Dr HW Liu

HA Convention 2015

Internal Resource Allocation –

The What, Why and How

Internal Resource Allocation – The What, Why and How ?

It was six men of Indostan

To learning much inclined,

Who went to see t he Elephant

(Though al l of t hem were blind )

That each by observation

Might satisfy his mind

. . .

John Godfrey Saxe (1816-1887)

And so t hese men of Indostan

Disputed loud and long,

Each in his own opinion

Exceeding stiff and strong,

Though each was partly in t he r ight,

And al l were in the wrong!

What do people disagree… the object or their understanding of it?

What Does IRA Mean/Entail ?!!

Internal resource allocation (IRA)

IRA analysis

Between the idea and the reality . . . Falls the Shadow

T.S. Eliot

IRA model

One Size Doesn’t Fits All…

• Historical based funding

• Bid based funding

• Expenditure based funding

• Activity based funding

• Population based funding

• …

Model Strength Weakness

Historical based

Minimize disruption to existing services

Perpetuate status quo even if unfair

Not conducive to evolving needs

Bid based Sense of control

Link resource to targets

High transaction costs

May cause disparity between regions and impression of political patronage

Expenditure based

Simple and easy to implement Contradicts principles of good public finance

Encourage spending, ignores efficiency

Activity based

Objective Challenge in adjusting case complexity

Risk unwarranted service utilization

Subject to gaming

Population based

Proactive to population demand

Forward looking

Remove the incentive for supplier induced demand

Reduce reliance on output data provided by local providers

Easy to articulate

Danger of oversimplification; factors other than population characteristics also affect demand

Challenge in monitoring output

Need damping mechanism to minimize disruption to existing services

There is No Panacea… The development of funding practices is a dynamic process

Devil is in the Detail… … significant congruence in the factors used to guide need and cost adjustments. However, there is considerable variation in interpretation and implementation of these factors. Despite broadly similar frameworks, there are distinct differences in the composition of the formulae across the seven health systems.

Resource Need

Project spending for coming years

Funding

Govt. subvention + Fees Income

VS

Baseline Services

New Initiatives (Annual Planning)

Contingency Med Mal provision…

Baseline Subvention by Govt.

New Money (Subvention growth)

Income

Revenue Reserve

Resource Gap

Negotiate more funding and/or mobilize internal resource if available

When does Pop-based come into picture?

Resource Gap

Prioritize as necessary

“Philosophical problems arise when language goes on holiday.”

- Ludwig Wittgenstein

When Language Goes on Holiday…

• Govt. : “Pop-based Model” provides an objective basis for assessing funding growth need (at the existing level of care) from the population perspective Allocate $$

• Social policy consideration

• Financial sustainability

• HA : Needs to minimize disruption to existing services while building up infrastructure to facilitate patient access to care within the community in the long run Plan & Execute

• Balance budget, operational efficiency, cost-effectiveness, economy of scale, concentration of expertise

• “Pop-based IRA” has to live with reality and requires multiple strategies over time

When Language Goes on Holiday … Funder vs Provider’s Concern

Let’s examine the elephant… a bit more thoroughly

Patient Days (in ‘000) HKEC HKWC KCC KEC KWC NTEC NTWC

Total by Residents 637 515 454 846 1,814 1,042 808

+ Inflow from Other Clusters 74 239 620 70 200 121 33

- Outflow to Other Clusters 117 53 127 276 580 95 111

Total by Cluster 595 701 947 641 1,434 1,069 729

Net Flow Percentage -7% 36% 109% -24% -21% 3% -10%

e.g. Inpatient care (12/13)

‘Cross-Cluster’ Flow

Green – Net Worker Inflow

Red – Net Worker Outflow

Eastern

Islands

Central &

Western

Kowloon

City

Kwai

Tsing

Kwun Tong

North

Sai Kung Sha Tin

Sham

Shui Po

Sourthern

Tai Po

Tsuen Wan

Wan Chai

Wong Tai Sin

Yau Tsim

Mong

Yuen Long

Tuen Mun

Source: 2011 Census

Estimation Methodology: McKenzie, Brian, William Koerber, Alison Fields, Megan Benetsky, and Melanie Rapino. "Commuter-Adjusted

Population Estimates: ACS 2006-10." (2010).

e.g. Worker flow

When Language Goes on Holiday … Residential population & daytime movement

A&E 1st Attendance of NTW Residents Outflow by Age Group

Average Across Age Groups

A&E 1st Attendance of Six Clusters Outflow by Age Group Outflow is higher for those

aged 15 – 64 for most regions

HKE HKW

KC KE

KW NTE

A&E 1st Attendance in HKEC Break down by residence and time of day

Resident District

A&E 1st Attendance in NTEC Break down by residence and time of day

Resident District

A&E 1st Attendance in Six Clusters Break down by residence and time of day

Resident District

Resident District

Resident District

Resident District

Resident District

Resident District

HKEC HKWC

KEC KWC

NTEC NTWC

A&E 1st Attendance in KCC Break down by residence and time of day

Resident District

Provider Cluster for A&E 1st Attendances (Simple Majority Method)

1 April 2014 – 31 March 2015

A&E ‘Cross-Cluster’ Flow

Note: Districts with less than five A&E 1st Attendances are omitted.

