(Part 1 of 2) How to Allocate and Ration Scarce Resources in Healthcare: A 3-Step Framework (#3 of 40 series)

 

A 3-Step Framework

Imagine you are a hospital manager and you have to decide how to distribute a limited number of ventilators among a large number of COVID-19 patients.

• How would you make this decision? 
• What criteria would you use? 
• Who would you consult? 
• How would you communicate your decision to the patients, their families, and the public?

These are some of the questions that healthcare professionals face every day when they have to allocate and ration scarce resources in healthcare. Resource allocation and rationing are not new phenomena, but they have become more urgent and visible during the pandemic. They are also not unique to healthcare, but they have special ethical implications because they involve life and death decisions.

In this post, I will explain what resource allocation and rationing are, why they are important and challenging, how to approach them in a systematic and ethical way, and what role lawmakers can play in this process. I will also share some examples from my own experience as a health economist and a policy advisor. My goal is to provide you with a practical framework that can help you make better decisions in this complex and sensitive area.

What are resource allocation and rationing in healthcare?

Resource allocation is the process of deciding how to distribute available resources among competing needs or demands. Rationing is the outcome of this process, when some needs or demands are not met or are met partially due to resource constraints. Resource allocation and rationing can occur at different levels of the healthcare system, such as macro (national or regional), meso (organizational or institutional), or micro (individual or clinical).

Resource allocation and rationing can also take different forms, such as explicit or implicit, prospective or retrospective, formal or informal, centralized or decentralized. 

Explicit rationing is when the criteria and procedures for allocating resources are clearly defined and communicated. 
Implicit rationing is when the criteria and procedures are not transparent or consistent. 
Prospective rationing is when resources are allocated before they are used. 
Retrospective rationing is when resources are allocated after they are used. 
Formal rationing is when resources are allocated according to official rules or guidelines. 
Informal rationing is when resources are allocated according to personal preferences or judgments. 
Centralized rationing is when resources are allocated by a single authority or agency. 
Decentralized rationing is when resources are allocated by multiple actors or stakeholders.

Why are resource allocation and rationing important and challenging?

Resource allocation and rationing are important because they affect the quality, efficiency, equity, and sustainability of healthcare. Quality refers to the extent to which healthcare services meet the needs and expectations of patients and improve their health outcomes. Efficiency refers to the extent to which healthcare services produce the maximum benefits with the minimum costs. Equity refers to the extent to which healthcare services are distributed fairly among different groups of people according to their needs, preferences, and abilities to pay. Sustainability refers to the extent to which healthcare services can be maintained over time without compromising future generations.

Resource allocation and rationing are challenging because they involve trade-offs among these objectives, as well as ethical dilemmas, value conflicts, uncertainty, complexity, and stakeholder interests. 

For example, allocating more resources to one group of patients may improve their quality of care, but it may also reduce the efficiency of the system, create inequities among other groups of patients, or jeopardize the sustainability of the system. Allocating resources according to evidence-based criteria may be ethically justified, but it may also clash with the values or preferences of some patients, providers, or policymakers. Allocating resources under conditions of uncertainty may require making assumptions or judgments that may turn out to be wrong or inaccurate. Allocating resources in a complex system may require considering multiple factors and interactions that may be difficult to measure or predict. Allocating resources in a pluralistic society may require engaging with diverse stakeholders who may have different perspectives, interests, or agendas.

How to approach resource allocation and rationing in a systematic and ethical way?

Given the importance and challenges of resource allocation and rationing in healthcare, how can we approach them in a systematic and ethical way? There is no simple or definitive answer to this question, but I propose a 3-step framework that can guide us in this process:

1.  Define the problem: The first step is to define the problem clearly and comprehensively. This involves identifying the scope, scale, nature, causes, consequences, and stakeholders of the problem. For example, if we want to allocate ventilators among COVID-19 patients, we need to know how many ventilators we have, how many patients we expect to need them, what criteria we use to prioritize them, what alternatives we have if we run out of ventilators, what impacts our decision will have on the patients' health outcomes and quality of life, as well as on the system's performance and reputation, and who are the key actors involved or affected by our decision, such as patients, families, providers, managers, policymakers, media, etc.

