A politico-economic analysis of decision making in funding health service organisations

From a normative perspective, conventional economic analysis is often used to establish a framework in which social objectives can be built into the decision-making process. The health economics literature, however, tends to overlook the positive analysis of decision making often assuming particular social objectives that may or may not correspond with reality. This perhaps explains why exercises in health economics priority setting on occasions break down. This study is a positive analysis of group decision making. It examines the process of deliberating upon proposed changes to funding arrangements across Divisions of General Practice in Queensland, Australia. Existing levels of funding had, for a number of years, largely been determined by an allocation formula. The motivation for this study was a perceived inequity created by the long-term under-funding of smaller (resource poor or 'marginal') Divisions. The challenge in this project was that any change in funding arrangements required the support of all the Divisions but also would potentially create 'winners' and 'losers'. Decision making within such an institutional context was rendered a zero sum game. This paper documents a consultative process whereby the relevant stakeholders, with clear interests in any decision, were asked to participate in deliberations as to how such a problem should be tackled. The objective was, in the face of adverse incentives, to derive recommendations for addressing existing shortfalls experienced by some of these Divisions. The process involved encouraging relevant players to take into consideration the global allocation issues and to move beyond their localised interests. The results indicate that such a process can be effective in not only generating the necessary goodwill to enable such group decision making, but also in establishing a more realistic set of policy recommendations. (C) 2003 Elsevier Science Ltd. All rights reserved.