Opportunity costs and local health service spending decisions: a qualitative study from Wales.

BACKGROUND: All health care systems face the need to find the resources to meet new demands such as a new, cost-increasing health technology. In England and Wales, when a health technology is recommended by the National Institute for Health and Care Excellence (NICE), the National Health Service (NHS) is mandated to provide the funding to accommodate it within three months of publication of the recommendation. Identifying what, in practice, is foregone when new cost-increasing technologies are introduced is important for understanding the effects of health technology assessment (HTA) decisions on the NHS or any other health care system. Our objective was to investigate how in practice local NHS commissioners in Wales accommodated financial "shocks" arising from technology appraisals (TAs) issued by NICE and from other cost pressures. METHODS: Semi-structured interviews were conducted with Finance Directors and Medical Directors from all seven Local Health Boards (LHBs) in NHS Wales. These interviews covered prioritisation processes, as well as methods of financing NICE TAs and other financial shocks at each LHB. We then undertook a systematic identification of themes and topics from the information recorded. The study relates to the period October 2010 to March 2013. RESULTS: 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. Efficiency savings (defined as reductions in costs with no assumed reductions in quality) were a source of funds for cost pressures of all kinds. Service displacements were not linkable to particular NICE TAs and there appears to be a general lack of explicit prioritisation activities. The Welsh Government has, on occasion, explicitly or implicitly acted as the funder of last resort. CONCLUSIONS: Services may be displaced as part of a response to the cumulative impact of all types of cost pressures, including cost-increasing health technologies recommended by NICE, but such displacements were not direct responses to the publication of individual NICE TAs. The additional cost pressure represented by a new NICE TA is likely to be accommodated at least partly by greater efficiency and increased expenditure rather than displacement of services.

Local health care expenditure plans and their opportunity costs.

BACKGROUND: In the UK, approval decisions by Health Technology Assessment bodies are made using a cost per quality-adjusted life year (QALY) threshold, the value of which is based on little empirical evidence. We test the feasibility of estimating the "true" value of the threshold in NHS Scotland using information on marginal services (those planned to receive significant (dis)investment). We also explore how the NHS makes spending decisions and the role of cost per QALY evidence in this process. DATA AND METHODS: We identify marginal services using NHS Board-level responses to the 2012/13 Budget Scrutiny issued by the Scottish Government, supplemented with information on prioritisation processes derived from interviews with Finance Directors. We search the literature for cost-effectiveness evidence relating to marginal services. RESULTS: The cost-effectiveness estimates of marginal services vary hugely and thus it was not possible to obtain a reliable estimate of the threshold. This is unsurprising given the finding that cost-effectiveness evidence is rarely used to justify expenditure plans, which are driven by a range of other factors. DISCUSSION AND CONCLUSIONS: Our results highlight the differences in objectives between HTA bodies and local health service decision makers. We also demonstrate that, even if it were desirable, the use of cost-effectiveness evidence at local level would be highly challenging without extensive investment in health economics resources.