s possible that these biases might "cancel" each other out, but there i s no assurance that such would occur. ZBB i n health i s further complicated because of the lack of empirical data concerning the effectiveness of many health care programs. Cost-effectiveness analysis or other formal methods of program evaluation can be h e l p f u l i n this regard, but examples of rigorous evaluation are noteworthy for being exceptional rather than normative i n health care. Consequently, the ranking of de-c i s i o n units i s l i k e l y to be e s s e n t i a l l y subjective, and to favour established programs. Another problem i n the p r i o r i zing of decision packages i s that managers have d i f f i c u l t y i n following through on t h e i r i n i t i a l rankings. Anthony (1977) ,and Patterson (1979) both point out that, once funding levels are established, p r i o r i t i e s are often changed. This would seem to compromise the o r i g i n a l intent of the ZBB technique. Such d i f f i c u l t i e s may be attributed to a lack of understand-ing or acceptance on the part of organizational members. - 10 3 -Bureaucrats are o f t e n very r e l u c t a n t to submit t h e i r programs to such i n t e n s e s c r u t i n y . They may t h e r e -f o r e i n f l a t e the importance of the a c t i v i t i e s they c o n t r o l . In a d d i t i o n , managers may f a i l to develop enough i n f o r m a t i o n to allow f o r meaningful a n a l y s i s of a d e c i s i o n package. These problems can be over-come through t r a i n i n g of managers i n the ZBB approach and w i t h e f f e c t i v e a d m i n i s t r a t i o n of the e n t i r e program (Stoner, p. 6 09). While i n i t i a l problems i n implementing ZBB may be due to a lack of understanding, f u r t h e r problems can be c r e a t e d when managers have a s u f f i c i e n t grasp of the technique to manipulate i t to t h e i r advantage. Managers might p r i o r i z e d e c i s i o n packages so t h a t e s s e n t i a l or popular programs are r e l a t i v e l y low on the l i s t , on the assumption t h a t a l l programs above t h i s mark w i l l be funded. T h i s i s not to suggest that managers w i l l be d i s -honest; r a t h e r , they may merely attempt to maximize t h e i r bene-f i t s . As o r g a n i z a t i o n s usually, reward managers f o r such i n g e -n u i t y , i t i s not unreasonable to expect seasoned managers to r e -a c t i n such a manner. Once again, the i n t e n t of ZBB would be compromised, y e t those i n v o l v e d i n the process c o u l d conclude t h a t e v e r y t h i n g was i n o r d e r . Union i m p l i c a t i o n s pose s t i l l more problems i n the a p p l i -c a t i o n of ZBB to h e a l t h c a re. I f such a method r e s u l t e d i n pro-gram cuts and s u b s t a n t i a l s t a f f l a y - o f f s , s t r o n g r e a c t i o n c o u l d be expected from the h e a l t h i n d u s t r y unions. B.C. i s a p r o v i n c e known f o r i t s union m i l i t a n c y and power. I t i s u n l i k e l y t h a t the M i n i s t r y of H e a l t h would wish to p r e c i p i t a t e a major c o n f r o n t -a t i o n w i t h unions on the grounds of ZBB. - 10 4 -One must also confront the f a c t that ZBB, l i k e PPBS, i s a time consuming and expensive task. A great deal of paper i s generated, and large numbers of f i n a n c i a l s t a f f are required. While government bureaucracies are quite accustomed to the former, they are often loathe to provide the l a t t e r . . In B.C. i n p a r t i c u -l a r , there i s a strong commitment to contain the size of the c i v i l service; hence, any management system which implies the need for additional s t a f f w i l l either not be done, or w i l l be done poorly. One way of dealing with this might be to employ ZBB at infrequent i n t e r v a l s — say, every f i v e years — rather than on an annual basis. 4. Economic Models Economics has been defined as "the study of how individuals and society as a whole allocate the scarce resources among the various uses, transform those resources into goods and services, and then d i s t r i b u t e those commodities to members of the society i n both the present and the future" !(Detsky, 1978, p. 3). Health economics, as a s p e c i a l i z e d component of this d i s c i p l i n e , i s p a r t i c u l a r l y concerned with the a l l o c a t i o n and d i s t r i b u t i o n of resources "which consumer/patients use solely or primarily be-cause of t h e i r anticipated (positive) impact on health status" (Evans, 19 82, p. 4). Key concepts i n economics include: - 105 -Scarcity: Wants or demands are v i r t u a l l y unlimited, but resources are f i n i t e ; therefore, choices must be made. While th i s axiom has long been accepted by economists and by most others when applied to non-health care areas, i t i s only recently that health care c l i n i c i a n s and planners have begun to face the in e v i t a b l e , i . e . , that the best health care, however defined, i s not possible for everyone. Rather, rationing of some type must occur. The manner i n which such rationing occurs, then, becomes an important issue. C l a r i t y i n e x p l i c i t l y defining how these judgments are made, and on what values or assumptions they are based, i s of v i t a l s i g n i f i c a n c e . Opportunity Cost: Any a l l o c a t i o n of resources to or within health care represents a foregone opportunity to use these resources for other purposes. For example, funds devoted to the purchase of a CT scanner a l t e r n a t i v e l y might have been spent i n other health programs (such as h i r i n g more public health nurses or long term care staff) or i n non- health areas (such as promoting tourism, improving roads, or providing grant monies to a b a l l e t company). Consequently, a decision to allocate resources i n one area i s a decision not to allocate resources i n other areas. Marginality: Generally speaking, decisions regarding resource a l l o c a t i o n are made on the basis of increments at the margin. How much more or (on rare occasions) less of a p a r t i c u l a r program should be funded? How does th i s change i n funding relate to the expected changes i n results for society? And again, how do these - 106 -marginal costs and benefits compare with the alternatives pre-sented by other programs? Note that this l i n e of questioning d i f f e r s markedly from that which asks whether or not a program should be funded at a l l . Such fundamental queries are more apt to be made of proposed programs rather than of e x i s t i n g ones. E f f i c i e n c y : Most health economists address themselves to the i d e n t i f i c a t i o n and improvement of e f f i c i e n c y i n the health care system. The concept of e f f i c i e n c y has been separated into two types: a l l o c a t i v e and technical. A l l o c a t i v e e f f i c i e n c y refers to Pareto-optimal conditions, where marginal costs are equal to marginal benefits i n a l l areas of the economy. If a l l o c a t i v e e f f i c i e n c y e x i s t s , then society's resources are di s t r i b u t e d so that any change i n the d i s t r i b u t i o n (e.g., taking some resources from health and using them for education) would decrease the benefits i n one of these areas. Issues of a l l o c a t i v e e f f i c i e n c y are, then, the "macro" issues of a l l o c a t i o n of resources to health versus other competing needs. Technical e f f i c i e n c y looks at the methods of production used_ within a p a r t i c u l a r production area. A method of production i s judged to be technically e f f i c i e n t i f the same outcomes could not have been achieved with fewer resources. In the area of health economics, technical e f f i c i e n c y has been e s p e c i a l l y concerned with manpower substitution and with the scope for alternatives to i n s t i t u t i o n a l i z a t i o n . - 10 7 -Viewpoint: In any evaluation of health programs, i t i s important that one's perspective be e x p l i c i t l y stated. Often, evaluations are biased toward a p a r t i c u l a r group's viewpoint, be they patients, c l i n i c i a n s , or the government. Economists, however, usually take the position that costs and benefits to society as a whole must be considered. In this sense, economics seeks to provide a comprehensive and objective framework within which to view re-source a l l o c a t i o n . Demand: In contrast to epidemiologists who assess need for health care, economists generally look at demand. Demand for health care i s defined as the relationship between the t o t a l amount of health care which individuals are w i l l i n g to purchase, and the prices of that health care. T r a d i t i o n a l economists take the position that the health care industry i s l i k e any other industry; the basic laws of supply and demand govern the costs and d i s t r i b u t i o n of health care i n society. According to this analysis, the market performs the a l l o c a t i v e function, and services are provided appropriately on the basis of consumer behaviour (where, as shown i n Figure 7, Q at P i s u t i l i z e d ) or on the basis of some d e f i n i t i o n of need e e (perhaps as determined by the quantity consumers would purchase at zero price, Q ). o I t can be readily noted that the B.C. health care system i s governed, not by price-determined a l l o c a t i o n , but by funding and regulation by the p r o v i n c i a l government, with major input from - 10 8 -F i g u r e 7: T r a d i t i o n a l Economic Depection of A p p r o p r i a t e A l l o c a t i o n of Health Care Resources P r i c e of Health Care Quantity of h e a l t h care A p p r o p r i a t e a l l o c a t i o n i s q u a n t i t y Q a t p r i c e P , or Q D = Demand S = Supply P = P r i c e Q = Quantity E - E q u i l i b r i u m - 109 -the medical profession. The t r a d i t i o n a l economist's solution to the problem of resource a l l o c a t i o n i n the B.C. Health Ministry would be to s t r i p away these governmental and professional con-s t r a i n t s , and to allow the market to perform i t s proper function. Others (Culyer, 1971; Arrow, 1963) note that health care i s d i f f e r e n t from other goods and services i n several s i g n i f i c a n t ways: uncertainty regarding the p r o b a b i l i t y and impacts of be-coming i l l , asymmetry of information between providers and con-sumers, and e x t e r n a l i t i e s . Because of these unique character-i s t i c s , health care demand i s seen as being d i f f e r e n t from the demand for other economic goods; as such, resource a l l o c a t i o n cannot be l e f t to the market. Evans (19 82) points out that the demand for health care i s r e a l l y a derived demand, i n that most individuals do not consume health care for i t s i n t r i n s i c value; rather, they u t i l i z e health care for i t s perceived b e n e f i c i a l e f f e c t upon health status. If one could determine the precise relationship between health status and consumption of health care, i t would then be possible to specify the amount of resources required to achieve a desired health status, and to determine the point on the health status (health care) curve at which society would be better o f f i n a l l o c a t i n g marginal resources elsewhere. The immediate d i f f i c u l t y which must be faced i s that we do not have a v a l i d measure of the c o r r e l a t i o n between health status and health care. Is there (as shown i n Figure 8a) a constant, d i r e c t relationship between the - 110 -F i g u r e 8: A l t e r n a t i v e R e l a t i o n s h i p s Between He a l t h Care and Health Status h e a l t h s t a t u s h e a l t h care 8a - constant, d i r e c t r e l a t i o n s h i p h e a l t h s t a t u s h e a l t h care 8b - d i m i n i s h i n g m a r g i n a l r e t u r n s h e a l t h s t a t u s h e a l t h care 8c - negative r e l a t i o n s h i p , a f t e r p o i n t 'x* - I l l -two? Are there points of diminishing marginal returns (Figure 8b)? Or, i s I l l i c h (1975) correct i n that after some point there i s a negative association between health care and health status (Figure 8c)? This i s indeed a very broad-brush analysis. Health care i s not a unitary concept but a diverse f i e l d . Global measures l i n k -ing health status and health care are less useful that s p e c i f i c measures of p a r t i c u l a r programs or services. As well, the con-cepts of marginality and of opportunity cost must be taken into account. To date, economists have not developed a comprehensive and generally accepted model for resource a l l o c a t i o n i n the health sector. There have, however, been considerable engeries devoted to evolving methods of measuring the e f f i c i e n c y of health i n t e r -ventions, some of which are relevant to resource a l l o c a t i o n i n a regional structure. Two general methods — economic modelling and economic evaluation — are discussed below. a) Economic Modelling Economic modelling can be divided into three stages --the o r e t i c a l development, empirical testing, and application — although not a l l modelling follows this process i n i t s entirety. In attempting to model resource a l l o c a t i o n i n a regional structure, one might begin at the the o r e t i c a l l e v e l by i d e n t i f y i n g the de-terminants of health care need (however defined) i n any geographical region. Then the amount and type of health care services which - 112 -would meet this need i n the most technically e f f i c i e n t manner could be estimated. Thus, such a model would i d e n t i f y the i d e a l combination of health care inputs i n any given region. Detsky (1978) has developed just this type of model, although i t i s l i m i t e d to primary, non-hospital care (see Appendix F). I t i s , to say the least, extremely elaborate and hence d i f f i c u l t to implement. The data requirements for u t i l i z i n g this model are complex, and are beyond the present c a p a b i l i t y of the B.C. Health Ministry. Furthermore, i t has not been tested empirically; hence, i t s v a l i d i t y can be questioned. Yett, et a l . (19 79) have developed another model of the entire health sector, and have tested i t i n relationship to data covering the period of 19 6 0 to 19 70 i n the United States. While this h i s t o r i c a l tracking indicates that the model requires some fine-tuning to improve i t s accuracy, i t i s perhaps the best economic model available for this purpose (see Appendix G). If the B.C. Health Ministry wished to apply this model to resource a l l o c a t i o n i n a regional structure, i t would be advisable to test i t within the context of B.C. data. Assuming the Yett model withstood this v a l i d a t i o n , i t then could be applied to the regions as a resource a l l o c a t i o n t o o l . Such application may indeed be feasible i n the longer range. At the present time, however, i t appears to be overly technical. The Yett model (or any other comprehensive model for that matter) - 113 -requires an inordinate amount of data, much of which i s not c o l -lected i n the B.C. system. As well, i t i s not readily understood by the lay person ( i . e . , the