New Publication: Opportunity Costs and Local Health Service Spending Decisions – A Qualitative Study from Wales

Work by Sarah Karlsberg Schaffer (OHE), Jon Sussex (RAND Europe), Dyfrig Hughes (Bangor University) and Nancy Devlin (OHE) has recently been published in BMC Health Services Research.

Research by OHE’s Sarah Karlsberg Schaffer and Professor Nancy Devlin, in collaboration with Jon Sussex (RAND Europe) and Dyfrig Hughes (Bangor University), has recently been published in BMC Health Services Research.

The paper, entitled “Opportunity Costs and Local Health Service Spending Decisions – a Qualitative Study from Wales”, focusses on identifying what, in practice, is foregone when the National Institute for Health and Care Excellence (NICE) recommends a new cost-increasing technology for mandatory use in the NHS as part of its Technology Appraisal (TA) programme.

The authors conducted semi-structured interviews with Finance and Medical Directors at Local Health Boards (LHBs) in Wales, covering prioritisation processes as well as methods of financing NICE TAs and other financial shocks at each LHB.

They found that the financial impact of NICE TAs is generally anticipated and planned for in advance and the majority of LHBs have contingency funds available to cope with these and other financial shocks within-period.

The authors also found that efficiency savings (defined as reductions in costs with no assumed reductions in quality) were a source of funds for cost pressures of all kinds and that service displacements were not linkable to particular NICE TAs. On occasion, unexpected increased demand for resources was met with increased expenditure, meaning that the Welsh Government has explicitly or implicitly acted as the funder of last resort. These results suggest that the opportunity cost of NICE TAs may be very difficult to quantify and may lie outside of the health system.

Access the paper here [Open Access].

Sarah will also be presenting the work at the EuHEA conference in Hamburg in July 2016.