Economic Evaluation Applied to Health Policy in New Zealand

Abstract

Background: New Zealand health reforms implemented in the 1990's split the purchaser from the provider and placed greater emphasis on contracting and competition. This was not sufficient in itself to solve the twin problems of achieving society's goals of equity and efficiency within the health sector. To improve decision making at an operational level microeconomic studies are required to highlight potential changes in both efficiency and equity. Furthermore, the analytical process must be easily understood and applied, transparent and theoretically grounded if these studies are to be used widely in the health sector often by non-economists. Problem: How can economic theory be applied to health care to improved decision making with respect to the efficiency of resource use in New Zealand? Objectives: To: (1) provide policy decision makers with the criteria and techniques by which the decision-making process in relation to resource allocation within the health sector can be improved to achieve greater efficiency and more equitable outcomes; and (2) present a range of practical examples that illustrate appropriate methodologies and provide suggested solutions to a range of problems that may be encountered by decision makers in health care. Method: The underlying theory to economic evaluation of health policy options is discussed and a series of different types of economic and policy evaluation (cases) relating to a range of health care resource allocation questions are used to illustrate the application of the theory to actual health policy issues in New Zealand. Results and conclusion: The case presented indicated that although a common overall approach may be applied to the policy questions no one recipe could be applied in all cases. The policy question and the data available dictated the methodology. Using these findings, a checklist was developed as guide for conducting policy evaluations and assessing efficiency gains in the health care.