non-economist). Therefore, acceptance i s u n l i k e l y to be obtained from the medical profession, the p o l i -t i c i a n s , and others who are greatly affected by the results of the resource a l l o c a t i o n process. A further d i f f i c u l t y i n the application of economic model-l i n g to resource a l l o c a t i o n centres around the concept of ef-f i c i e n c y . Because modelling i s based on technical e f f i c i e n c y , i t assumes that once i d e n t i f i e d , economies w i l l be desired and supported by policy makers i n the health care system. History i n the area of health professions, however, would suggest other-wise. Several studies (Yankauer, 1972; S c h i f f , et a l . , 1969 ; Spitzer, et a l . , 1974) have found that physician substitutes could be used to greater advantage than i s currently the case. Yet, because of the power structure of the health care system and the manner i n which the incomes of health personnel are de-termined, substitution for physicians by a l l i e d professions i s extremely limited. We more frequently see these personnel i n the role of complementing or extending the role of the physician, which i n the long run, could lead to i n e f f i c i e n c y i n the sense of over-production of health care. Another problem regarding economic modelling i s the premise that e f f i c i e n c y i n the provision of health services i s always i n the best interests of the patient. This concept appears v a l i d at f i r s t glance; however, one must also take into account certain - 114 -s o c i a l interactions between the health care system and the i n d i -vidual u t i l i z i n g the services. Indeed, there i s evidence to suggest that, under p a r t i c u l a r circumstances, improved coordin-ation and e f f i c i e n c y i n service delivery can have an inverse re-lationship to health status (Blenkner, Bloom, and Nielsen, 19 71). While such findings may only be an a r t i f a c t of how one measures e f f i c i e n c y , the importance of d i f f e r e n t i a t i n g between e f f i c i e n c y and e f f i c a c y once again becomes evident. For a l l of these reasons then, economic modelling i s not advocated as a tool to guide resource a l l o c a t i o n to health regions. b) Economic Evaluation Stoddart (1980, p. 5) has defined economic evaluation as "the comparative analysis of alternative courses of action i n terms of both t h e i r costs and consequences". While economic evaluation of alternative investment decisions i s commonplace i n the private sector, i t i s less frequent i n government resource a l l o c a t i o n s . Williams (19 74) has provided c r i t e r i a which des-cribe the type of circumstances where economic evaluation i s l i k e l y to prove b e n e f i c i a l . He indicates that the following conditions should e x i s t : sizeable amounts of scarce resources are at stake r e s p o n s i b i l i t y i s fragmented the objectives of the respective parties are at variance or unclear - 115 -there e x i s t alternatives of a r a d i c a l l y d i f f e r e n t kind the technology underlying each alternative i s well understood the results of the analysis are not wanted i n an impossibly short time. Economic evaluation d i f f e r s from medical appraisal i n that the l a t t e r i s confined to the estimation of the posit i v e and negative e f f e c t s of a p a r t i c u l a r treatment. Assessing the con-sequences of a program, however, constitutes only one part of economic analysis. The other i s the evaluation of resource costs necessary to achieve these r e s u l t s . This cost analysis allows an appraisal of the benefits foregone i n other areas, or the op-portunity cost of the treatment. E f f i c i e n c y i s the chief emphasis i n economic evaluation. As Drummond (19 80) notes: Adoption of the c r i t e r i o n of economic e f f i c i e n c y implies that choices i n health care should be made so as to derive the maximum t o t a l benefit from the resources at the community's disposal. In practice, this involves the appraisal of health care a l t e r n -atives through the cal c u l a t i o n of the amount by which the benefits generated exceed the costs (s a c r i f i c e s ) incurred. Therefore, i t i s i m p l i c i t i n the e f f i c i e n c y c r i t e r i o n that a given treatment or procedure cannot be preferred over another sole-ly on the basis of being less costly... The choice w i l l depend on both r e l a t i v e benefits and r e l a t i v e costs. After a l l , the costs merely represent bene-f i t s foregone elsewhere (p. 3). Thus, i t i s evident that the economist provides e x p e r t i s e i n one area of economic e v a l u a t i o n — cost and e f f i c i e n c y analy-- 116 -s i s . (S)he i s r e l i a n t upon other health care professionals, how-ever, for information concerning the effectiveness or e f f i c a c y of programs. I t i s also important to r e a l i z e that economic evaluation rarely addresses d i s t r i b u t i o n a l issues. The most e f f i c i e n t a l l o c a t i o n of resources need not r e s u l t i n equitable d i s t r i b u t i o n . Consequently, i f equity i s a major concern, other models of re-source a l l o c a t i o n need to be considered instead of or i n con-junction with economic evaluation techniques. Four types of economic analysis tend to f i n d use i n the health care context: cost-minimization, cost-benefit, cost-effectiveness, and c o s t - u t i l i t y " ^ ^ . i) Cos t-minimi zation Cost-minimization i s concerned with technical e f f i c i e n c y , and i s s i m i l a r to the concept of e f f i c i e n c y as defined i n the management models of resource a l l o c a t i o n . Of c r i t i c a l importance i s obtaining a given l e v e l of output at the lowest possible cost. These terms are often used rather loosely, and tend to be confused with one another. They are a l l methods of comparing costs and outcomes, the major difference being the units of outcome comparison used i n each of the four techniques. Cost-effectiveness can be viewed as the most general of the four tools, with cost-minimization, cost-benefit, and c o s t - u t i l i t y being more s p e c i f i c types of cost-effectiveness analysis ap-p l i c a b l e i n certain well-defined s i t u a t i o n s . - 117 -In order to accomplish t h i s , economists look at a number of alternative methods of achieving the same objectives with equal efficacy.. Then, based on a series of mathematical calculations, estimates are made as to the costs involved i n each of these al t e r n a t i v e s . The l o g i c a l course of action i s to s e l e c t that method which uses the fewest of society's resources. Cost-minimization thus i s applicable where the effectiveness side of the cost-effectiveness analysis can be ignored because the alternatives are assumed to be equivalent. A s i g n i f i c a n t problem associated with cost-minimization -- or indeed with most economic evaluation techniques -- i s the accurate i d e n t i f i c a t i o n and evaluation of costs. What costs should be included? There are d i r e c t costs ( i . e . , those used to organize, operate, or u t i l i z e a program), i n d i r e c t costs (e.g., the value of l o s t productivity attributable to patient and family p a r t i c i p a t i o n i n the program), and intangible costs ( i . e . , non-monetary costs, such as pain, anxiety, or s u f f e r i n g ) . Furthermore, i f costs are to be incurred over a period of some years, what rate of discount should be used? Much of course depends on the spe-c i f i c circumstances involved; there i s no standard formula for solution of these problems. S e n s i t i v i t y analysis, however, i s usually conducted i n such cases, for i t allows the decision maker to evaluate the impact of using various costs and discount rates. Setting aside these d i f f i c u l t i e s for the moment, i t would s t i l l appear that cost-minimization i s not a p a r t i c u l a r l y - 118 -useful tool for resource a l l o c a t i o n to health care regions. I t i s l i m i t e d i n i t s scope, being best suited to evaluation of s p e c i f i c programs with rather narrowly defined outcomes. The Piachaud and Weddell (19 72) study, which compares surgery and injection-compression schlerotherapy for treatment of varicose veins, i s an example of the type of resource a l l o c a t i o n decision to which this technique can be applied successfully. Thus, while cost-minimization does not lend i t s e l f to rationing resources i n a regional structure, i t can be seen as a beginning towards the development of more comprehensive economic evaluation tech-niques described as follows. i i ) Cost-Benefit The history of cost-benefit analysis (CBA) can be traced back to 1844 i n France. Dupuit's discussion on the measurement of the u t i l i t y of public, works provided the springboard for other individuals and governments to apply CBA to a variety of areas i n the public sector. In the United States, this technique was introduced i n the early 1900's by the federal government, for the purpose of r a t i o n a l i z i n g r i v e r and harbour projects. Later, i n the 19 30's, CBA was used as the basis for evaluating flood-control schemes as regards the costs and benefits "to whomsoever they may accrue". Since that time, CBA has been applied to numerous areas of government a c t i v i t y , health care being but one (Prest and Turvey, 1965). - 119 -Cost benefit analysis i s viewed as an e f f e c t i v e method of determining resource a l l o c a t i o n i n the public sector. . . . the government tends to intervene i n precisely those markets i n which prices are either lacking or are seriously divergent from s o c i a l values. I t i s inherent i n government enterprises, therefore, that market prices cannot be used i n appraising t h e i r s o c i a l contributions. S t i l l , some economic basis i s needed for judging which p o t e n t i a l government undertakings are worthwhile and which are not. Bene-f i t - c o s t analysis provides this base (Dorfman, 1963, p. 6) . CBA, s i m i l a r l y to cost-minimization, seeks to evaluate alternative approaches deemed to be e f f e c t i v e i n obtaining de-si r e d health objectives. Unlike cost-minimization techniques, however, CBA provides a framework for comparing alternatives which may have d i f f e r i n g and multiple outcomes or objectives. The common denominator which i s used to compare the consequences of these alternatives i s that of d o l l a r benefits. Then, depend-ing on the circumstances, basic decision rules can be applied which w i l l a s s i s t i n determing which program should be selected. These include choosing the program with the highest benefit-cost r a t i o , the highest net benefit, or the highest i n t e r n a l rate of return. (See Drummond .(.(1980)), pp. 59-65 for a more detailed discussion of the appropriate, application of these decision rules.) CBA, frequently used as an adjunct to PPBS, gained considerable popularity i n the 1960's, but this popularity has diminished since then. Such d i s a f f e c t i o n has been attributed i n large measure to abuses of CBA by governments wishing to j u s t i f y - 120 -the status quo or to obtain a delaying t a c t i c (Turner, 1979). Like almost any other decision-making tool, CBA can be used as a means either to broaden the base of decision-making or to de-fend and hence l i m i t consideration to only those programs which are currently operational. The fac t that a technique has been abused, however, should not i n i t s e l f i nvalidate the d e s i r a b i l i t y of the method. Actually, CBA appears to be a very a t t r a c t i v e method of resource a l l o c a t i o n , not only i n health care, but i n non-health areas as well. Its use of dollars as a common denominator for measuring outcomes allows for comparison among such diverse a c t i v i t i e s as inpatient hospital care, ambulatory care, education, recreation, bridge building, and so on. Thus, i f i t were possi-ble to monetize accurately the outcomes of government expenditures, these outcomes could be evaluated i n r e l a t i o n to s p e c i f i e d goals, and adjustments i n allocations (and perhaps goals) could be made u n t i l such time as marginal costs and benefits among a l l areas were equal. If this could i n f a c t be done, we would need to look no farther i n our search for a r a t i o n a l method of resource a l l o -cation i n a regional structure for health care. Unfortunately, the search must continue. F i r s t of a l l , not a l l costs and benefits can be readily translated into monetary terms. In some cases, the market value of discounted earnings streams i s used as a means of assessing the benefits of l i v e s saved or of productivity losses foregone. - 121 -This i s generally referred to as the human c a p i t a l or l i v e l i h o o d saving approach. There i s , of course, a major difference between valuation of a l i f e , and valuation of l i v e l i h o o d . Individuals vary greatly i n t h e i r incomes, yet do we as a society believe that saving the l i f e of one person earning $100,000 per year i s equal i n merit to four persons earning $25,000? Si m i l a r l y , based on the l i v e l i h o o d approach, are we prepared to give p r i o r i t y to men over women, Caucasians over Native Indians, and middle-aged persons over the elderly? To those who are r e l a t i v e l y unfamiliar with the assump-tions behind the human c a p i t a l approach, such questions may appear to be either humorous or morally repugnant. Nevertheless, this method i s the most commonly used economic technique for evaluat-ing reductions i n mortality. As Acton (19 76, p. 52) notes: The l i v e l i h o o d saving approach may have received the attention i t has because i t i s r e l a t i v e l y easy to apply and gives the impression of providing an un-ambiguous numerical answer. I t i s easy because the analyst can consult a table to determine the l i v e l i -hood at d i f f e r e n t ages, i d e n t i f i e d by sex, race, and education. The impression of numerical precision i s more apparent then r e a l , however. A number of impor-tant assumptions underlie the tables, and unless the decision maker i s conscious of t h e i r meaning, he may be unconsciously supporting a s o c i a l judgement that he would r e j e c t i f he faced i t e x p l i c i t l y . Another method used to monetize benefits i s the w i l l -ingness-to-pay measure of l i f e , whereby benefits are judged on the basis of the amount of money people are w i l l i n g to pay (and thus forego spending i n other areas) for a health program or - 122 -service. In a government health care system such as B.C., how-ever, one cannot use market prices as a means of deducing the public's willingness-to-pay. Attempts have been made to develop various estimation techniques, but none has been widely accepted. S t i l l another problem associated with monetization i s quite simply, that some costs and benefits do not lend themselves to being monetized — either through market or proxy measures. Intangible costs, such as the emotional distress of a c l i e n t or family, cannot be reduced i n any meaningful way to a mere price tag. Thus, where these