Using basic health economic modelling for more equitable PHN service commissioning

Commissioners of health and social services are constantly in a struggle to meet the demands of the populations they serve with the finite resources they have available. Many are still opting to use population-based allocation models, which have a tendency to assume that one communities needs are the same as another.

Using an equity based model, these commissioners could better allocate resources and expectations around equitable delivery of services with their commissioned providers, monitor performance and demonstrate equitable use of resources. 

In this blog, we share our insights around how other PHNs could use a similar modelling approach to drive more equitable service delivery to meet the needs of their communities and how it compares to traditional models.

Background

Our team recently worked with a Queensland-based Primary Health Network (PHN) to develop a basic quantitative model that enabled them to develop equity-based targets for key performance indicators across the mental health services that they commission. These targets aimed to drive more equitable access to mental health services for priority population groups including First Nations people, culturally and linguistically diverse (CALD) communities, people with a disability and LGBTIQ+ communities across their region.

The need for more equitable service commissioning

In an environment of finite resources for health and social services that often don’t meet the level of demand in the population, those resources must be used in the most effective way to deliver outcomes. A key principle underpinning this is health equity. This means resources are allocated in a way that recognises and responds to disparities in the health status and opportunities we know exist within populations.

Resource allocation modelling (RAM) is one tool that PHNs can use to allocate resources to reflect the relative ‘need’ of local communities.

Need refers to more than just the size of a population

The first point to consider is what we mean by ‘need’. 

A population-based (or per capita) model simply allocates resources based on the distribution of the population, often by geography. It assumes the need is the same across the population. For example, if x% of Australia’s population lives in Queensland, then x% of Australia’s public health spending gets directed to Queensland.

However, a per capita model doesn’t consider that levels of need (which influence service demand) are reflective of a range of demographic, socioeconomic and health-related factors within populations.

An equity-based model considers these other factors that better reflect the relative level of need between groups to allocate resources accordingly. 

These indicators of need can include measures of health status, health service utilisation or other known risks/protective factors. The different groups that resources are allocated to might be geographically defined or based on other characteristics.

A basic example of equity-based allocation of resources

We want to allocate resources (in this case $$$) for a mental health service to ensure funding is equitable across several communities within the broader region based on relative needs. 

We know that the size of the population in each community is different, so we start by distributing the resources by population (per capita).

We determine three indicators that are most relevant to the relative level of need in a community:

• the age of the population (because young people are more likely to access services)

• the socioeconomic status of the population (because people who experience social vulnerability are more likely to experience psychological distress)

• the rate of mental health-related presentations to an emergency department [ED] (because people are more likely to present to an ED if they aren’t able to obtain mental health support in their community).

We can use a straightforward calculation to model the allocation of resources that accounts for differences between the groups across all of these indicators and is more reflective of ‘need’.

Using resource allocation modelling to drive provider performance

‘Resources’ commonly refers to the amount of funding for services provided by an organisation like a PHN or government agency with the intent to create a social outcome.

However, resources can also be considered as the outputs produced by a program or service using that funding. 

If the amount of funding is already determined, a commissioning org can use modelling to develop equity-based targets for KPIs such as service contacts delivered that sit within a provider’s contract. These targets can then inform monitoring and evaluation activities and reporting over time that considers the equity of service delivery as one component of a provider’s performance. 

Tips for how you can ensure more equitable service commissioning 

A RAM that allows for relevant figures to be inputted and the resulting allocated targets outputted is a simple and straightforward tool for commissioning organisations to set expectations around equitable delivery of services with their commissioned providers, monitor performance and demonstrate equitable use of resources.

Here are a few steps to consider:

• engage early with commissioned providers to communicate the principles and rationale for setting equity-based targets

• determine the unit cost for a particular service type (i.e. cost per service contact) based on provider submissions, past performance, benchmarking with other PHNs and/or using existing modelling (e.g. National Mental Health Service Planning Framework)

• use resource allocation modelling to develop needs-based KPI targets based on relevant indicators of need

• embed equity-based KPI targets in provider contracts, such as requiring a minimum proportion of outputs to engage priority population groups based on modelled need

• give providers time to respond to equity-based targets through a phase-in approach, monitor performance and work with providers to explore service delivery strategies that are more equitable over time. 

Do you want to learn more about how to use modelling for more equitable service? Please feel free to contact one of friendly team via our Contact Us page.