Priority-setting in New Zealand: translating principles into practice

In May 1998 the New Zealand Health Funding Authority released a discussion paper which proposed a principles-based approach to setting purchasing priorities that incorporates the economic methods of programme budgeting and marginal analysis, and cost-utility analysis. The principles upon which the process was to be based are effectiveness, cost, equity of health outcomes, Maori health and acceptability. This essay describes and critiques issues associated with translating the principles into practice, most particularly the proposed methods for evaluating the effectiveness and measuring the cost of services. It is argued that the proposals make an important contribution towards the development of a method for prioritizing services which challenges our thinking about those services and their goals, and which is systematic, explicit, and transparent. The shift towards 'thinking at the margin' and systematically reviewing the value for money of competing claims on resources is likely to improve the quality of decision-making compared with the status quo. This does not imply that prioritization can, or should, be undertaken by means of any simple formula. Any prioritization process should always be guided by informed judgement. The approach is more appropriate for some services than for others. Key methodological issues that need further consideration include the choice of instrument for measuring health gains, the identification of marginal services, how to combine qualitative and quantitative information, and how to ensure consistency across different levels of decision-making.