psychic costs or benefits are strong factors to be considered, CBA i s not appropriate as a resource a l l o c a t i o n t o o l . CBA also serves as a test of the accuracy and honesty of those who are expected to estimate the costs and benefits of a p a r t i c u l a r program. I t would seem that many administrators f i n d themselves confronted by an e t h i c a l dilemma i n this regard. An agency administrator must face the question of how f o r t h r i g h t l y he wishes to lay out a long-range expenditure program. By projecting his r i s i n g ex-penditures accurately, an administrator may incur emotional objections to his programs from the public long before the expenditures are actually made. On the other hand, i f an administrator honestly pro-jects declining expenditures for a p a r t i c u l a r pro-gram, groups adversely affected may exert pressure to a l t e r the plan. In both cases, the reaction may be on grounds other than r a t i o n a l cost-benefit analysis (Steiner, 1965, p. 49). CBA presents a further problem concerning the d i s t r i -butional effects of costs and benefits. While these values are - 123 -to be computed on the basis of "to whomsoever they may accrue", this technique provides no guidance as to which members of society should bear the costs of a program, and which members should en-joy the benefits. The Pareto-optimal c r i t e r i o n has t r a d i t i o n a l l y been used as the economists* yardstick; however, i t i s not universally accepted as an appropriate standard of resource d i s -t r i b u t i o n . The Kaldor-Hicks c r i t e r i o n ( i . e . , those who gain from a program should be able to compensate those who lose) i s some-times advocated as an alternative means of evaluating government intervention. Nevertheless, i n the application of CBA there i s no requirement that compensation (from win-ners to losers) actually take place . . . Although i t should be clear that benefit-cost analysis would have l i t t l e a p p l i c a b i l i t y i f only projects leading to a s t r i c t Pareto improvement could be examined, i t i s also apparent that the question of gains, losses, and compensation does become important when considering implementation, e s p e c i a l l y i f the "losers" have the power to a f f e c t the success of the project (Luft, 19 76, p. 441) . To summarize then, CBA, while providing a means of comparing diverse programs, does so by evaluating benefits i n purely monetary terms. This monetization process l i m i t s the scope of analysis possible through CBA. Therefore, i t does not appear to be a desirable technique f o r the purpose of resource a l l o c a t i o n to the regions by the B.C. Health Ministry. - 124 -i i i ) Cost-Effectiveness Cost-effectiveness analysis can be used to compare the r e l a t i v e e f f i c i e n c y of alternative health care programs or of alternative means of delivering health care programs directed at the same objectives. Unlike CBA, CEA does not monetize a l l benefits. Instead, i t seeks to evaluate effectiveness through quantifiable measures of the performance of health care programs i n r e l a t i o n to desired goals, and then to relate effectiveness to costs. ..CEA .is s i m i l a r i n some respects to cost-minimization, for both techniques can be used to compare programs with equiv-alent outcomes. The difference between these two techniques, however, i s that the equivalence i s only assumed i n the l a t t e r . CEA, on the other hand, e x p l i c i t l y measures the effectiveness of programs. For th i s reason, CEA i s employed "when various bene-f i t s are d i f f i c u l t to measure or when the several benefits that are measured cannot be rendered commensurate" (Klarman, et a l . , 1968, p. .49). As these conditions seem to be the norm i n the health care sector, CEA has been seen by many as a powerful tool for health resource a l l o c a t i o n . While this technique has been applied to the health care sector (Stason and Weinstein, 1977; Klarman, et a l . , 1968; Neuhauser and Lewicki, 1975), CEA was developed primarily by the U.S. Department of Defense. I t provided a framework i n which m i l i t a r y analysts could evaluate the effectiveness of various - 125 -weapons systems — an area i n which monetization c l e a r l y would not have been appropriate. Other government departments have been less enthusiastic i n the adoption of CEA. Levin (19 75 , p. 9 3) states: I t i s probably safe to assert that i t s application to other s o c i a l endeavors has not been extensive i n part because s o c i a l evaluators have been less con-scious of the importance of costs i n decision-making than has the Pentagon. While such a statement may well have been an accurate r e f l e c t i o n of the health care sector some years ago, i t can no longer be accepted. Yet, the use of CEA i s not widespread i n health care generally, nor i n the B.C. Health Ministry i n p a r t i c u l a r . One of the most important reasons for this rather l i m i t -ed u t i l i z a t i o n i s the cost and complexity involved i n engaging i n such analysis. Application of CEA to a l l health care programs i n a regional structure would necessitate the expenditure of incredible amounts of time and money. This i s simply not r e a l -i s t i c . I t would make more economic sense, however, to u t i l i z e CEA either for those programs to which the majority of resources are allocated (e.g., acute care and physicians' services), or to considerations of marginal decreases or increases i n alternative large programs. Another d i f f i c u l t y i n u t i l i z i n g CEA for regional health resource a l l o c a t i o n i s that a s p e c i f i c goal or l e v e l of service must be selected by the p o l i c y maker. I t i s only i n r e l a t i v e l y - 126 -recent times that those involved i n the planning and provision of health care have come to the r e a l i z a t i o n that " c a d i l l a c " s t y l e health care for everyone i s not possible (or even desirable), and that more achievable standards of service provision must be de-veloped. Having arrived at this conclusion, however, the next problem i s that of developing appropriate standards or goals. Similar to the MBO process, CEA stresses the need for measuring a program i n r e l a t i o n to s p e c i f i c outcome dimensions. Experi-ences to date have tended to emphasize quantitative measures, rather than q u a l i t a t i v e issues. This over-reliance upon numerical evaluation has been c r i t i c i z e d by Georgescu-Roegen (19 71) as per-petuation of the myth of "arithmorphosis", whereby any method which claims to be s c i e n t i f i c must use numbers. Because of this s i m i l a r i t y to MBO, CEA shares a number of the d i f f i c u l t i e s previously c i t e d i n the MBO model. These include the process versus outcome controversy, effectiveness versus e f f i c a c y problems, measurement and rewarding of e f f i c i e n c y , and the p o l i t i c a l dilemmas involved i n not funding programs which may be other than e f f e c t i v e , e f f i c i e n t , or e f f i c a c i o u s . Problems also arise i n the u t i l i z a t i o n of CEA data for program funding decisions. Unlike CBA, CEA has no clear cut and generally accepted decision rules. Programs can be evaluated as being highly e f f e c t i v e but i f they are also highly costly, can they be j u s t i f i e d ? Furthermore, i f programs are evaluated i n terms of multiple outcome dimensions, how can one d i f f e r e n t i a t e - 127 -among the various combinations of program results? C r i t e r i a can be developed to guide decisions i n s p e c i f i c instances (see Doherty and Hicks, 19 77 as one example); yet i t i s clear that these c r i t e r i a are highly dependent upon the values of those who are performing the evaluation. iv) Cost-uti l i t y C o s t - u t i l i t y i s a methodologically sophisticated method of cost effectiveness analysis, whereby " u t i l i t y " i s used as the measure of program outcome. U t i l i t y i s a th e o r e t i c a l concept which refers to the perceived value of a p a r t i c u l a r health status, and i s usually evaluated i n terms of healthy days or q u a l i t y -adjusted l i f e years. This d e f i n i t i o n of u t i l i t y bears a s t r i k i n g resemblance to that of e f f i c a c y ( i . e . , the o v e r a l l benefit to the i n d i v i d u a l of a program). As such, c o s t - u t i l i t y can be viewed as an economic evaluation tool which e x p l i c i t l y seeks to measure both e f f i c i e n c y and e f f i c a c y . Since these are two of the goals i n the B.C. Health Ministry's reg i o n a l i z a t i o n plan, c o s t - u t i l i t y analysis appears e s p e c i a l l y appropriate for resource a l l o c a t i o n to the regions. In applying c o s t - u t i l i t y analysis to resource a l l o c a t i o n i n a regional structure, two d i s t i n c t processes emerge. F i r s t , one must obtain some means of determing the u t i l i t y weights as-sociated with various health or disease states. This can be done on the basis of expert opinion, such as a survey of general prac-- 12 8 -t i t i o n e r s (Torrance, Sackett, and Thomas, 1973). A l t e r n a t i v e l y , the general public or those who are experiencing the health state being studied can be polled (Sackett and Torrance, 1978). The v a l i d i t y of u t i l i z i n g either of these respondent groups can be debated at length,, the results of which w i l l l i k e -ly be s i m i l a r to those raised e a r l i e r concerning epidemiological indices ( i . e . , contrasting professional opinion and i n d i v i d u a l s e l f - r e p o r t ) . In the f i n a l analysis, neither approach can claim superiority i n terms of being the "true" measure of health u t i l i t y . Perhaps more c r i t i c a l , however, i s the second stage i n c o s t - u t i l i t y analysis decisions concerning regional resource a l l o -cations. How much should each region obtain? Because of the contentious and v i s i b l e nature of government funding, i t i s un-l i k e l y that this l e v e l of decision-making could be l e f t s o l e l y to the experts, whether they be physicians, p o l i t i c i a n s , or senior bureaucrats. I t i s probable that the general public would demand that t h e i r preferences be included. The immediate problem which comes to mind i s how the views of the population could be surveyed. As w i l l be r e c a l l e d from the discussion on survey techniques used i n epidemiological indices, general surveys are costly. Yet, i t i s evident that society sanctions these techniques from time to time, i n the form of elections and public referenda. To a certain extent, holding a referendum can be viewed as a p a r t i c u l a r application of a cost-u t i l i t y survey. I f each region were responsible for the cost of - 129 -i t s own h e a l t h care i t s population could be asked to s e l e c t from a number of programs or c a p i t a l expenditure proposals, e.g., a n u t r i t i o n program, a s e n i o r c i t i z e n ' s s o c i a l and r e c r e a t i o n centre, a d d i t i o n a l p r e - n a t a l c l a s s e s , e t c . Assuming the p u b l i c were given adequate i n f o r m a t i o n on costs and h e a l t h s t a t e s , t h i s process can be viewed as a c o s t - u t i l i t y a n a l y s i s on increments of various programs. At the present time, however, regions are not respond s i b l e f o r a l l h e a l t h care costs. While m u n i c i p a l i t i e s fund most of t h e i r preventive and p u b l i c h e a l t h i n s p e c t i o n programs, the m a j o r i t y of t o t a l h e a l t h care costs at the l o c a l l e v e l are funded v i a the province. Unless the p u b l i c i s d i r e c t l y accountable f o r these a l l o c a t i o n d e c i s i o n s , there i s no reason to expect them to be r e a l i s t i c i n t h e i r e x pectations. I f the p u b l i c were accountable, the next concern would be the imprecise knowledge we have of h e a l t h program e f f e c t i v e -ness. C o s t - u t i l i t y a n a l y s i s can only be as r a t i o n a l as the e p i d e m i o l o g i c a l and c l i n i c a l data on which i t i s based. This e v e n t u a l l y might be achieved i f (or when) a l l h e a l t h programs have been subjected to the rigorous e v a l u a t i o n of the randomized c l i n i c a l t r i a l . We are c l e a r l y a long way from achieving t h i s g o a l . In the meantime, a method of resource a l l o c a t i o n i s r e -q u i r e d which i s more r e f l e c t i v e of our rudimentary knowledge i n program e v a l u a t i o n . - 130 -CHAPTER IV: CHOICE For every complicated problem there i s a simple solution and i t i s always wrong. - H. L. Mencken For every complicated problem there i s also a complicated solution. I t too i s l i k e l y to be wrong. - B. A. Kaminsky There are no "right" or "wrong" arrangements for resource allocations i n health care. There are ju s t choices, and they are largely p o l i t i c a l and value-oriented; i t i s the role of information based on sensible measures to illuminate and even make e x p l i c i t , the nature of the values employed and the choices made. - K. L. White Clearly, the issue of resource a l l o c a t i o n i n a regional structure for the B.C. Health Ministry i s a complex problem. The foregoing analysis of options i l l u s t r a t e s a broad range of solutions — some complicated, others less so — yet none which meets a l l of the Ministry's r e g i o n a l i z a t i o n goals ( i . e . , r a t i o n -a l i t y , equity, e f f i c i e n c y , and e f f i c a c y ) . In b r i e f summary, there were four major types of resource a l l o c a t i o n methods analyzed i n this study. The least complex i s the retention of current funding levels to the regions, with any changes i n a l l o c a t i o n being done on an across-the-board basis. - 131 -This method e s s e n t i a l l y extends the status quo. I t i s quick and inexpensive to administer, and offers a crude but e f f e c t i v e means of cost control. Retention at current levels has the appearance of being f a i r to a l l regions, and has considerable legitimacy i n the sense of having been used on previous occasions by the B.C. Health Ministry. Unfortunately, this approach offers l i t t l e improvement over the present system. Retaining current funding levels would freeze i n any e x i s t i n g i n e q u i t i e s , and would do nothing to encourage improved e f f i c i e n c y or effectiveness i n the health care system. Several methods from the d i s c i p l i n e of economics were also explored. Economic modelling provides a means of estimating the amount and type of resources required to meet the health needs of a region. However, the data necessary to implement such models for resource a l l o c a t i o n are beyond the present c a p a b i l i t y of the Health Ministry. A d d i t i o n a l l y , these models are highly technical and tend to over-emphasize e f f i c i e n c y factors. They are, therefore, not viewed as being feasible at the present time. Economic evaluation, and c o s t - u t i l i t y analysis i n p a r t i c u l a r , hold considerable promise as resource a l l o c