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Future Pressures on the Health System:Some Critical Factors
Presentation to the2012 Health and Disability Sector NGO-MoH Forum
Deloitte LoungeWestpac Stadium
WellingtonThursday 29th March
Barry Smith (Te Rarawa, Ngati Kahu)
Population Health AnalystPlanning and Funding
Lakes District Health Board
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The three sides to every story:
- yours
- mine
- and what’s really happening!
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Four messages
Given that forewarned is forearmed we should debate these matters now – and - in a fully transparent way
We should examine options using a ‘slow policy’ process and avoid the reactive ‘dog bite’ approach
How we deal with these (ethical) challenges will say a lot about us - our values - and the sort of society we want to live in
Community based entities may end up ‘bearing the
brunt’ of stresses felt elsewhere in the health system
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“There will be increasing pressure to raise health funding levels - even under a philosophy of fiscal constraint”
“Increasing numbers of older people will make spending on health difficult to control fiscally - but – especially – politically”
“Continued use of the current ways of distributing the health dollar may widen health disparities - and so add social costs”
“Explanations around individual health status will focus more on personal responsibility”
“ [But] the major cause of financial stress on the health system may well lie with factors other than ageing”
The dominant (global) narrative
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Pressure Source 1: Changing population
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Demographic picture for New Zealand 2011-36(Source: Statistics NZ)
Count
0%
-----4%------
98%
12%
Medium Growth Projections 2011-2036
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Number in working population (15-65 yrs) for every person 65 yrs and over
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2011 2016 2021 2026 2031 2036
Year
Rati
o 1
5-6
4:6
5+
NZ Australia
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Healthcare Cost by Age(Source: NZ Treasury, 2010)
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Total Cost per Hospital Discharge by Age and Ethnicity2010/11 Fiscal Year
(Source: NMDS)
0
50
100
150
200
250
300
00-04 05-09 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85+
Age Category in Years
Co
st
in M
illio
ns
Do
llars
Maori
Non-Maori
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Average Hospital Discharge Cost by Age and Ethnicity:2010/11 Fiscal Year
(Source: NMDS)
0
1000
2000
3000
4000
5000
6000
00-04 05-09 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85+
Age Category in Years
Co
st
in D
olla
rs
Maori
Non-Maori
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Pressure Source 2: Changing technology
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The impacts – positive and negative
Positive Supports new thinking and new knowledge Can contribute to better health outcomes if access is
only needs driven
Negative Often adopted before being ‘fully tested’ New treatments can worsen health disparity if access
is not needs based Enthusiasm can override appropriate application [Generally] raises costs to the health sector
So - how should we balance cost against ‘progress’?
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Pressure Source 3: Changing workforce
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Some questions
Does use of language like “front-line services” etc. over simplify the way the health system works?
Are we making ‘savings’ just to meet rising costs in other parts of the health system?
How will regionalisation and centralisation impact communities in provincial New Zealand and just what should be regionalised?
Should control and accountability be located in the same or different places?
What should the future skill-mix in the health sector look like and will decisions be driven by equations of cost or need?
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Pressure Source 4: Changing inequality?
