The Health Care Sustainability Framework is based on disaggregating the health care expenditure into separate planning components. Unlike other approaches to planning health care expenditure, this framework explicitly incorporates population health needs as a determinant of health care requirements, and provides a diagnostic tool for understanding the sources of expenditure increase.
Financial sustainability is affected by revenues to support the health care system (column 4) and levels of expenditure (column 2). In difficult economic times the opportunity to support increasing expenditure through increasing revenues is constrained (column 4), leaving expenditure controls as the main tool for financial sustainability. Column 1 identifies the determinants of expenditure. The ways policies and strategies to control public health care expenditure growth affect these determinants appear in column 2. Demography and epidemiology largely lie outside the influence of health care policy, at least in the short term, leaving the shaded expenditure determinants, levels of service, provider productivity and provider pay, as policy routes for expenditure control in response to exogenous changes in population size, age distribution and health. These policies may also affect access to publicly funded health care and social inequalities in health (column 2). Reductions in access to care would threaten political sustainability (column 3) as more people seek health care from the private sector. If those with the potential ability to pay privately for care, either out of pocket or through private insurance, demand access to an alternative system, support for the publicly funded system is eroded.
The HCSF represents a development of the needs-based health workforce planning framework described by Birch et al. (2007), and is consistent with the activity analysis planning framework used effectively to analyse health workforce policy, health care expenditure policy and physician practice pattern changes (Evans, 1984). The HCSF, by drawing on these separate approaches, identifies total health care expenditure as the product of the number of health care services delivered and the average cost per service. The total number of services is determined by the product of the size of the population served, the average level of health among the population, and the average service use per person by level of health. The average cost per service is given by the product of the average provider payment per service and the average number of services delivered per provider, plus any non-direct labour costs (i.e. management and administration, capital or consumables). In other words, total health care expenditure is a function of the size and level of the health of the population, the services they use, the providers required to deliver those services, the costs of paying those providers, and any additional non-labour costs. By combining the frameworks of Evans and Birch et al. in this way, the contributions of each determinant of expenditure can be analysed and compared and the effect of policies on those determinants evaluated. The framework can be used prospectively as a planning tool to explore the resource consequences of policy developments covering, inter alia, service enhancements for particular client groups, implications of productivity improvements and provider substitution for health workforce requirements as well as expenditure consequences of these developments. It can also be used as a diagnostic tool by identifying the underlying contributing sources of expenditure growth: increases in population size, needs, services per unit need, or reductions in provider productivity and pay.
Related Publication: Birch S, Tomblin Murphy G, Cumming J, MacKenzie A. (2014). In place of fear: Aligning health care planning with system objectives to achieve financial sustainability. Journal of Health Services Research and Policy, 2015; 20(2):109-114. (OnlineFirst, published on December 11, 2014, doi:10.1177/ 1355819614562053, 1-6).