a t i o n tools. With i t s e x p l i c i t attempt to evaluate both e f f i c i e n c y and e f f i c a c y , cost-u t i l i t y addresses two of the major goals of reg i o n a l i z a t i o n . Un-fortunately, the v a l i d i t y of c o s t - u t i l i t y i s predicated upon the epidemiological and c l i n i c a l data upon which i t i s based. As our knowledge and application of health program evaluation improves, this method w i l l be increasingly practicable. - 132 -Management by consensus, management by o b j e c t i v e s , and p l a n -ned program budgeting/zero-based budgeting were a l s o d i s c u s s e d as p a r t of the g e n e r a l management model. With i t s emphasis upon m u t u a l i t y of g o a l s e t t i n g and problem-solving-, management by consensus would r e s u l t i n s t r o n g cohesion and commitment among those i n v o l v e d i n resource a l l o c a t i o n d e c i s i o n s . T h i s approach would be extremely d i f f i c u l t to implement i n an area as d i f f u s e as the h e a l t h care system. Management by consensus a l s o l i m i t s the power of c e n t r a l a u t h o r i t y ; as such, i t may not be a c c e p t a b l e to those concerned with m a i n t a i n i n g c l o s e f i s c a l c o n t r o l i n government. MBO i s another management method of resource a l l o c a t i o n . Regions c o u l d be rewarded on the b a s i s of program e f f i c i e n c y and e f f e c t i v e n e s s , as compared with Health M i n i s t r y goals and ob-j e c t i v e s . Immediate u t i l i z a t i o n o f t h i s method i s not c o n s i d e r -ed p o s s i b l e , p r i m a r i l y because of our rudimentary a b i l i t y to e v a l u a t e e f f i c i e n c y and e f f e c t i v e n e s s i n h e a l t h care. A l s o , d i f f i c u l t i e s a r i s e when one c o n s i d e r s how e f f i c i e n c y might be rewarded, or how i n e f f e c t i v e but p o l i t i c a l l y expedient programs might be dropped from funding. Planned Program Budgeting Systems and Zero-Based Budgeting emphasize the l i n k a g e s between budgeting and program g o a l s , and r e c o g n i z e the importance of p r i o r i z i n g resource a l l o c a t i o n de-c i s i o n s i n accordance with the goals of e f f i c i e n c y and e f f e c t i v e -ness. Both methods, however, r e q u i r e enormous investments of - 133 -time, paperwork, and money. The Health Ministry i s unlikely to invest such resources to the degree that i s necessary for success-f u l u t i l i z a t i o n of these techniques. This study has also reviewed epidemiological models. These models are based on the premise that regions should be allocated resources according to t h e i r r e l a t i v e l e v e l of need, with pro-portionately more resources to those regions with a comparative-ly poor health status, less to those with a better health status. With this emphasis upon the needs of the region's population, equity becomes a major issue. A number of d i f f e r e n t epidemiological methods were analyzed. The per capita a l l o c a t i o n method i s the simplest and easiest to administer of a l l epidemiologically based approaches. I t also has a high degree of legitimacy. Nevertheless, i t i s a r e l a t i v e -ly crude instrument, and requires some finetuning before being implemen te d. U t i l i z a t i o n s t a t i s t i c s are another means of applying an epidemiological approach to resource a l l o c a t i o n . Such data, while generally readily available (at least for established programs) are of equivocal significance, and thus, can be de-bated as to t h e i r i n t e r p r e t a t i o n . Ideal resource/population ra t i o s were also explored b r i e f l y . This method i s viewed as overly technical and, i n the f i n a l analysis, a r b i t r a r y . S i m i l a r l y , s o c i a l indicators as proxy - 134 -measures of health status were noted, but since they represent too r a d i c a l a departure from the medical paradigm, this method i s not seen as being acceptable to the various parties interested i n health resource a l l o c a t i o n . Various "true" epidemiological indices were presented, which u t i l i z e data concerning the d i s t r i b u t i o n of general health status, indicators, functional l i m i t a t i o n , disease or death. While application of these methods would represent major progress i n a l l o c a t i n g resources on the basis of health care need, the greatest impediment to r e a l i z i n g this achievement i s our current l e v e l of sophistication i n health information systems. The i n -formation which would be most meaningful i s not being c o l l e c t e d ; that which i s c o l l e c t e d i s not necessarily readily available or categorized i n a way that i s useful; and that which i s a v a i l -able i s not always relevant. "Epidemiological plus" models were also discussed, whereby epidemiological indices are combined with other factors to enhance the v a l i d i t y and/or p r a c t i c a l i t y of the method. This approach i s viewed as e s p e c i a l l y relevant i f incrementalism and pragmatism are desired. Having reviewed the methods developed i n this study, i t i s now appropriate to i d e n t i f y which i s the most desirable for use by the Health Ministry i n regional a l l o c a t i o n s . Before doing so, i t should be r e i t e r a t e d that none of these models, i n themselves takes into account the powerful influence of the p o l i t i c a l and - 135 -bureaucratic forces which permeate health care. The models pre-sented above are e s s e n t i a l l y planning and administrative approach-es which are not l i k e l y to be r i g i d l y followed i n any r e a l world environment. Generally speaking, the more r a t i o n a l the method appears when discussed i n i t s own context, the less l i k e l y i t i s to be acceptable to the various i n t e r e s t groups involved i n health care. Whatever planning model which may be selected w i l l of necessity be "compromised" by the process of negotiation with these diverse p a r t i e s . Furthermore, regardless of the method which i s evolved for use by the B.C. Health Ministry, i t i s highly improbable that i t w i l l be used for a l l resource a l l o c a t i o n decisions. Any sphere where p o l i t i c s plays a major role w i l l f i n d that planning may provide a basic framework for perhaps the majority but not a l l of the a l l o c a t i o n decisions. At t h e i r best, r a t i o n a l planning methods can take the heat o f f decision-makers by providing data (reasons) for making unpopular decisions i n a world where everything you do makes someone unhappy . . . If we do not have enough money to do every-thing and please everyone, [rational methods] can :-. at least increase the odds of doing something and pleasing someone (Patton, 1978, p. 16). - 136 -A. SELECTION OF A RESOURCE ALLOCATION MODEL FOR THE B.C. HEALTH MINISTRY The most c r i t i c a l component i n the process of s e l e c t i n g a resource a l l o c a t i o n t o o l f o r the B.C. Health M i n i s t r y i s to i d e n t i f y the value base or g o a l which i s deemed to be of great-e s t p r i o r i t y to the M i n i s t r y . Unfortunately, w h i l e the Health M i n i s t r y has a r t i c u l a t e d four o v e r a l l goals, i t has not ranked them as to importance. Lacking t h i s i n f o r m a t i o n , i t i s not p o s s i b l e to evaluate which of the resource a l l o c a t i o n methods presented i n t h i s study would be the most appropriate to meet the M i n i s t r y ' s needs. The viewpoint advocated i n t h i s a n a l y s i s , however, i s t h a t the preeminent goal of any h e a l t h s e r v i c e should be the improve-ment of the h e a l t h s t a t u s of the p o p u l a t i o n . Having a r t i c u l a t e d t h i s p o s i t i o n , i t i s then necessary to compare how c l o s e l y each of the a l l o c a t i o n methods comes to acknowledging t h i s i s s u e i n the a l l o c a t i o n process. C l e a r l y , r e t e n t i o n of the s t a t u s quo can be r e j e c t e d , as i t o f f e r s r e c o g n i t i o n of n e i t h e r need nor outcome. The economic model, w i t h i t s main emphasis upon e f f i c i e n c y does not c l e a r l y address h e a l t h s t a t u s . The management model, concentrating on e f f i c i e n c y and e f f e c t i v e n e s s merits c o n s i d e r a t i o n i f one assumes tha t e f f e c t i v e n e s s i s defined i n terms of improved h e a l t h s t a t u s . Applying t h i s p r i n c i p l e to resource a l l o c a t i o n , however, might - 137 -produce perverse r e s u l t s . Most management models reward e f f i c i e n t and e f f e c t i v e programs. Thus, when the time arises to allocate resources, regions which have developed e f f i c i e n t programs that r e s u l t i n improvement i n health status w i l l be given further resources. Those that have not demonstrated these competencies w i l l not be s i m i l a r l y rewarded. The ludicrous l o g i c of the above l i n e of argument i s obvious. The management model may well be appropriate to motivate managers; however, we would not generally wish to provide health resources on this basis. The important value which i s absent from the management model i s equity. Most individuals i n our society would agree that health care i s a basic rig h t , and that i t should be provided, not as a reward for e f f e c t i v e or e f f i c i e n t programs, but according to the needs of the population. Indeed, this con-cept of equity l i e s at the very heart of the Canadian health care system. With i t s history of medicare and of h o s p i t a l insurance, this country has demonstrated i t s commitment to equality of access to health care. The recent passage of the Canadian Charter of Rights has reaffirmed and strengthened this commitment to i n -dividual rights and equality. Therefore, the epidemiological model, with i t s emphasis on the health needs of population groups and on equity i n a l l o c a t i o n of health resources i s , from the point of view of basic values, the most f a i r and just resource a l l o c a t i o n method. Clearly, i t has the highest degree of l e g i t -imacy of a l l models reviewed i n this study. Consequently, the epidemiological model i s the recommended model for use by the B.C. Health Ministry i n resource a l l o c a t i o n to the regions. - 138 -B. SELECTION OF A RESOURCE ALLOCATION METHOD FROM THE EPIDEMIOLOGICAL MODEL Having made the basic value choice for an epidemiological approach, the Kepner-Tregoe problem-solving methodology (de- . ... scribed on pages 20 and 21 of this study) then can be u t i l i z e d to provide further d i r e c t i o n i n determining which of the various Epidemiological methods i s most advisable for the B.C. Health Ministry. The objectives or c r i t e r i a of the decision concerning re-source a l l o c a t i o n methods are categorized on the basis of "musts" (those which are essential) and "wants" (those which are de-sirable) . 31 1. E s s e n t i a l Features of a Resource A l l o c a t i o n Method I t should be: a) understandable and acceptable to the various parties involved i n health care, and w i l l i n part be i n -fluenced by the a l l o c a t i o n methods previously used i n the B.C. Health Ministry as well as those i n current use i n other j u r i s d i c t i o n s ; b) r e l i a b l e . D i f f e r e n t people at d i f f e r e n t times, using the same data, should arrive at the same conclusion; Many of these c r i t e r i a are derived from Moriyama (1968). - 139 -c) based on data which are already available or economi-c a l l y feasible to obtain; d) v a l i d . Its underlying assumptions should be theoret-i c a l l y and i n t u i t i v e l y l o g i c a l ; e) objective, and not readily lend i t s e l f to manipulation by those with a vested i n t e r e s t i n the resource a l l o -cation process; and f) r e f l e c t i v e of the current l e v e l of sophistication i n planning i n the B.C. government system ( i . e . , i t should be simple). Desirable Features of a Resource A l l o c a t i o n Method I t should be: a) s u f f i c i e n t l y sensitive to major variations i n health status i n the regions; b) based on the "maximin" p r i n c i p l e : improvements i n a value d i s t r i b u t i o n con-s i s t i n cutting off the bottom of the d i s -t r i b u t i o n , not extending the top. The achievement of a policy or program i s ap-praised by i t s minima, not i t s peaks. We assess a technology, from the standpoint of s o c i a l planning, by the price of shoes rather than the achievement of a sputnik. Equivalently . . . those with least of a p a r t i c u l a r value should have the f i r s t p r i o r i t y for more of i t (Kaplan, 19 73, p. 54). c) capable of implementation i n a r e l a t i v e l y short period of time, and should not require a large cadre of planning, f i n a n c i a l , or administrative s t a f f on an ongoing basis. - 140 -3. Time Frame An additional consideration i n selecting a resource a l l o -cation tool i s that of timeliness. There i s a need for a re-source a l l o c a t i o n method which can be implemented i n the next several years. This statement i s based on the assumptions that the current system needs improvement as soon as possible and/or that r e g i o n a l i z a t i o n w i l l occur within this time period. I t i s quite l i k e l y that whichever method i s most feasible i n the short-run may not be as v a l i d or r e l i a b l e as could be developed i n the longer term. Consequently, two strategies should be considered -- one for immediate implementation and another for the longer range. In noting the need for a two stage strategy, however, i t should be emphasized that unless concrete steps are taken to improve or develop beyond a short range approach, the short range has the unfortunate tendency of extending to the longer range. Therefore, the Health Ministry must be targeting for the longer range strategy coincident with development of a short range approach. 