How are population-based funding formulae for healthcare composed?

Population-based funding formulae act as an important means of promoting equitable health funding structures. To evaluate how policy makers in different jurisdictions construct health funding formulae and build an understanding of contextual influences underpinning formula construction we carried out a comparative analysis of key components of funding formulae across seven high-income and predominantly publically financed health systems: New Zealand, England, Scotland, the Netherlands, the state of New South Wales in Australia, the Canadian province of Ontario, and the city of Stockholm, Sweden.Methods Core components from each formula were summarised and key similarities and differences evaluated from a compositional perspective. We categorised approaches to constructing funding formulae under three main themes: identifying factors which predict differential need amongst populations; adjusting for cost factors outside of needs factors; and engaging in normative correction of allocations for ‘unmet’ need. Results We found significant congruence in the factors used to guide need and cost adjustments. However, there is considerable variation in interpretation and implementation of these factors. Conclusion Despite broadly similar frameworks, there are distinct differences in the composition of the formulae across the seven health systems. Ultimately, the development of funding formulae is a dynamic process, subject to availability of data reflecting health needs, the influence of wider socio-political objectives and health system determinants

Unlocking the PBFF. An evaluation of New Zealand's Population-Based Funding Formula

New Zealand’s District Health Boards (DHBs), which are responsible for delivering health services to their populations, receive their share of public funding according to the Population-Based Funding Formula (PBFF). The PBFF is intended to fairly distribute funding between DHBs according to the relative health needs of their populations and the costs of providing services to meet those needs. In 2014/15 the PBFF distributed $12 billion amongst DHBs, representing over two-thirds of the total health budget. Consequently, the PBFF exerts considerable influence on the health sector. Since its introduction in 2003, the PBFF has been subject to vigorous criticism. Significant differences in per capita funding, in conjunction with disparate financial circumstances, across the 20 DHBs has resulted in ongoing tensions within the health sector. Compounding uncertainty over the fairness of the allocation process, there is limited publicly available information regarding the methods underpinning the PBFF and little independent scrutiny of them. The aim of this thesis is to independently evaluate the PBFF, elucidating the current allocation methods and evaluating the capacity of the core determinant of PBFF allocations, known as the cost weights, to explain variations in need, use and expenditure. Four main studies – corresponding to chapters in the thesis – are undertaken to evaluate the PBFF. First, the methods underpinning the PBFF allocations are investigated and a methodological précis developed. Second, the PBFF is viewed from a comparative perspective and the main features of, as well as nuances behind, funding formulae across seven high-income countries, including New Zealand, are considered. Third, the relationships between health need, use and the PBFF cost weights are explored using data from the New Zealand Health Survey. Fourth, the predictive accuracy of the PBFF is evaluated at the individual and, crucially, the DHB-levels using routinely collected inpatient discharge data, as well as Census data, and compared against alternative models informed by richer demographic and clinical data. Overall, the results of these studies suggest that, despite its stated intentions, the PBFF does not support the fair allocation of health funding between DHBs. The vast majority of funding is allocated according to DHBs’ population demographics. However, the agglomeration of the population into relatively few demographic clusters, in particular with respect to ethnicity, appears to obscure important differences in needs, use and expenditure between DHBs. Comparisons with international funding formulae underscore the relatively simplistic approach of relying exclusively on demographic data as a proxy for more fundamental drivers of demand for health care. Consistent with international evidence and practice, incorporating clinical data reflecting casemix or clinical complexity into the PBFF could considerably improve the predictive accuracy and equity of allocations between DHBs. These findings provide a cogent argument for revisiting the rationale and construction of the PBFF. Given the centrality of the PBFF to the New Zealand health system – which emphasises population-level health as well as the reduction of inequalities – there is a pressing need for transparent and inclusive discourse on the impacts of the PBFF, as well as alternative funding formulae, on different populations in New Zealand

Unlocking the PBFF. An evaluation of New Zealand's Population-Based Funding Formula

New Zealand’s District Health Boards (DHBs), which are responsible for delivering health services to their populations, receive their share of public funding according to the Population-Based Funding Formula (PBFF). The PBFF is intended to fairly distribute funding between DHBs according to the relative health needs of their populations and the costs of providing services to meet those needs. In 2014/15 the PBFF distributed $12 billion amongst DHBs, representing over two-thirds of the total health budget. Consequently, the PBFF exerts considerable influence on the health sector. Since its introduction in 2003, the PBFF has been subject to vigorous criticism. Significant differences in per capita funding, in conjunction with disparate financial circumstances, across the 20 DHBs has resulted in ongoing tensions within the health sector. Compounding uncertainty over the fairness of the allocation process, there is limited publicly available information regarding the methods underpinning the PBFF and little independent scrutiny of them. The aim of this thesis is to independently evaluate the PBFF, elucidating the current allocation methods and evaluating the capacity of the core determinant of PBFF allocations, known as the cost weights, to explain variations in need, use and expenditure. Four main studies – corresponding to chapters in the thesis – are undertaken to evaluate the PBFF. First, the methods underpinning the PBFF allocations are investigated and a methodological précis developed. Second, the PBFF is viewed from a comparative perspective and the main features of, as well as nuances behind, funding formulae across seven high-income countries, including New Zealand, are considered. Third, the relationships between health need, use and the PBFF cost weights are explored using data from the New Zealand Health Survey. Fourth, the predictive accuracy of the PBFF is evaluated at the individual and, crucially, the DHB-levels using routinely collected inpatient discharge data, as well as Census data, and compared against alternative models informed by richer demographic and clinical data. Overall, the results of these studies suggest that, despite its stated intentions, the PBFF does not support the fair allocation of health funding between DHBs. The vast majority of funding is allocated according to DHBs’ population demographics. However, the agglomeration of the population into relatively few demographic clusters, in particular with respect to ethnicity, appears to obscure important differences in needs, use and expenditure between DHBs. Comparisons with international funding formulae underscore the relatively simplistic approach of relying exclusively on demographic data as a proxy for more fundamental drivers of demand for health care. Consistent with international evidence and practice, incorporating clinical data reflecting casemix or clinical complexity into the PBFF could considerably improve the predictive accuracy and equity of allocations between DHBs. These findings provide a cogent argument for revisiting the rationale and construction of the PBFF. Given the centrality of the PBFF to the New Zealand health system – which emphasises population-level health as well as the reduction of inequalities – there is a pressing need for transparent and inclusive discourse on the impacts of the PBFF, as well as alternative funding formulae, on different populations in New Zealand

