Spending reviews: OECD practices and applications for health
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The document discusses the rise of spending reviews as a critical tool for fiscal consolidation and resource re-prioritization in healthcare, particularly in the wake of the global economic crisis. It covers key aspects of designing and focusing spending reviews, including strategic choices, impacts on public sectors and populations, and notable examples from OECD countries. The document emphasizes the importance of aligning health values with evidence of effective practices and maintaining clear national health priorities.
Spending reviews: OECD practices and applications for health
- 1. Spending Reviews: OECD practices and applications for Health Ronnie Downes Deputy Head - Budgeting and Public Expenditures, Public Governance & Territorial Development OECD Joint Network on Health Budgeting Paris, 4-5 February 2015
- 2. Spending Review – What? and Why? • A critical re-assessment of existing expenditures, and of the policies they are based upon, in light of the principles of efficiency, effectiveness, economy and/or affordability • Baseline expenditure 80-90% fixed – LIMITED DISCRETION • Requirement to live within fiscal limits – LIMITED ADDITION – Harder for governments to identify “fiscal space” • Are the old decisions still the best decisions? NEW PRIORITIES • Cost drivers in health ratchet upwards – NEW PRESSURES • Efficiency, modernisation, innovation – NEW DEMANDS – Move from “incremental” to a more “zero-based” approach
- 3. Growth in use of spending reviews • Before the global economic crisis – Australia, Canada, Denmark, the Netherlands, UK • After the crisis – Over half of OECD member countries report that they have conducted, or are planning, spending reviews – Becoming a standard tool of fiscal consolidation, fiscal space – Becoming a standard tool of resource re-prioritisation
- 4. Designing a Spending Review – Basic Choices Who? • Outsiders OR In-house experts • Central AND/OR line ministry • Steering committee • Balance between political and administrative viewpoints What? • All spending OR Sector focus OR Specific areas • Efficiency AND/OR strategic priorities • Programmes OR Ministries • Streamlining of agencies How? • Expenditure baseline analysis • Savings targets AND/OR ceilings • Public / civic engagement • Performance- focused analysis • Policy options OR prescriptions
- 5. Focusing a Spending Review – Strategic Choices Impacts on people? • Income distribution • Gini coefficient • Wellbeing indicators • Access to healthcare • Access to housing • Access to education • Gender impacts • Ethnic impacts • Environmental Impacts on growth? • Public investment • Prioritising education • Structural economic reforms • Labour market reforms / activation • Red tape reduction • Liberalisation of professions Impacts on public sector? • Staff numbers • Staff efficiency and work practices • Outsourcing • Shared services • E-Government • Budgetary reform
- 6. Why the OECD-wide interest in Spending Reviews? Fiscal balances as %GDP
- 7. Recent notable examples from OECD countries • Ireland: “Comprehensive Review of Expenditure” – Crisis-era: 2009 (independent), 2011, 2014 (internal) – Linked to ongoing evaluation, performance framework – Sample output: Review of Local Transport Programmes • School transport, Rural access, Health / Disability transport • Netherlands: “Comprehensive Spending Review” – Crisis-era: 2009/2010 – Intensive upgrading of ongoing evaluations (“spending reviews”) – 20 sector-specific reports delivered (incl. long-term health care) • UK: Spending Review 2015 – Integral, periodic but “ad hoc” feature of UK budget system – Part of fiscal crisis response: “living within our means” – Sets medium term “departmental expenditure limits” – 2015: special focus on sustainability of health and social care systems
- 8. Some lessons from international experience? • Each spending review is different – even within countries – linked to political, economic, social factors • Often starts as ad hoc response to shocks, stresses • Maintaining the impetus of spending review? – role of fiscal rules, fiscal framework – demands of “fiscal space” for national development goals – integrate into multi-annual budgetary framework • Maintaining and developing policy prioritisation role? – National evaluation framework – Build up a corpus of material for use in spending review – Build up – and disseminate – specialists in each sector • Spending Review is about more than just “cutbacks” …
- 9. Towards a Spending Review model for Health? • Starting point: national health “strategic stock-take” – marrying health values with evidence of “what works” • Are national health priorities clear and up-to-date? – National health goals, outcome objectives – SDG – WHO – OECD – “Key National Indicators” – Longevity – Morbidity – Access to care – Care quality – etc. • Alignment of processes, structures, resources with these goals? – Primary care – Pharmacies – Hospitals – Health promotion – etc. etc. – Is there a system-wide “logic model” informing the allocation of resources? • Clarity about horizontal cost drivers – Structure of costs – HR efficiencies – Procurement • Evaluation of specific programmes in this overall context – Each programme should stand on its own merits – Is there a clear “programme logic model” for each allocation of resources? – What are the evaluation and accountability frameworks in place?