4. Evaluation of Epidemiological Methods i n Relation to L i s t e d  C r i t e r i a Two time horizons must be considered: the short range and the longer-range. a) Short-range: Clearly, the method selected for immedi-ate implementation should meet a l l of the e s s e n t i a l features l i s t e d above. As a beginning, i t i s useful - 141 -to h i g h l i g h t those which relate to f e a s i b i l i t y , i . e . , ac c e p t a b i l i t y to those involved i n the health care system and current a v a i l a b i l i t y of data. Per capita a l l o c a t i o n , u t i l i z a t i o n s t a t i s t i c s , and epidemiological indices based on standardized mortality s t a t i s t i c s meet these c r i t e r i a . U t i l i z a t i o n s t a t i s t i c s , however, are rejected because of the confusion as to t h e i r interpre-tation. This method i s therefore viewed as neither r e l i a b l e nor v a l i d . The two remaining methods — per capita allocations and standardized mortality s t a t i s t i c s -- s a t i s f y a l l of the "musts". The per capita method i s marginally pre-ferred, as i t i s the simpler of the two methods and i t i s already being used i n other Canadian j u r i s d i c t i o n s . Longer-range: Selection of a method for the longer-range need not be constrained by f e a s i b i l i t y consider-ations to the same degree as a short-range method. Therefore, substantive c r i t e r i a such as r e l i a b i l i t y and v a l i d i t y can be emphasized to a greater extent. Per capita allocations and u t i l i z a t i o n s t a t i s t i c s are rejected because of the i r i n s u f f i c i e n t p r ecision. The arbitr a r y nature of i d e a l resource/population ra t i o s renders this method inappropriate. S o c i a l indicators, being too r a d i c a l a departure from the medical model, are also not advocated. Epidemiological indices and - 142 -" e p i d e m i o l o g i c a l p l u s " models, however, both appear c o n c e p t u a l l y d e s i r a b l e and t e c h n i c a l l y f e a s i b l e i n the longer-range. The choice between these two types of methods i s r a t h e r d i f f i c u l t , as they are q u i t e s i m i l a r to one another. The "epide-m i o l o g i c a l p l u s " method i s s e l e c t e d on the b a s i s of i t s pragmatism, as w e l l as the l e g i t i m a c y d e r i v e d from the precedent of RAWP a l l o c a t i o n s i n B r i t a i n . C. RECOMMENDATIONS FOR THE B.C. HEALTH MINISTRY Based on the f o r e g o i n g a n a l y s i s , two recommendations are o f f e r e d -- one f o r the s h o r t - r u n and another f o r the longer-run -- both of which are based on the e p i d e m i o l o g i c a l approach. 1. Short-Run S t r a t e g y IT IS RECOMMENDED THAT THE B.C. MINISTRY OF HEALTH ADOPT THE PRINCIPLE OF PER CAPITA ALLOCATIONS TO THE REGIONS. T h i s i s a r e l i a b l e , simple, and understandable resource a l l o c a t i o n method. I t has the v i r t u e of l e g i t i m a c y , i n t h a t o t h e r j u r i s d i c t i o n s have used t h i s approach. The data r e q u i r e d f o r per c a p i t a a l l o c a t i o n s are r e a d i l y a v a i l a b l e from the Census, and from the Health Min-i s t r y . Furthermore, t h i s method cannot e a s i l y be manipulated by those with v e s t e d i n t e r e s t s i n the resource a l l o c a t i o n p r o c e s s . Perhaps most important of a l l , the per c a p i t a method r e p r e s e n t s a b e g i n n i n g i n the process of a p o p u l a t i o n based awareness i n resource a l l o c a t i o n . To date, resources have been a l l o c a t e d more - 143 -on the basis of the "needs" of i n s t i t u t i o n s and p r a c t i t i o n e r s , than on the health care needs of the population. The s i m p l i c i t y and i n t u i t i v e l o g i c of the per capita method renders i t as an appropriate tool for re-orienting our thinking on the rationale for resource a l l o c a t i o n . While the per capita method s a t i s f i e s a l l the c r i t e r i a l i s t -ed as "musts", i t does not meet a l l the "wants". F i r s t of a l l , i t i s not as precise as some of the more sophisticated epidemi-o l o g i c a l models. Also, this method appears at f i r s t glance to be capable of immediate implementation with l i t t l e support s t a f f . However, i t w i l l be r e c a l l e d that additional study i s necessary to account for age and sex difference i n regional populations, cross-boundary patient flow for expensive t e r t i a r y care, d i f f e r -ences i n costs of providing programs i n various regions, teaching f a c i l i t i e s for health personnel, and depreciation of c a p i t a l stock. I t must also be acknowledged that i f the per capita approach, incorporating the refinements described above, results i n major changes over the status quo, then allocations should be made on the basis of approaching targets (similar to the process used by the RAWP i n B r i t a i n ) . Incrementalism continues to be the watch-word i n health care; the use of a resource a l l o c a t i o n tool must be congruent with this p r i n c i p l e . Table III presented on page 6 0 indicates the beginning of the process which must be undertaken to develop a per capita a l l o c a t i o n system. - 14 4 -2. Longer-Run S t r a t e g y Perhaps i n the next decade o r so, those i n v o l v e d i n the h e a l t h care system w i l l be able to accept a more r a t i o n a l e p i d e -m i o l o g i c a l approach than the per c a p i t a method. P l a n n i n g f o r the longer-range i s extremely d i f f i c u l t , however. One can an-t i c i p a t e t h a t there w i l l be economic and p o l i t i c a l changes which a f f e c t the H e a l t h M i n i s t r y , but accurate p r e d i c t i o n of the nature of these changes i s i m p o s s i b l e . Notwithstanding t h i s l i m i t a t i o n i n longer-range p l a n n i n g , an " e p i d e m i o l o g i c a l p l u s " model i s advocated. IT,IS RECOMMENDED THAT AN "EPIDEMIOLOGICAL PLUS" APPROACH BE DEVELOPED IN THE NEXT TEN YEARS, WHICH HAS AS ITS BASE AN INDEX APPROXIMATING THE ECONOMISTS' GNP AS A STANDARD UNIT OF COMPARISON. Such an e v o l u t i o n i n t h i n k i n g w i l l not occur o v e r n i g h t . An acceptance of and f a m i l i a r i t y with more rudimentary p o p u l a t i o n based methods are necessary p r e r e q u i s i t e s to the development of an e p i d e m i o l o g i c a l p l u s method. T h i s w i l l be a slow, i t e r a t i v e p r o c e s s , i n v o l v i n g not o n l y the B.C. h e a l t h care system, but other j u r i s d i c t i o n s as w e l l . An e p i d e m i o l o g i c a l p l u s method a l s o must r e l y on f u r t h e r enhancement of our h e a l t h i n f o r m a t i o n systems. Our c u r r e n t e p i d e m i o l o g i c a l data base i s an incomplete patchwork. R e f i n e -ment of e i t h e r comprehensive indexes or accurate t r a c e r measures i s e s s e n t i a l . - 145 -While the hope f o r an e p i d e m i o l o g i c a l plus method of r e -source a l l o c a t i o n might appear i m p r a c t i c a l to many i n v o l v e d i n he a l t h care at t h i s time, the importance of a longer range per-s p e c t i v e must be appreciated. J u s t as those who ignore h i s t o r y are condemned to repeat the mistakes of the past, those who lack a sense of v i s i o n are condemned to d r i f t a i m l e s s l y i n t o the f u t u r e . I t i s hoped th a t the Health M i n i s t r y and indeed the p r o v i n c i a l government are able to meet t h i s challenge. - 146 -CHAPTER V: IMPLEMENTATION A. ANTICIPATION OF PROBLEMS Having recommended a s h o r t - r u n and a l o n g e r - r u n r e s o u r c e a l l o c a t i o n method, one must then a n t i c i p a t e the p o s s i b l e n e g a t i v e consequences o f i m p l e m e n t i n g these d e c i s i o n s , and s t r a t e g i z e methods t o c o n t r o l f o r p o t e n t i a l d i f f i c u l t i e s . The d e s i r a b i l i t y o f p l a n n i n g i m p l e m e n t a t i o n beyond the s h o r t - r u n i s d u b i o u s ; t h e r e -f o r e comments c o n c e r n i n g i m p l e m e n t a t i o n f o c u s on the p e r c a p i t a method o n l y . F o l l o w i n g the Kepner-Tregoe approach, a l l o f the a n t i c i p a t e d problems are e v a l u a t e d as t o t h e i r p e r c e i v e d s e r i o u s n e s s as ob-s t a c l e s t o i m p l e m e n t a t i o n , and t h e i r p r o b a b i l i t y o f o c c u r r e n c e . T h i s l i s t , p r e s e n t e d i n F i g u r e 9, i s by no means e x h a u s t i v e . C e r t a i n l y , i t can be e x p e c t e d t h a t once the p e r c a p i t a approach began t o be d i s c u s s e d , a m y r i a d o f o t h e r problems would be r a i s e d — some l e g i t i m a t e , o t h e r s perhaps as r e d h e r r i n g s . Those l i s t e d , however, r e p r e s e n t the major i s s u e s w h i c h , i n the o p i n i o n o f t h i s w r i t e r , need to be c o n s i d e r e d . A problem w h i c h i s r a t e d h i g h i n b o t h s e r i o u s n e s s and p r ob-a b i l i t y i s t h a t , i f the a d o p t i o n o f p e r c a p i t a a l l o c a t i o n s l e a d s to a major change i n the s t a t u s quo, o p p o s i t i o n w i l l a r i s e from - 147 -F i g u r e 9: A n t i c i p a t e d Problems i n the Implementation of the Per C a p i t a Method PROBLEM SERIOUSNESS PROBABILITY C o n f l i c t from those l i k e l y to l o s e i f there are major changes i n the s t a t u s quo High High Lack of refinement of the per c a p i t a method Moderate Moderate Conceptual flaws b a s i c to a l l e p i d e m i o l o g i c a l methods Moderate Moderate Low commitment from bureaucrats and p o l i t i c i a n s to r a t i o n a l ... p l a n n i n g High High - 14 8 -those who stand to lose. In an area as subject to p o l i t i c a l pressures as health care, this opposition i s of major import. A second problem which jeopardizes the acceptance of this system i s i t s lack of refinement. A s t r i c t per capita a l l o c a t i o n , as previously mentioned, does not take into consideration age and sex differences i n regional populations, crossboundary patient flow, differences between regions i n service costs, teaching f a c i l i t i e s for health care personnel, and differences i n the value of c a p i t a l stock. These shortcomings w i l l become evident to those who take the trouble to analyze the d e t a i l s of the a l l o c a t i o n t o o l , and are rated as moderate i n terms of serious-ness and p r o b a b i l i t y . S i m i l a r l y , the flaws inherent i n the epidemiological, needs-based approach threaten the success of the per capita a l l o c a t i o n method. A l l o c a t i n g resources on the basis of population need provides no assurance that e f f i c i e n c y , effectiveness or e f f i c a c y w i l l be achieved i n the health care system. Conceptually, this i s a major problem; however, on comparing this approach with others, i t i s seen as the best possible point from which to begin the development of a resource a l l o c a t i o n t o o l . Thus, conceptual problems are considered to be moderately serious and probable. Having acknowledged the basic flaws i n per capita a l l o c a t i o n s , and the opposition to be expected from those who may lose re-sources with any change i n the system, a fourth problem becomes even more c r i t i c a l . There i s , at the present time, a low com-- 149 -mitment to r a t i o n a l planning p r i n c i p l e s , both by bureaucrats and p o l i t i c i a n s . Consequently, when the c o n f l i c t begins to heighten, a hasty retreat from r a t i o n a l methodologies might be expected. The seriousness and pr o b a b i l i t y of this problem i s viewed as high. B. HOW TO DEAL WITH PROBLEMS Accurately predicting the type of problems to be encounter-ed i n implementing the per capita approach i s one thing; develop-ing appropriate strategies to overcome or to minimize such d i f -f i c u l t i e s i s quite another. One of the most important considerations i n dealing with these problems i s the manner i n which resource a l l o c a t i o n methods are developed. I t i s commonly accepted that those who are to be affected by planning should be d i r e c t l y involved i n the planning process. In this way planners can help ensure that the p r i o r i t i e s have been properly iden-t i f i e d , that the plan i s fea s i b l e , and that most importantly, the implementation phase w i l l enjoy broad support (Hall i n Reinke, 1972, p. 83). In considering how to deal with these problems i t i s help-f u l to refer to the Vroom and Yetton (1973) decision-making model. B r i e f l y , these writers i s o l a t e three c r i t i c a l variables i n any decison-making process: the r a t i o n a l i t y or objective qu a l i t y of the decision, the acceptance by and commitment to the decision by those affected by the decision, and the degree to which organizational members share a common set of goals. - 150 -Vroom. and Yetton have developed a decision tree which serves as a guide to determining which mode of decision-making should be used, given a certain set of circumstances. (See Appendix H for a description of the model and i t s application to the problem of selecting a resource a l l o c a t i o n method for the B.C. Health Ministry.) This model indicates that consultation with others as a group i s necessary, with the central authorities s t i l l re-taining the power of ultimate decision-making. Having determined that consultation i s i n order, the next task i s to decide whom to consult, and to what extent. General-ly speaking, one can predict that there w i l l always be a certain amount of c r i t i c i s m , regardless of the decision taken. Many of those who are not consulted w i l l complain that i n s u f f i c i e n t i n -put has been obtained. Often, those who are consulted but whose viewpoints are not s u f f i c i e n t l y heeded w i l l lament that con-s u l t a t i o n was more ceremonial than r e a l . I t i s of the utmost importance, then, that the Health Ministry c l a r i f y that the intent of consultation i s purely advisory; consensus i s neither achievable nor necessarily desirable. Notwithstanding the above, i t should also be c l e a r l y under-stood that the consultative process m i l i t a t e s against any pre-determined outcome on the part of the Health Ministry. While background papers or recommendations may serve as catalysts for discussion, they should not be used to legitimize a p a r t i c u l a r resource a l l o c a t i o n method already selected by the Ministry or - 151 -the Treasury Board. I t i s i n this s p i r i t that the present study i s offered. Consequently i t i s quite apparent that the per capita a l l o c a t i o n method need not be the recommended option a r i s -ing from such consultation. For the sake of completing the d i s -cussion on implementation, however, the remainder of this chapter w i l l be devoted to the strategies for reducing the problems anticipated i n u t i l i z i n g the per capita method. Figure 10 summarizes the anticipated problems and the s t r a t -egies suggested for minimizing these d i f f i c u l t i e s . Problems con-cerning the lack of refinement of the method, and hence i t s lack of c r e d i b i l i t y would c e r t a i n l y be lessened i f the per capita method were developed i n close consultation with those who are to be affected by the process. Just as the Ministry of Health anticipated a need for an implementation committee for regional-32 i z a t i o n as a whole , i t would seem i n order for a task force to be struck to address the issue of resource a l l o c a t i o n i n a regional structure. Given the l i k e l i h o o d of c o n f l i c t i n such a task force, the use of an external resource — such as a consulting firm with a strong f i n a n c i a l or accounting c a p a b i l i t y -- might be considered. The flaws i n the population based approach whereby e f f i c i e n c y , effectiveness, and e f f i c a c y are not formally addressed, would suggest the need to ensure that certain economic and management See Regionalization of Health Care i n B.C. - 152 -Figure 10: Implementation Strategies to Overcome Anticipated Problems i n the Per Capita A l l o c a t i o n Method PROBLEM STRATEGY Lack of refinement of the per capita method Develop method i n