2.  Evaluate the options: The second step is to evaluate the options available and compare them according to relevant criteria. This involves generating, analyzing, and ranking the options based on their expected costs, benefits, risks, and uncertainties. For example, if we have three options for allocating ventilators among COVID-19 patients, such as first-come first-served, lottery, or clinical triage, we need to estimate how each option will affect the number of lives saved, the quality of life of the survivors, the fairness of the distribution, the feasibility of the implementation, the acceptability of the stakeholders, and the robustness of the results under different scenarios.

3.  Make and communicate the decision: The third step is to make and communicate the decision in a transparent and accountable way. This involves selecting the best option based on the evidence and values, explaining the rationale and justification for the decision, implementing the decision effectively and efficiently, monitoring and evaluating the outcomes and impacts of the decision, and revising or adapting the decision if necessary. For example, if we decide to allocate ventilators among COVID-19 patients based on clinical triage, we need to inform the patients, families, providers, managers, policymakers, media, etc. about our decision and its reasons, apply our decision consistently and fairly across all cases, collect and report data on the outcomes and impacts of our decision, and adjust our decision if new evidence or feedback emerges.

What are some examples or case studies of resource allocation and rationing in healthcare in other countries or contexts?

Resource allocation and rationing in healthcare are not only relevant for COVID-19 pandemic situations, but also for other countries or contexts that face different challenges or opportunities. Here are some examples or case studies that illustrate how resource allocation and rationing are done in different settings or situations:

●      In Australia, a program called Sustainability in Health care by Allocating Resources Effectively (SHARE) was developed to introduce a systematic, integrated, evidence-based approach to disinvestment in a local health service. Disinvestment is a form of resource allocation that involves removing, reducing, or restricting current practices that are unsafe, ineffective, or inefficient. The program aimed to identify potential areas for disinvestment, evaluate their costs and benefits, and implement and monitor their effects. The program also involved stakeholder engagement, governance structures, and evaluation methods. The program found that resource allocation decisions are complex and require multiple components and elements to be considered. The program also faced some barriers and enablers such as organizational culture, leadership support, staff capacity, and data availability.

●      In Germany, the Netherlands, Sweden, Switzerland, and the United Kingdom, healthcare systems use different methods to ration healthcare services based on explicit criteria such as cost-effectiveness, need, or equity. For example, Germany uses a positive list of services that are covered by statutory health insurance based on evidence of effectiveness and efficiency. The Netherlands uses a basic package of services that are covered by mandatory health insurance based on necessity, cost-effectiveness, and consumer sovereignty. Sweden uses priority-setting guidelines that rank services according to severity of condition, patient benefit, and cost-effectiveness. Switzerland uses a negative list of services that are excluded from mandatory health insurance based on lack of effectiveness or appropriateness. The United Kingdom uses a national institute that provides guidance on which services should be funded by the National Health Service based on clinical effectiveness and cost-effectiveness.

●      In low- and middle-income countries (LMICs), resource allocation and rationing in healthcare are often driven by scarcity of resources and high burden of disease. LMICs face challenges such as lack of data, evidence, and capacity to inform resource allocation decisions; weak governance and accountability mechanisms to ensure fair and transparent resource allocation processes; and competing demands from different sectors and stakeholders for limited resources. LMICs also have opportunities such as innovation, collaboration, and participation to improve resource allocation outcomes. For example, some LMICs have used tools such as benefit incidence analysis, budget impact analysis, or multi-criteria decision analysis to assess the distributional effects, financial implications, or trade-offs of different resource allocation options. Some LMICs have also used platforms such as health sector reviews, health sector strategic plans, or health sector forums to engage with different actors such as government agencies, donors, civil society organizations, or private sector providers to coordinate and align resource allocation decisions.