Cost-effectiveness of surveillance for bloodstream infections for sepsis management in low-resource settings

Copyright © 2015 by The American Society of Tropical Medicine and Hygiene. Bacterial sepsis is a leading cause of mortality among febrile patients in low- and middle-income countries, but blood culture services are not widely available. Consequently, empiric antimicrobial management of suspected bloodstream infection is based on generic guidelines that are rarely informed by local data on etiology and patterns of antimicrobial resistance. To evaluate the cost-effectiveness of surveillance for bloodstream infections to inform empiric management of suspected sepsis in low-resource areas, we compared costs and outcomes of generic antimicrobial management with management informed by local data on etiology and patterns of antimicrobial resistance. We applied a decision tree model to a hypothetical population of febrile patients presenting at the district hospital level in Africa. We found that the evidence-based regimen saved 534 more lives per 100,000 patients at an additional cost of $25.35 per patient, resulting in an incremental cost-effectiveness ratio of$4,739. This ratio compares favorably to standard cost-effectiveness thresholds, but should ultimately be compared with other policyrelevant alternatives to determine whether routine surveillance for bloodstream infections is a cost-effective strategy in the African context

Performance requirements to achieve cost-effectiveness of point-of-care tests for sepsis among patients with febrile illness in low-resource settings

Copyright © 2015 by The American Society of Tropical Medicine and Hygiene. Bacterial sepsis is an important cause of mortality in low- and middle-income countries, yet distinguishing patients with sepsis from those with other illnesses remains a challenge. Currently, management decisions are based on clinical assessment using algorithms such as Integrated Management of Adolescent and Adult Illness. Efforts to develop and evaluate point-of-care tests (POCTs) for sepsis to guide decisions on the use of antimicrobials are underway. To establish the minimum performance characteristics of such a test, we varied the characteristics of a hypothetical POCT for sepsis required for it to be cost-effective and applied a decision tree model to a population of febrile patients presenting at the district hospital level in a low-resource setting. We used a case fatality probability of 20% for appropriately treated sepsis and of 50% for inappropriately treated sepsis. On the basis of clinical assessment for sepsis with established sensitivity of 0.83 and specificity of 0.62, we found that a POCT for sepsis with a sensitivity of 0.83 and a specificity of 0.94 was cost-effective, resulting in parity in survival but costing $1.14 less per live saved. A POCT with accuracy equivalent to the best malaria rapid diagnostic test was cheaper and more effective than clinical assessment

How did New Zealand’s regional District Health Board groupings work to improve service integration and health outcomes: a realist evaluation

Objectives In Aotearoa New Zealand (NZ), integration across the healthcare continuum has been a key approach to strengthening the health system and improving health outcomes. A key example has been four regional District Health Board (DHB) groupings, which, from 2011 to 2022, required the country’s 20 DHBs to work together regionally. This research explores how this initiative functioned, examining how, for whom and in what circumstances regional DHB groupings worked to deliver improvements in system integration and health outcomes and equity.Design We used a realist-informed evaluation study design. We used documentary analysis to develop programme logic models to describe the context, structure, capabilities, implementation activities and impact of each of the four regional groupings and then conducted interviews with stakeholders. We developed a generalised context-mechanisms-outcomes model, identifying key commonalities explaining how regional work ‘worked’ across NZ while noting important regional differences.Setting NZ’s four regional DHB groupings.Participants Forty-nine stakeholders from across the four regional groupings. These included regional DHB governance groups and coordinating regional agencies, DHB senior leadership, Māori and Pasifika leadership and lead clinicians for regional work streams.Results Regional DHB working was layered on top of an already complex DHB environment. Organisational heterogeneity and tensions between local and regional priorities were key contextual factors. In response, regional DHB groupings leveraged a combination of ‘hard’ policy and planning processes, as well as ‘soft’, relationship-based mechanisms, aiming to improve system integration, population health outcomes and health equity.Conclusion The complexity of DHB regional working meant that success hinged on building relationships, leadership and trust, alongside robust planning and process mechanisms. As NZ reorients its health system towards a more centralised model underpinned by collaborations between local providers, our findings point to a need to align policy expectations and foster environments that support connection and collegiality across the health system