THE NSW HEALTH OUTCOMES INITIATIVE AND ECONOMIC-ANALYSIS

The New South Wales Health Department's initiative on health outcomes promises some important advances in the planning and priority setting of health services. However, the potential to promote better health ca re will not be realised unless resources are redeployed to the program s where health outcomes (and other benefits) can be purchased most che aply. The initiative reflects firmly the economic concept of efficienc y but leaves less certainty about how concerns for equity are to be ha ndled. This paper proposes that program budgeting and marginal analysi s be used to create a framework for redeploying resources to follow th e good buys-in terms of health and other outcomes. Additionally, the p aper argues for creating the right incentives to promote efficiency, a nd expressly argues against the use of diagnostic related groups or ca semix funding, as such funding is concerned, by definition, with cases and not with health per se. The goal of the initiative of trying to m aximise health outcomes implies that there are no other valued gains t o be had from health care. This is challenged. In reaching decisions a bout how best to deploy resources, more account should be taken, in a structured way, of community values.