Health Care Resource Allocation Models - A Critical Review

The purpose of a resource allocation sub-model, within the IIASA National Health Care System (HCS) model, is to represent the interaction between the demand for and the supply of health care resources. The overall model can then be used to examine the consequences of alternative health care policies, particularly policies concerned with the production of new resources. The HCS resource allocation models in the literature can be classified into three types: macro-econometric, behavior simulation, and system optimization. For each type some examples are described and the strengths and weaknesses of the approach are assessed. The macro-econometric approach has many advantages; it is well-tried and has standard methods, terminology, and computer programs. But it has the important limitation that its results are only strictly valid over the ranges of the variables that exist in the data from which the econometric equations are estimated. Thus the domain of its valid application is normally limited to small variations around the status quo. By contrast, the behavior simulation approach lacks many of the advantages of the macro-econometric approach but is, in principle, capable of exploring a wider range of situations; provided that the behavioral hypotheses are sound, such a model can be used to explore situations which are radically different from the status quo and in which variables may lie outside the ranges observed to date. In theory the optimization approach produces the ideal solution but in practice, if applied to the HCS, the approach is likely to founder on the difficulty of defining an objective function that both expresses reasonable objectives for the HCS as a whole and, at the same time, takes adequate account of the practice of the actors in the HCS. Accordingly the behavior simulation approach is recommended for the IIASA Task