Alberta Health Services

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Alberta Health Services Step-Wise Approach to
Improving Allocative Efficiency in Health
CareDr. Stephen Duckett, President and CEO,
Alberta Health ServicesPresented to the
Institute of Health EconomicsMay 25, 2009
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ISSUES

• Allocative efficiency involves consideration of
  technical efficiency.
• The latter is a boring and neglected aspect of
  health economics but not health policy.
• There is considerable work to do on technical
  efficiency in Alberta.
• Allocative efficiency also involves a focus on
  improving effectiveness.

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ALLOCATIVE EFFICIENCY

• A focus on what (health) outcomes you gain for
  the inputs you provide (OUTCOME / INPUT).
• Aim that last unit of input yields better
  outcomes than investing that input elsewhere (or
  at least as good).
• But
• Outcome/Input f (input/output ,output/output
  )
• Technical Effectiveness
• Efficiency
• As technical efficiency improves (cost per
  patient treated goes down) so does allocative
  efficiency.

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Cost per Weighted ED Visit, 2007-08
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Cost per Weighted Case vs. Number of Weighted
Cases, Alberta EDs, 2007-08
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Cost per Weighted Case vs. Mean Complexity,
Alberta EDs, 2007-08
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Improving Technical Efficiency

• Activity based funding
• Addresses overfunding, fairness
• Reduces likelihood of service reductions as
  budget strategy
• Applies to acute and continuing care
• Needs to be accompanied by focus on quality
• Feasibility assessment
• Consistency of financial allocation practices
• Recording and coding of activity
• Audit systems
• CMG, RUGS III

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Policy Levers

• Financial incentives/markets/quasi-markets
• Legal structure, hierarchies, organizational
  incentives
• Culture

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Improving Effectiveness

• Guidance
• Alberta Service Models
• Care Paths
• Enhancing patient choice
• Measurement of outcomes
• Providing feedback
• Clinical Measures
• Patient reported outcome measures
• Technology Assessment

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Summary

• Addressing allocative efficiency requires
• Addressing technical efficiency
• Activity based funding
• Improving effectiveness
• Alberta Service Models
• Care Paths
• Ensuring dynamic efficiency
• Technology assessment
• Stephen.Duckett_at_albertahealthservices.ca

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IHE Innovation Forum II
Making Difficult Decisions