Briefing paper

Rationing in healthcare

12 Feb 2015

Rationing healthcare in some form is inevitable, even in wealthy countries, because resources are scarce and demand for healthcare is always likely to exceed supply. This means that decision-makers must make choices about which health programs and initiatives should receive public funding and which ones should not. These choices are often difficult to make, particularly in Australia, because:

  1. there are inconsistencies in and duplication of the economic evaluation evidence generated to inform the rationing process;
  2. much of the economic evaluation evidence being generated by academics and private consultants in Australia has limited influence on decision-making because its focus is too narrow or it is not policy relevant; and
  3. decision-makers do not always use clearly defined processes to compare information on competing programs or initiatives and judge their relative value for money.

Australia does have some well-regarded rationing processes in place—the Pharmaceutical Benefits Advisory Committee and the Medical Services Advisory Committee, for example—that incorporate important information such as cost-effectiveness into the assessment process. However we can improve rationing processes by looking to organisations internationally. England’s National Institute of Health and Care Excellence, and the Canadian Agency for Drugs and Technology for Health, are two examples of organisations that have helped to create a strong culture of cost-effectiveness in healthcare. Both are independent government agencies that pull together the best available information to assist health policymakers make decisions about healthcare funding. The advice they provide is influential and almost always adopted by decision-makers.

To facilitate better healthcare rationing in Australia, we make the following recommends:

  1. Make explicit rationing based on a national decision-making tool (such as Multi-criteria Decision Analysis) standard process in all jurisdictions.
  2. Develop nationally consistent methods for conducting economic evaluation in health so that good quality evidence on the relative efficiency of various programs and initiatives is generated.
  3. Generate more economic evaluation evidence to inform rationing decisions.
  4. Revise national health performance indicators so that they include true health system efficiency indicators, such as cost-effectiveness.
  5. Apply the Comprehensive Management Framework used to evaluate items on the Medicare Benefits Schedule (MBS) to the Pharmaceutical Benefits Scheme (PBS) and the Prosthesis List to accelerate disinvestment from low-value drugs and prostheses.
  6. Seek agreement among Commonwealth, state and territory governments to work together to undertake work similar to the National Institute for Health and Care Excellence in the United Kingdom and the Canadian Agency for Drugs and Technologies in Health.
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