consultation with those who w i l l be affected. Resource a l l o c a t i o n task force External f a c i l i t a t o r Conceptual flaws i n the epidemiological approach Link with management and economic approaches C o n f l i c t from those l i k e l y to lose Consult those affected by the resource a l l o c a t i o n method. Phase i n change over 5 to 10 year period. Low commitment from bureaucrats and p o l i t i c i a n s to r a t i o n a l planning A r t i c u l a t e goal of improving the health status of the population. Encourage service providers to consider a change i n the current system, primarily through economic controls. - 15 3 -p r i n c i p l e s be u t i l i z e d i n conjunction with the per capita system of a l l o c a t i o n . This would c l e a r l y enhance the technical f e a s i -b i l i t y of the system. Techniques such as Management by Objectives and Zero-Based Budgeting are examples of management tools which seek to improve e f f i c i e n c y and effectiveness. These methods add considerably to the epidemiological base. Having i d e n t i f i e d the health care needs of a population, the process of goal setting or determining standards can follow i n a l o g i c a l progression. Economic tools, such as cost-benefit and cost-effectiveness analysis should also be used i n the health care system to a greater degree than has been evident so f a r . Such methods would allow for informed choice among a number of program alternatives, and would a s s i s t i n achieving the most value for the dollars spent i n health care. By combining the needs based approach i n resource a l l o c a t i o n with management and economic methods of pro-gram evaluation, the health system would be strengthened con-siderably. An important part of this process would be the qual-i t y of information available to the Health Ministry. Our current health information system can perhaps most charitably be des-cribed as rudimentary; there i s a need fo r a great deal of im-provement i n this area. The problem of c o n f l i c t from those who stand to lose from any change i n the status quo might be reduced somewhat through the consultative process. S t i l l , i t would be naive to expect that, having been consulted, various groups would accept as i n -evitable a s h i f t i n resources away from t h e i r i n t e r e s t s . Perhaps - 154 -the only e f f e c t i v e method of coming to terms with this issue i s to phase i n the rate of change, say at the rate of f i v e to ten per cent per year. Ultimately, the major test of the f e a s i b i l i t y of the per capita approach i s whether or not senior Health Ministry s t a f f -- and more importantly the p o l i t i c i a n s -- are prepared to stand behind this method. At present, there i s some rh e t o r i c with l i t t l e demonstrable commitment on the part of eit h e r group to a more r a t i o n a l system of resource a l l o c a t i o n . What i s clear i s a preoccupation with cost control, based more on accounting than planning p r i n c i p l e s . While the Health Ministry c i t e s increased r a t i o n a l i t y as one of i t s goals, i t i s i n t e r e s t i n g to note that there i s no o f f i c i a l reference to the goal of improving the health status of the population. As noted e a r l i e r , there are l i m i t s as to the extent to which health status can be improved through resources devoted to health care. Yet, i t i s e s s e n t i a l that this concept of population needs be emphasized i f the per capita or indeed any epidemiologically based approach i s to be seen as legitimate. A clear goal statement concerning health status enhancement would be a good s t a r t toward demonstrating a commitment to ra-t i o n a l planning methods. Of much greater importance, however, i s whether such a statement would bear any r e l a t i o n to the nature of decisions taken i n resource a l l o c a t i o n . In a p o r t f o l i o as contentious as Health, p o l i t i c i a n s generally wish to avoid prob-lems rather than to p r e c i p i t a t e them. This has resulted i n a - 155 -paucity of decision-making at the po l i c y l e v e l for the health care system. I t would seem that the p o l i t i c a l imperative i s to i n i t i a t e action only when one i s forced to do so. P o l i t i c i a n s attempting to lead the electorate faster than they wish to be .. led are l i k e l y to f i n d themselves bereft of a r i d i n g . The point then i s whether or not the public i n general and/ or the major service providers i n the health care sector are s u f f i c i e n t l y d i s s a t i s f i e d with the current a l l o c a t i o n system that they would view a change as an improvement. In general, the public has not expressed any s i g n i f i c a n t d i s s a t i s f a c t i o n with the B.C. health care system. Service providers, on the other hand, have been known to voice t h e i r discontent from time to time. We are, to state the obvious, i n a period of economic re-cession. Unless the government attempts to severely c u r t a i l services or conversely to raise taxes or user charges inexorably, the average c i t i z e n i s more l i k e l y to be preoccupied with manag-ing his or her own budget than with seeking c i t i z e n input into the area of health care. Change then i s more l i k e l y to occur through the vehicle of health service and government channels, than through any populist movement. When a l l service providers are e s s e n t i a l l y s a t i s f i e d with t h e i r resource a l l o c a t i o n , there i s l i t t l e incentive for change. When resources become constrain-ed, incentives can be developed which encourage change. S e l f -preservation i s a potent motivating force. The time may be ripe for such change, provided that these groups believe that they w i l l be given s u f f i c i e n t input i n t o the process. - 156 -As a beginning to this development i t i s mandatory that the Health Ministry acknowledge the existence of f i n a n c i a l constraint by holding service providers to s p e c i f i e d funding l i m i t s . Such a strong stand has not been c h a r a c t e r i s t i c of the Ministry to date. One need not have a long memory to r e c a l l l a s t year's fee debate between the physicians and the government, whereby physi-cians obtained a 40 per cent increase over a two year period. I t i s d i f f i c u l t to take f i s c a l r e s t r a i n t seriously when such settlements occur. 19.82, i t seems, w i l l be d i f f e r e n t . With the February 18th announcement by the p r o v i n c i a l government of a twelve per cent /.ceiling on the public sector and on government i n general, there i s a growing resolve to tackle the f i s c a l c r i s i s . I t seems im-probable that i n t e r e s t groups i n the health care sector can ignore these circumstances. C. TIMING AND PHASING I f the B.C. Health Ministry desires a more r a t i o n a l , equit-able system of resource a l l o c a t i o n i n a regional structure, the per capita method should be developed coincident with the pro-cess of reg i o n a l i z a t i o n . To date, the plan i s to begin regional-i z a t i o n with those programs which are under d i r e c t government control ( i . e . , most of the preventive and community programs). Observers of the health care system w i l l quickly point out that r a t i o n a l i z i n g merely one portion of the health care system --- 157 -and a c o m p a r a t i v e l y s m a l l one a t t h a t — w i l l h a v e l i m i t e d r e -s u l t s . U n l e s s t h e m a j o r a r e a s o f e x p e n d i t u r e s u c h as i n s t i t u t i o n -a l c a r e a n d p h y s i c i a n s ' s e r v i c e s a r e d e a l t w i t h , l i t t l e i m p r o v e -ment i n a l l o c a t i v e e q u i t y c a n be e x p e c t e d . N e v e r t h e l e s s , as h a s b e e n e m p h a s i z e d r e p e a t e d l y t h r o u g h o u t t h i s s t u d y , c h a n g e i n t h e h e a l t h c a r e s y s t e m o c c u r s i n c r e m e n t a l l y , a n d w i t h i n t h e c o n t e x t o f l i m i t e d r a t i o n a l i t y . I f a new r e s o u r c e a l l o c a t i o n s y s t e m c a n be s u c c e s s f u l l y a p p l i e d i n one a r e a , t h e n t h e r e i s a g r e a t e r l i k e l i h o o d t h a t i t c a n be i m p l e m e n t e d i n more c o n t r o v e r s i a l p r o g r a m a r e a s a t a l a t e r d a t e . I f t h e i n t e n t o f t h e H e a l t h M i n i s t r y i s t o r a t i o n a l i z e a l l h e a l t h r e s o u r c e s on a r e g i o n a l b a s i s o v e r t h e n e x t s e v e r a l y e a r s , t h e n t h e c u r r e n t p h a s i n g a p p e a r s a p p r o p r i a t e . I f t h e r e i s no s u c h i n t e n t i o n , t h e c o s t - e f f e c t i v e n e s s o f r e g i o n a l i z a t i o n o f a s m a l l p e r c e n t a g e o f h e a l t h p r o g r a m s a p p e a r s q u e s t i o n a b l e . A s s u m i n g t h e n t h a t r e g i o n a l i z a t i o n w i l l e x p a n d t o a l l h e a l t h c a r e p r o g r a m s i n t h e y e a r s t o come, b e g i n n i n g w i t h s e r v i c e s u n d e r d i r e c t g o v e r n m e n t c o n t r o l a p p e a r s t o h a v e a f a v o u r a b l e p r o s p e c t f o r s u c c e s s . T h e s e s e r v i c e s h a v e a r e l a t i v e l y s t r o n g b u r e a u c r a t i c l i n k w i t h t h e H e a l t h M i n i s t r y a n d a r e t h e r e f o r e a m e n a b l e t o i n -f l u e n c e o r d i r e c t i o n b y t h e g o v e r n m e n t . As w e l l , t h e y a r e o f a m a n a g e a b l e s i z e ; i m p l e m e n t a t i o n a n d c o m m u n i c a t i o n i s much e a s i e r w i t h a c o m p a r a t i v e l y s m a l l g r o u p t h a n w i t h a l a r g e , d i f f u s e s y s t e m o f p r o g r a m s . P e r h a p s m o s t i m p o r t a n t l y , t h e m a j o r i t y o f s e r v i c e s u n d e r d i r e c t g o v e r n m e n t c o n t r o l c a n be g e n e r a l l y d e s -c r i b e d as p u b l i c h e a l t h o r i e n t e d . T h e s e s e r v i c e s h a v e a h i s - -- 15 8 -t o r i c a l base and a philosophical appreciation of epidemiological 33 p r i n c i p l e s i n health care planning . Therefore, the Health Ministry could begin the process of developing the per capita resource a l l o c a t i o n system by engaging Health Unit Directors and relevant senior s t a f f from Central Office i n V i c t o r i a i n a task force directed to this issue. I f the per capita a l l o c a t i o n system resulted i n considerable change over e x i s t i n g funding l e v e l s , the system could be phased i n over a number of years. I t i s important, however, that community and preventive programs not be i s o l a t e d from i n s t i t u t i o n a l and physicians' services. Planning and resource a l l o c a t i o n i d e a l l y should be comprehensive rather than piecemeal. Eventually, this would suggest the need to dissolve the three current organizational divisions of Preventive, Community and I n s t i t u t i o n a l Services and to emphasize instead, decentralization of powers to the regional l e v e l . Given the complexity of the i n t e r - r e l a t i o n s h i p s between health care programs, and between Health and other j u r i s d i c t i o n s , the per capita method of a l l o c a t i o n i s best suited to determining allocations to the regions. Regions, however, should be allocated budgets on a global basis, and should have the administrative authority and planning c a p a b i l i t y to decide which s p e c i f i c services should be funded, and to what extent. Verbal Communication, February 25, 19 82, Dr. Frank White, Epidemiologist, B.C. Ministry of Health. - 159 -I t would seem that the evolution of c i t i z e n input into these de-cisions would be both l o g i c a l and desirable. The Health Ministry, however, w i l l also require a means of ensuring that regions are meeting M i n i s t e r i a l goals. Therefore, standards of performance should be developed i n order to evaluate the e f f i c i e n c y , e f f e c t -iveness, and e f f i c a c y of health programs i n each of the regions. Developing a system-wide perspective for r e g i o n a l i z a t i o n and resource a l l o c a t i o n w i l l be a slow and arduous process. Dialogue with i n s t i t u t i o n s and the physicians concerning these issues should begin i n the near future, for i t w i l l take some time for these areas to accept the need for any change. Partly as a means of motivating change, and partly as a means of gaining time while energies are devoted to implementing regi o n a l i z a t i o n and per capita allocations i n other areas of health care, a status quo strategy of holding i n s t i t u t i o n a l and physicians' expenditures at their current levels i s recommended 34 for the next several years . With the February 18, 1982 an-.-nouncement of twelve per cent l i m i t s i n public spending, the stage seems to have been set for applying greater controls over i n s t i t u t i o n s ' and physicians' costs. In the case of i n s t i t u t i o n s — and most notably acute care hospitals — the government has the power through i t s budgetary The attentive reader w i l l note at t h i s point that i n f a c t three methods of resource a l l o c a t i o n have been recommended: status quo, per capita methods, and "epidemiological plus" approaches. - 16 0 -process of holding i n s t i t u t i o n s at a desired funding l e v e l , such as a ten per cent increase per year. The c r i t i c a l component i n this process, however, w i l l be how seriously the boards of d i r e c t -ors of the i n s t i t u t i o n s , the senior s t a f f i n the Health Ministry and the p o l i t i c i a n s take these r e s t r i c t i o n s . If over-runs are continually met by the Health Ministry, or i f many i n s t i t u t i o n s are able to negotiate s p e c i a l consideration beyond the guideline figure, then l i t t l e f i s c a l control can be expected. I f , on the other hand, these guidelines are adhered to, i n s t i t u t i o n s w i l l experience.a marked and immediate tension between resources a l l o -cated and those required to maintain e x i s t i n g service l e v e l s . While i t i s possible that some improvements might be made i n e f f i c i e n c y of service delivery within the i n s t i t u t i o n s , i t i s v i r t u a l l y inevitable that some decrease i n i n s t i t u t i o n a l s t a f f i n g w i l l occur, either through a t t r i t i o n or l a y - o f f s . Unions are not l i k e l y to applaud such approaches and may well j o i n health care p r a c t i t i o n e r s i n protesting that areas of " c l i n i c a l need" 35 are being neglected I t i s fortuitous — but not c o i n c i d e n t a l — that a r a t i o n a l planning process has already begun i n the ho s p i t a l sector. The Many of these developments have already begun. Vancouver General Hospital has practiced management by a t t r i t i o n over the past year. Also, the B.C. Health C o a l i t i o n seminar i n Vancouver on March 6, 1982 brought together p r a c t i t i o n e r s and unionists for the cause of saving Medicare and financing of health care i n general. - 161 -Hospital Role Study, while i t i s slow, i s