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New Zealand life expectancy at birth(Source: Statistics NZ, NZ Life Tables, 2005-2007)
Period Non-Maori Males
Maori Males Non-Maori Females
Maori Females
1970-72 69.1 61.0 75.2 65.0
2000-2002 77.2 69.0 81.9 73.2
2005-2007 79.0 70.4 83.0 75.1
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Life Expectancy Trends: Maori and Non-Maori(Source: MSD)
NZ LIFE EXPECTANCY AT BIRTH BY ETHNICITY AND GENDER
65
67
69
71
73
75
77
79
81
83
85
1985-87 1990-92 1995-97 2000-02 2005-07YEARS
LIF
E E
XP
EC
TA
NC
Y I
N Y
EA
RS
Maori Male
Non-Maori Male
Maori Female
Non-Maori Female
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Amenable Mortality Rates 1996-2006(Source: MoH)
SRR Maori : NonMaori
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Year
Male Female
Rate Ratio
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Inequalities by DHB (‘Bulletin 28’)(Source: Monitoring Health Inequality Through Neighbourhood Life ExpectancyMoH Public Health Intelligence Occasional Bulletin No. 28, December 2005)
Bay of Plenty
Waitemata
Hawke's Bay
Southland
Wairarapa
LakesNorthland
Counties Manukau
Waikato
West Coast
South Canterbury
MidCentral
Taranaki
Hutt
Nelson-Marlborough
Canterbury
Capital and Coast
Possible goal
Auckland
Whanganui
Tairawhiti
Otago
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
-2.5 -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5
Scatter plot of LE against HIIs, after standardisation
Low average level of healthFair distribution of health
High average level of healthFair distribution of health
High average level of healthUnfair distribution of health
Low average level of healthUnfair distribution of health
HII
LE
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Age standardised death rates < 75 years
France Australia Japan Germany New Zealand United Kingdom USA
1997–98 75.6 88 81.4 106.2 114.5 126.5 120.2
2002–03 64.8 71.3 71.2 90.1 95.6 102.8 109.6
2006–07 55 56.9 61.2 76.4 78.6 82.5 95.5
(Source: OECD)
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The ‘glass half-full’ scenario
Slower growth of the population under 65 years will provide opportunities to ‘re-invest’ elsewhere in the system
Improving morbidity rates and ‘re-configured’ models of healthcare delivery will reduce pressure on available resources
Better measures of ageing (e.g. the ‘old age dependency ratio’) will provide a more accurate picture of the social impacts of ageing
‘Distance from death’ measures will provide a more
‘optimistic’ picture of future resource demand
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The ‘glass half-empty’ scenario
Increasing life expectancy will generate increasing levels of disability and associated costs
Social expectations around the level of available healthcare will rise as populations age
Reconfigured models of health delivery will generate a net cost and so will not solve funding pressures
[Thus] advantages from ‘morbidity compression’ will be lost
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The melancholic optimist
“There is a crack, a crack in everything,That’s how the light gets in”(Anthem)
Leonard Cohen, b. 1934
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Thinking about solutions:
Models of resource distribution
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Some critical questions
How should we assess health need - and what definition should we use?
Should all health gains count equally - and what about the ‘fair innings’ argument?
Whose costs and benefits should we value most – should we focus just on the working population?
Should we apply ‘discount rates’ to health care - and focus on improving system responsiveness?
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Still more questions!
Will we need a clearer definition of ‘adequate health’?
What priority should we give to the ‘worst off’?
Why don’t we just work on reducing health inequalities and focus less on ‘health maintenance’?
How should we balance individual rights against
broader social goals?
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So - how should we carve up the cake?
Models of social distribution Equality model – an equal portion to each Functional model – a portion proportional to need Reward model – a portion proportional to effort Social value model – a portion proportional to the
contribution to society Meritocracy model – a portion proportional to merit
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Thinking about solutions:
The consequences of these models for the ways we spend the health dollar
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Healthcare cost by age - current picture
AGE
FUNDING
LEVEL
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Healthcare cost by age – future picture
AGE
FUNDING
LEVEL
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Equality model - based on an equal share for all
AGE
FUNDINGLEVEL The
‘needs –allocation’ gap
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Reward model - based on current ‘productive effort’
AGE
FUNDINGLEVEL
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Social values model- based on ‘contribution’ to society
AGE
FUNDING
LEVEL
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Meritocracy model - based on ‘social merit’
AGE
FUNDINGLEVEL
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Functional model: - based on a current picture of health cost by age
AGE
FUNDING
LEVEL
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Neo-functional model: - based on re-configured need - the ‘bathwater effect’
AGE
FUNDING
LEVEL
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‘Right’ conditions for policy development?
Value views from outside the sector
Know more about ethics and social justice and evaluate policy directions accordingly
Have wider more inclusive debates about definitions of need View health goals in terms of both collective and individual
gains
Take the issue of health inequality seriously Apply ‘slow policy’ methods rather than the reactive
fragmented approach we seem to prefer
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The policy maker’s lament!!
Steven Gene Wold, b.1941
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And so - back to the future