KWC

KWC

KCC

KEC

NTEC

HKWC HKEC

ZOOM IN

Provider Cluster for A&E 1st Attendances (Simple Majority Method)

1 April 2014 – 31 March 2015

A&E ‘Cross-Cluster’ Flow

Note: Districts with less than five A&E 1st Attendances are omitted.

KWC

KWC

KCC

KEC

NTEC

HKWC HKEC

ZOOM IN

A&E ‘Cross-Cluster’ Flow Provider Cluster for A&E 1st Attendances (Simple Majority Method)

1 April 2014 – 31 March 2015

KWC

KWC

KCC KEC

Note: Districts with less than five A&E 1st Attendances are omitted.

Provider Cluster for Inpatient Services (Simple Majority Method using Total Bed Days)

1 April 2014 – 31 March 2015

IP ‘Cross-Cluster’ Flow

Note: Districts with less than ten patient days utilized are omitted.

KWC

KCC KEC

KWC

QEH

PMH

What are patient’s concerns?

8.9 km

5.5 km

WTS to PMH: 8.9 km (12 min without traffic jam via Lung Cheung Rd) or 46 min via MTR

WTS to QEH: 5.5 km (10 min without traffic jam via Choi Hung Rd, Argyle Street and Wylie Rd) or 32 min via MTR

When Language Goes on Holiday … What boundary?

Hong Kong East

Hong Kong West

Kowloon Central

Kowloon East

Kowloon West

New Territories East

New Territories West

Understanding is dynamic and evolving

When Language Goes on Holiday … Clusters

Provider Cluster for A&E 1st Attendances (Simple Majority Method)

1 April 2014 – 31 March 2015

A&E ‘Cross-Cluster’ Flow

Note: Districts with less than five A&E 1st Attendances are omitted.

Cross-cluster flow is more prevalent at certain areas

HKWC HKEC

KCC

KEC

KWC

NTEC

NTWC

Provider Cluster for Inpatient Services (Simple Majority Method using Total Length of Stay)

1 April 2014 – 31 March 2015

IP ‘Cross-Cluster’ Flow

Note: Districts with less than ten patient days utilized are omitted.

HKWC HKEC

KCC

KEC

KWC

NTEC

NTWC

How ? • How to select relevant funding strategies

& apply them to suit reality?

• How to identify & adjust for factors that affect HC utilization of the population?

• How to identify deviation of HC utilization from the ‘model(s)’ and adjust resource to providers accordingly?

• How to interpret the variance found between clusters? Should case complexity be accounted for?

• How to take account of the planning lag time, patient behavior & the future?

• How to reconcile competing concerns of stakeholders?

Characteristics of Wicked Problems Cannot be exhaustively formulated

Every formulation is a statement of a solution

No stopping rule

No true or false

No exhaustive list of operations

Many explanations for the same problem

Every problem is a symptom of another problem

No immediate or ultimate test

One-shot solutions

Every problem is essentially unique

Problem solver has no right to be wrong

“Some problems are so complex that you have to be highly intelligent and well informed just to be undecided about them .”

- Laurence J. Peter

Existing

HC infrastructure,

operation & capacity

(provider’s reality), health

care utilization (reality

from patient angle)

From ‘Activity-based’ to ‘Population-based’ Maybe one day we’ll f ind the place where our ideas and reality meet Existing

HA Cluster Arrangement (an administrative concept? a reality ? or a hybrid somewhere in between?)

Present/HA Review

Pop-based model to guide IRA… (concept guides planning right now aligns future HC infrastructure, mode of delivery & capacity with population base) Future

Evolution of HC system (becoming reality) influences patient accessibility & thereby behavior over time (future possibility)

Between the idea

and the reality

Between the motion

and the act

Falls the Shadow

The Hollow Men

T.S. Eliot

Wicked problems can't be solved… hopefully be tamed

• Financial Planning Team, HO Finance

• Ms Clara Chin, HO D(F)

• Ms Eva TSUI, HOS&P CM(S&WP)

• Dr K L CHUNG, HOCS CM(CP)

Acknowledgements

Linked Slides

A&E 1st Attendance in HKEC Break down by residence and time of day

Resident District

A&E 1st Attendance in NTEC Break down by residence and time of day

Resident District