at l e a s t providing the background data necessary to i d e n t i f y the appropriate role for each h o s p i t a l , based among other things, upon population character-i s t i c s . Once this i s completed, resource a l l o c a t i o n according to population c h a r a c t e r i s t i c s i s a reasonable next step. The above strategy assumes that i n s t i t u t i o n s w i l l be con-t r o l l e d by government -- controlled i n the sense of adhering to budgets allocated to them. Should this not occur, alternative methods of mandating i n s t i t u t i o n a l services may need to be con-sidered. Increasing the number of government appointees to h o s p i t a l boards i s one option which appears l i k e l y . A more extreme but possibly more e f f e c t i v e method would be to eliminate the arm's length agency relationship between i n s t i t u t i o n s and the Health Ministry, and to put these i n s t i t u t i o n s under d i r e c t government control. Dealing with a l l o c a t i o n of resources for, physicians' services i s an even more thorny issue. Merely c o n t r o l l i n g physicians' fee increases to ten or twelve per cent increases w i l l be an i n -adequate strategy to contain costs, even i n the short run. In the fee-for-service system, physicians have considerable f l e x i b i l -i t y i n the management of t h e i r caseloads. If fees do not increase to the extent deemed appropriate by the medical p r a c t i t i o n e r , (s)he can see more patients, or see the same number of patients but on a more frequent basis. Therefore, while negotiated s e t t l e -ments with the medical profession may be contained within the twelve per cent l i m i t , actual expenditures could increase sub-s t a n t i a l l y beyond this figure. - 16 2 -Furthermore, B.C. has no method of c o n t r o l l i n g the number of physicians who decide to practice i n this province. B r i t i s h Columbia continues to a t t r a c t a large number of physicians from 3 6 other parts of Canada and from other countries . Previous attempts by the B.C. College of Physicians and Surgeons to l i m i t Cor discriminate against) immigrant physicians from p r a c t i c i n g i n this province were brought to an end i n 19 76, when i t was held that such actions were i n v i o l a t i o n of human ri g h t s . Adding to this problem of the increasing physician supply i s the expansion of the B.C. medical school at the University of B.C. Since 1967, 37 medical school admissions have increased from 80 to 120 , and the plan i s to continue to grow to 16 0 admissions per year. The most frequently c i t e d rationale for this expansion i s to allow native sons and daughters the opportunity of becoming physicians i n t h e i r own province. Yet, one cannot overlook the impact which this w i l l have on health expenditures — not only i n d i r e c t fees but i n other patient care areas such as h o s p i t a l i z a t i o n s , diag-nostic tests, and the l i k e . In 19 77, Bennett and Krasny estimated that each physician on an average generates a quarter of a m i l l i o n dollars i n health expenditures per year. If an i n f l a t i o n factor i s added to this figure, or i f more recent s t a t i s t i c s are ana-New registrants (by place of graduation) i n B.C. from September 19 79 to September 19 81 consisted of only eighteen per cent from the University of B.C. The remaining 82 per cent came from other areas, predominantly other Canadian provinces. Source: ROLLCALL 81. 3 7Source: PRODUCTION 77 and PRODUCTION 81, University of B r i t i s h Columbia. - 163 -lyzed , this amount can escalate to an astonishing height --$400,000 to $440,000 per year. (Note that these are average not marginal costs. I t cannot be assumed that each additional physician generates an a d d i t i o n a l $400,000 or $440,000 per year. However, lacking more refined figures, these succeed i n making the point that the number of physicians i n practice have a dramatic e f f e c t on health care costs.) A coordinated plan concerning physician manpower tra i n i n g and physician payment i s c l e a r l y required i f health resources are to be r a t i o n a l i z e d e f f e c t i v e l y . In recent months, there has been renewed discussion of the concept of r e s t r i c t i n g the number of medical plan b i l l i n g numbers allocated to p a r t i c u l a r geo-graphical regions. This approach can and has been c r i t i c i z e d on a number of grounds (e.g., i t does not deal with the basic flaws of the fee-for service system, and w i l l merely r e s u l t i n the g e r i a t r i f i c a t i o n of the medical profession i n the more desirable areas of the province). Nevertheless, i t represents a beginning attempt to relate physician resources to population needs. Si m i l a r l y , some acute hospitals have r e s t r i c t e d , on an i n -d i v i d u a l basis, the number of physicians to whom they w i l l extend admitting p r i v i l e g e s . While these decisions have been rather inconsistent and uncoordinated among the various hospitals, the Sources: 1980 Health Manpower Inventory ( c i v i l i a n , p r a c t i c i n g physicians i n Canada, excluding residents and interns) and 19 79 Health and Welfare Canada unpublished health care cost figures. - 16 4 -mechanism of h o s p i t a l p r i v i l e g e s r e p r e s e n t s another p o t e n t i a l l y p romising means of r a t i o n a l i z i n g p h y s i c i a n manpower. In d i s c u s s i n g the ti m i n g and phasing of r e g i o n a l i z e d r e -source a l l o c a t i o n on a per c a p i t a b a s i s , some mention must a l s o be made as to the amount of money which i s spent on Hea l t h as a whole. As resources become f u r t h e r c o n s t r a i n e d w i t h i n h e a l t h care, or as a l l o c a t i o n s b e g i n to s h i f t away from c e r t a i n h e a l t h care areas, i n c r e a s e d demands can be expected f o r a d d i t i o n a l funds to be d i v e r t e d to H e a l t h . Two approaches are f r e q u e n t l y advocated. The f i r s t l i n e of argument i s t h a t h e a l t h care i s under-funded, i n the sense t h a t the p r o v i n c i a l government i s spending an i n s u f f i c i e n t percentage of i t s gross p r o v i n c i a l revenues on h e a l t h c a r e . The second approach i s t h a t of c l i e n t p a r t i c i p a t i o n . Those who advocate i n c r e a s i n g premiums or user fees do so on the p r i n c i p l e t h a t p a t i e n t s should pay more towards the c o s t o f t h e i r care, p a r t l y as a means of d e t e r i n g f r i v o l o u s use of the h e a l t h care system. The r e s o l u t i o n of these q u e s t i o n s w i l l become e s p e c i a l l y important i n the years to come. - 165 -CHAPTER VI; SUMMARY AND CONCLUSIONS As part of i t s planning for regio n a l i z a t i o n , the B.C. Ministry of Health w i l l be addressing the problem of sel e c t i n g a method of resource a l l o c a t i o n to the regions. The foregoing material has been offered as an attempt to f a c i l i t a t e discussion and decision-making i n this complex and p o t e n t i a l l y controver-s i a l area. Based on a l i t e r a t u r e review and on information from individuals i n other jurisdictions- as well as i n the B.C. health care system, a number of resource a l l o c a t i o n methods have been presented. These methods have been categorized i n t o three major types of planning r a t i o n a l i t y — epidemiological, management, and economic. As well, they have been ordered i n terms of the extent to which they adhere to r a t i o n a l planning p r i n c i p l e s and r e s u l t i n r a t i o n a l a l l o c a t i o n of resources. There i s no perfect or correct method of resource a l l o c a t i o n i n a regional structure — or i n any structure for that matter. Choice of a method should be related to the goals of the Health Ministry, and should r e f l e c t an appreciation of the bureaucratic and p o l i t i c a l r e a l i t i e s of the health care system. In addition, the selection and development of an a l l o c a t i o n tool should be a consultative process, involving those parties who w i l l be af-fected by the decision. - 166 -One i n d i v i d u a l i s i n no position to prescribe an a l l o c a t i o n method for use by the Health Ministry. This study has developed one approach, based on the b e l i e f that resources should be re-lated to regional population needs, with equity i n a l l o c a t i o n being of prime importance. Having i d e n t i f i e d that the epidemi-o l o g i c a l approach i s the foundation for resource a l l o c a t i o n , the Kepner-Tregoe problem-solving methodology was employed i n order to s e l e c t the s p e c i f i c method most appropriate for the B.C. Ministry of Health. Two recommendations have been made: Recommendation 1: The B.C. Health Ministry should adopt the p r i n c i p l e of per capita allocations to the regions. Recommendation 2: An "epidemiological plus" approach should be developed i n the next ten years, which has as i t s base an index approximating the economists' GNP as a'standard unit of comparison. Implementation of the per capita method has been discussed. Problems were anticipated, strategies for managing these problems were suggested, and the timing and phasing i n of the method were described. Ultimately, however, i f resources are to be r a t i o n a l -ized e f f e c t i v e l y , a l l health resources should be included i n the re g i o n a l i z a t i o n plan. - 16 7 -Although t h i s study has discussed resource a l l o c a t i o n within the framework of a regional structure, i t should be emphasized that r e g i o n a l i z a t i o n need not occur before a regional approach to resource a l l o c a t i o n i s adopted. As has been seen i n other j u r i s d i c t i o n s , resources can be allocated c e n t r a l l y with regional boundaries i n mind, but with no administrative or planning struc-tures at the regional l e v e l . Thus, regardless of the fate of the r e g i o n a l i z a t i o n plan i n the Health Ministry, the p r i n c i p l e of a regionalized approach to resource a l l o c a t i o n can be im-plemented. Alterations i n a resource a l l o c a t i o n system seem p a r t i c u l a r -ly timely during times of f i n a n c i a l hardship. I t i s clear that the B.C. government — and indeed governments throughout the world -- are facing d i f f i c u l t decisions regarding health care funding. In the past, Health was considered to be a p o l i t i c a l l y desirable and p r o f i t a b l e sphere of government a c t i v i t y . With constraints on resources and escalating pressures on the health care d o l l a r , i t i s becoming considerably less so. Regionalization and the development of population based re-source a l l o c a t i o n methods thus appear to hold considerable appeal to the p r o v i n c i a l government in.,light of the current problems i n Health. A regional structure could provide a buffer mechanism between the province and the various pressure groups, each vying for increased funding. Furthermore, i t i s possible that the de-velopment of a regionalized system may pave the way for new methods of financing health care. Regions i n time might be given - 16 8 -r e s p o n s i b i l i t y for generating revenues for certain health pro-grams (e.g., those deemed to be beyond the standards set by the province). A l t e r n a t i v e l y or a d d i t i o n a l l y , per capita methods of resource a l l o c a t i o n might lead to the development of per capita levies for health services. Whether or not these events actual-ly occur w i l l have major sig n i f i c a n c e , not only for the health care sector, but for government as a whole. Those who have followed f e d e r a l - p r o v i n c i a l negotiations over the years may remark that the above scenario i s v i v i d l y f a m i l i a r . 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Berkeley: University of C a l i f o r n i a Press, 1980. Williams, A. H. "The Cost Benefit Approach", B r i t i s h Medical  B u l l e t i n , 30_, 1974, 252-256 . Yankauer, A. "The Outcome and Service Impact of a P e d i a t r i c Nurse P r a c t i t i o n e r Training Program — Nurse P r a c t i t i o n e r Training Outcomes", American Journal of Public Health, 62, 1972, 347-353. Yett, Donald E., et a l . A Forecasting and Policy Simulation  Model of the Health Care Sector. Washington, D.C: Health and Company, 19 79. - 178 -APPENDIX A GLOSSARY OF MAJOR TERMS USED IN THIS STUDY Terminology used i n health care can be confusing. Like a l l technical and academic pursuits, health services planning has developed i t s own set of jargon which can f a c i l i t a t e communication with the i n i t i a t e d , but may hinder communication with others. Of p a r t i c u l a r concern i s that many commonly used words have s p e c i f i c rather narrow d e f i n i t i o n s i n the health care l i t e r a t u r e . Thus, i n an e f f o r t to reduce some of these ambiguities, the following are d e f i n i t i o n s of major terms used i n the study. ADEQUACY: The ..degree to which a program covers a problem area or target population. ALLOCATION: The d i s t r i b u t i o n of resources, tasks, and responsi-b i l i t i e s , generally as a r e s u l t of a centralized, planned process. APPROPRIATENESS: The degree to which a problem i s deemed s u f f i c -i e n t l y important to j u s t i f y action or a program. EFFECTIVENESS: The degree to which a program achieves i t s stated objectives. EFFICACY: The o v e r a l l benefit to the i n d i v i d u a l of a program or treatment, i . e . , the degree to which the program does more good than harm to those who adhere to the treat-ment program. - 179 -EFFICIENCY: The degree to which resources have been used s k i l -f u l l y i n the achievement of a giv e n o b j e c t i v e , o r the degree to which output has been maximized f o r a giv e n l e v e l of output. EPIDEMIOLOGY: The study of the d i s t r i b u t i o n of di s e a s e and d i s -a b i l i t y i n human p o p u l a t i o n s and the f a c t o r s which i n f l u e n c e t h a t d i s t r i b u t i o n . EQUITY: J u s t i c e , f a i r n e s s , i m p a r t i a l i t y . In the context of h e a l t h care, t h i s i s g e n e r a l l y meant to imply f a i r shares, i . e . , each a c c o r d i n g to h i s / h e r needs. RATIONALITY: The q u a l i t y or c o n d i t i o n of being reasonable, l o g i c a l and c o n s i s t e n t . In the context of d e c i s i o n -making, r a t i o n a l i t y i m p l i e s a c o n s i d e r a t i o n o f a v a r i e t y o f a l t e r n a t i v e s , a search f o r i n f o r m a t i o n on which to make d e c i s i o n s , and d e c i s i o n s made as a r e s u l t of t h i s p r o c e s s . REGIONALIZATION: The o r g a n i z a t i o n a l process o f p l a n n i n g and de-l i v e r i n g h e a l t h s e r v i c e s f o r a geographic r e g i o n a t an in t e r m e d i a t e l e v e l , the g o a l being the o p t i m a l a l l o -c a t i o n and use of r e s o u r c e s . RESOURCES: A v a r i e t y of i n p u t s , i n c l u d i n g p e r s o n n e l , funds, m a t e r i a l s , f a c i l i t i e s , knowledge, s k i l l s , techniques, and time which are a v a i l a b l e o r r e q u i r e d f o r the pro-v i s i o n of a p a r t i c u l a r s e r v i c e o r range of s e r v i c e s . - 180 -- 181 -APPENDIX C. LETTERS TO PROVINCIAL DEPUTY MINISTERS OF HEALTH R e g i o n a l i z a t i o n Study Group Health Services. Planning Program Department o f Health Care and Epidemiology U n i v e r s i t y o f B r i t i s h Columbia 5 8 0 4 F a i r v i e w Crescent • Vancouver, BC V6T 1W5 December 1 , 1 9 8 1 Dear : The B r i t i s h Columbia M i n i s t r y o f Health has begun to plan a r e g i o n a l i z e d system f o r the d e l i v e r y o f health care s e r v i c e s . As students i n the Health Services Planning Program at the U n i v e r s i t y of B r i t i s h Columbia, we are, with the support of the M i n i s t r y o f Health, attempting to c o n t r i b u t e to t h i s planning process through research f o r our theses. •• .. We would appreciate the a s s i s t a n c e of your M i n i s t r y i n communicating to us information, i n s i g h t s and experiences you may have on the t o p i c o f regionalization.We would appreciate any documents o r references you may be able to provide. ; . More s p e c i f i c a l l y , we are requesting your d i r e c t i o n i n i d e n t i f y i n g members of your s t a f f who could serve as appropriate contact persons i n each of the f o l l o w i n g areas: " 1. A d m i n i s t r a t i v e s t r u c t u r e s f o r r e g i o n a l i z a t i o n , claims f o r e f f i c a c y of r e g i o n a l i z a t i o n and c r i t e r i a f o r and e v a l u a t i o n of r e g i o n a l i z e d d e l i v e r y systems. - 182 2. Information on models f o r planning of h e a l t h s e r v i c e s at the r e g i o n a l l e v e l , examples of r e g i o n a l h e a l t h plans, any documents o u t l i n i n g your present approach t o the planning o f hea l t h care s e r v i c e s . 