A NEEDS-BASED APPROACH TO RESOURCE-ALLOCATION IN HEALTH-CARE

In this paper we identify the apparent inconsistency between the stated objectives of federal health-care policy in Canada and the existing methods of allocating health-care resources at the provincial level. We argue that while federal policy has focussed on arrangements for the payment of providers of services and prohibiting the application of user charges, little attention has been paid at either the federal or provincial level to what criteria should be used to allocate resources in ways consistent with the stated objectives. Current approaches to resource allocation implicitly assume that individual providers (physicians, hospital administrators) are both able and willing to allocate health-care resources in line with the stated objectives. We show that this is likely to be difficult to achieve, particularly given the methods used currently for funding providers and institutions. An alternative approach to allocating health-care resources is derived which is population-, as opposed to provider-, based and relates resource shares to the relative needs for health care among communities. The proposed approach provides a practical method of aligning the stated objectives of both federal and provincial health-care policies with the management of scarce health-care resources. Policy issues arising from the adoption of the proposed approach are discussed.