3. Methods of determining resources a l l o c a t i o n s to regions. A f t e r r e c e i v i n g t h i s information, we would l i k e t o • contact the persons you suggest i n order to pursue these t o p i c s i n greater depth. Your a s s i s t a n c e i s most appreciated. Should you wish copies of the theses we are preparing they can be made a v a i l a b l e upon request. -Yours t r u l y , PER BARBARA KAMINSKY JAMIE MILLER PATRICIA RYAN APPENDIX D. FOLLOWUP LETTER January , 1982. Dear: I am conducting a Health Services Planning t h e s i s on the t o p i c o f a l l o c a t i o n of resources to heal t h care regions, and (Deputy M i n i s t e r ' s  name) has k i n d l y suggested that I contact you f o r more information regarding your province's experiences i n t h i s area. Enclosed please f i n d a short p r o t o c o l of questions and a blank cas e t t e tape. As your time permits, I would g r e a t l y appreciate i t i f you would respond to these questions by using the tape, and supplementing your v e r b a l communication with any w r i t t e n m a t e r i a l which you f e e l might be of use. * ~ Many thanks, S i n c e r e l y , BARBARA KAMINSKY The f o l l o w i n g questions are meant to serve as a springboard for ob t a i n i n g your i n s i g h t s i n t o the process o f a l l o c a t i n g resources from the p r o v i n c i a l to the r e g i o n a l l e v e l . Please add any information which you b e l i e v e i s r e l e v a n t to the area, even i f i t may not have been e x p l i c i t l y addressed i n these questions. 1. Does the M i n i s t r y of Health o f f i c i a l l y use the term " r e g i o n a l i z a t i o n " i n reference t o i t s method o f hea l t h s e r v i c e d e l i v e r y , a d m i n i s t r a t i o n , or planning? I f so, how i s r e g i o n a l i z a t i o n defined, and what are i t s goals? 2. Could you des c r i b e the method used f o r a l l o c a t i o n of resources t o the regions? Is there a s p e c i f i c formula or s e t o f c r i t e r i a used f o r some or a l l of the resources? Please provide as much d e t a i l as p o s s i b l e . (Written documents, i f such e x i s t , may be h e l p f u l i n t h i s regard.) 3. What input do the regions and who i n the regions has t h i s input i n t o the resource a l l o c a t i o n process? How much autonomy do the regions have once the a l l o c a t i o n s are made? 4. What i s your general impression of the cur r e n t method of resource a l l o c a t i o n ? What are i t s major strengths and weaknesses? 5. Has your M i n i s t r y considered any methods o f resource a l l o c a t i o n . other than that which i s c u r r e n t l y used? I f so, what were they, why were they considered, and why were they not s e l e c t e d f o r use? 6. What advice can you give your colleagues i n B r i t i s h Columbia regarding resource a l l o c a t i o n to regions? Thankyou very much indeed f o r responding to these q u e s t i o n s . - 185 -APPENDIX E EVALUATION OF RESEARCH METHODS USED IN THE STUDY Conducting this study provided valuable experience regarding the effectiveness of two research methods: the l i t e r a t u r e review and the survey of expert opinion. The following comments are offered as my evaluation of these strategies as applied to this study. They are documented i n the hope that they w i l l be of relevance to other researchers undertaking s i m i l a r studies i n the future. 1. GENERAL COMMENTS A considerable amount of information i s available about reg i o n a l i z a t i o n -- both i n the l i t e r a t u r e as well as from experts i n the f i e l d . By and large, these sources f a i l to provide de-t a i l s concerning the resource a l l o c a t i o n process. This should not be surprising, given the p o l i t i c a l s e n s i t i v i t y of the issue. Clearly, there are l i m i t s as to the extent of data which are l i k e l y to be made available to graduate students i n this area. 2. LITERATURE REVIEW No central reference was found which provided consolidated information on resource a l l o c a t i o n and reg i o n a l i z a t i o n of health services. Research i n many subject areas was required i n order to obtain the conceptual background for the development of the paradigm of options presented i n Figure 2 of this study. - 186 -3. SURVEY OF EXPERT OPINION The most candid, t i m e l y , and comprehensive i n f o r m a t i o n r e -garding resource a l l o c a t i o n i n a r e g i o n a l s t r u c t u r e was r e c e i v e d i n f a ce-to-face and telephone conversations, as opposed to c o r -respondence . Contact w i t h Health M i n i s t r i e s i n other provinces proved to be a time-consuming, cumbersome task. S u b s t a n t i a l delays occurred between the time of the f i r s t l e t t e r to the Deputy M i n i s t e r and the response by h i s a t a f f to the followup l e t t e r . The s h o r t e s t i n t e r v a l of time was two months; the longest was e i g h t and a h a l f months; the mean was four months. A l s o , s e v e r a l provinces r e -q u i r e d followup l e t t e r s and/or phone c a l l s to s t i m u l a t e t h e i r responses. Of f u r t h e r i n t e r e s t was the f a c t t h a t none of the nine provinces e l e c t e d to tape t h e i r responses to the p r o t o c o l of questions. Instead, they submitted t h e i r responses i n l e t t e r form, and supplemented t h i s correspondence w i t h m i n i s t r y reports when appropriate. These responses were p a r t i c u l a r l y u s e f u l i n d e s c r i b i n g p o t e n t i a l implementation problems of any changes i n the process of resource a l l o c a t i o n i n the h e a l t h care system. - 187 -4. RECOMMENDED IMPROVEMENTS IN THE METHODS USED IN THE STUDY I f s i m i l a r r e s e a r c h i s done i n the f u t u r e , the f o l l o w i n g recommendations are suggested: a) The use of the c a s s e t t e tape should be e l i m i n a t e d . I t i s apparent t h a t Health M i n i s t r y p e r s o n n e l are more accustomed to correspondence than to audio tapes. b) O n - s i t e v i s i t s to a s e l e c t e d number of p r o v i n c e s should be undertaken. Assuming the r e s e a r c h e r has a s u f f i c i e n t l y generous budget ( i n terms of time and money), followup v i s i t s c o u l d be arranged a f t e r r e v i e w i n g the responses to the p r o t o c o l of q u e s t i o n s , i n o rder to o b t a i n more indepth i n f o r m a t i o n i n those j u r i s d i c t i o n s of p a r t i c u l a r i n t e r e s t . I t i s suggested t h a t i n t h i s study such v i s i t s would have been e s p e c i a l l y f r u i t f u l i n p r o v i n c e s undergoing t r a n s i t i o n i n t h e i r resource a l l o c a t i o n methods to the regions (e.g., Quebec and A l b e r t a ) , as implementation i s s u e s would be f r e s h i n the minds of m i n i s t r y o f f i c i a l s . I f an o n - s i t e v i s i t to Quebec were undertaken, i t i s important to note t h a t f a c i l i t y i n the French language would be e s s e n t i a l . - 1 8 8 -A P P E N D I X F A T H E O R E T I C A L M O D E L F O R N O N - H O S P I T A L P R I M A R Y H E A L T H C A R E I N A R E G I O N M K R = 1 m = 1 ft = 1 r-1 o=l w h e r e : r = l o c a t i o n (R l o c a t i o n s ) m = m e d i c a l s e r v i c e s (M s e r v i c e s ) f - f e e f o r s e r v i c e m m ^ = s h o r t a g e c o s t o f 1 u n i t o f s e r v i c e m • m 3 . h = n u m b e r o f h e a l t h s e r v i c e s o f t y p e m d e l i v e r e d a t m r - i x . - . l o c a t i o n r k = c a p i t a l p a c k a g e (K k i n d s o f c a p i t a l p a c k a g e s ) P k = ^ k r ^  n u m b e r o f l a b o u r u n i t s w i t h c a p i t a l p a c k a g e k a d d i t i o n a l c a p i t a l a n d h e a l t h s e r v i c e s r e q u i r e d a t l o c a t i o n 4 a . = . l a b o u r s u b c a t e g o r y ( L s u b c a t e g o r i e s ) TL = a t t r a c t i o n o r d e v e l o p m e n t c o s t f o r l a b o u r t y p e a a P ^ = n u m b e r o f a d d i t i o n a l p e r s o n n e l r e q u i r e d f o r r e g i o n a o f t y p e a S o u r c e : A l l a n S . D e t s k y , T h e E c o n o m i c F o u n d a t i o n s o f  N a t i o n a l H e a l t h P o l i c y ( C a m b r i d g e , M a s s a c h u s s e t t s : B a l l i r i g e r P u b l i s h i n g , 1 9 7 8 ) , p p . 2 1 7 - 2 3 2 . - 189 -APPENDIX G DIAGRAM OF A MICROECONOMETRIC MODEL OF THE HEALTH,CARE SYSTEM 0 Consumers Age Sex Race Income PHYSICIAN SERVICES ( Demands for patient visits • Markets for patient visits Supply of patient visits Demands for nonphysician manpower © PHYSICIANS Age Specialty Activity U.S. or foreign graduate © HOSPITAL SERVICES Demands for patient days Markets for patient days i Supply of patient days Demands for nonphysician manpower / ' HOSPITALS Ownership Size Length of stay Markets for nonphysician manpower Supply of nonphysician manpower NONPHYSICIAN MANPOWER Registered nurses (by age) Licensed practical nurses Allied health professionals Other personnel 1 Source: Donald E. Y e t t , e t a l . , A F o r e c a s t i n g and P o l i c y  S i m u l a t i o n Model of the H e a l t h Care S e c t o r (Washington, D . C : Health and Co., 1979), p. 7. - 190 -APPENDIX H THE VROOM AND YETTON DECISION-MAKING MODEL* In selecting a method of decision-making for a given s i t u a t i o n , seven basic questions need to be addressed: a) Is there a qu a l i t y requirement such that one solution i s l i k e l y to be more r a t i o n a l than another? b) Do I have enough information to make a high quality decision? c) Is the problem structured? Do we know what information we need and where to get i t ? d) Is acceptance of the decision by subordinates or colleagues c r i t i c a l to e f f e c t i v e implementation? e) If I were to make the decision by myself, i s i t reasonably certain that i t would be accepted by others? f) Do other parties share the organizational goals to be obtained i n solving this problem? g) Is c o n f l i c t among other parties l i k e l y i n preferred solutions? Tracing the answers to these questions through the decision tree (Figure 8), one can emerge with one (or more) of f i v e modes of decision making: * Adapted from James A. F. Stoner, Management (Englewood C l i f f s , New Jersey: Prentice-Hall, 1978), pp. 184-187. FIGURE 8 - 191 -C i t e d i n James A.F.Stoner, Management,Englewood C l P r e n t i c e - H a l l , 1978, pp 185. - 192 -1) You s o l v e the problem o r make the d e c i s i o n y o u r s e l f , u s i n g i n f o r m a t i o n a v a i l a b l e to you a t t h a t time. 2) You o b t a i n the necessary i n f o r m a t i o n from o t h e r s , then decide on the s o l u t i o n to the problem y o u r s e l f . You may or may not t e l l o thers what the problem i s i n get-t i n g the i n f o r m a t i o n from them. The r o l e p l a y e d by others i n making the d e c i s i o n i s c l e a r l y one of pro-v i d i n g the necessary i n f o r m a t i o n to you, r a t h e r than g e n e r a t i n g or e v a l u a t i n g a l t e r n a t i v e s o l u t i o n s . 3) You share the problem with r e l e v a n t others i n d i v i d u a l l y , g e t t i n g t h e i r ideas and suggestions without b r i n g i n g them together as a group. Then you make the d e c i s i o n t h a t may or may not r e f l e c t the oth e r i n d i v i d u a l s ' i n f l u e n c e . 4) You share- the problem with others as a group, c o l l e c t -i v e l y o b t a i n i n g t h e i r ideas and sug g e s t i o n s . Then you make the d e c i s i o n t h a t may or may not r e f l e c t the i n -f l u e n c e of o t h e r s . 5) You share a problem w i t h o t h e r s as a group. Together you generate and ev a l u a t e a l t e r n a t i v e s and attempt to reach agreement (consensus) on a s o l u t i o n . Your r o l e i s much l i k e t h a t o f chairman. You do not t r y to i n -f l u e n c e the group to adopt "your" s o l u t i o n , and you are w i l l i n g to accept and implement any s o l u t i o n t h a t has the support o f the e n t i r e group. - 193 -I n t h i s w r i t e r ' s a n a l y s i s o f t h e r e s o u r c e a l l o c a t i o n i s s u e , mode 4 a p p e a r s t o be t h e m o s t a p p r o p r i a t e a c c o r d i n g t o t h i s m o d e l : a) t h e r e i s a q u a l i t y r e q u i r e m e n t s u c h t h a t one s o l u t i o n i s l i k e l y t o be more r a t i o n a l t h a n a n o t h e r ; b) t h e H e a l t h M i n i s t r y h a s i n s u f f i c i e n t i n f o r m a t i o n t o make a h i g h q u a l i t y d e c i s i o n ; c) t h e p r o b l e m i s u n s t r u c t u r e d ; d) a c c e p t a n c e b y o t h e r s i s c r i t i c a l t o i m p l e m e n t a t i o n ; e) u n i l a t e r a l d e c i s i o n - m a k i n g i s n o t l i k e l y t o be a c c e p t e d b y o t h e r s ; a n d f ) o t h e r p a r t i e s do n o t s h a r e o r g a n i z a t i o n a l g o a l s . Mode 4 i s e s s e n t i a l l y c o n s u l t a t i v e . I n p u t f r o m v a r i o u s i n t e r e s t s i n t h e h e a l t h c a r e s y s t e m w o u l d be s o u g h t ; y e t i n t h e f i n a l a n a l y s i s , s e n i o r H e a l t h M i n i s t r y s t a f f a n d t h e H e a l t h M i n i s t e r w o u l d r e t a i n c e n t r a l i z e d c o n t r o l . 

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