Using Simulation to Plan Health Service Resources: Discussion Paper

Introduction In the not so distant past, even in those specialties with a clear allocation of funds, hospital consultants were able to treat patients without having to pay much regard to the consequent costs. Health authorities are now encouraging the introduction of systems for monitoring expenditure. They are particularly motivated to do this in the case of highly specialized services which have grown up during the last twenty years and which are often funded on a Regional or even supra-Regional basis: treatment of chronic renal failure, cardiac surgery and radiotherapy services are all examples of services which have changed greatly during this period, the motive force being technological improvements which have increased the potential benefits to patients usually at great expense. Health service administrators and doctors have and undoubtedly even general managers will have considerable difficulty even keeping up with these various fast-moving changes, let alone being able to forecast, cost, budget and control them in the context of all the other less prestigious services which continue with their own technological changes. For more than a decade, British health officials have in any case placed increasing emphasis on the importance of more informed decision-making'. More recently, the espousal of commercial general management principles as enunciated by Roy Griffiths and accepted by the Secretary of State for Health2'3 would mean the adoption of sophisticated costing and budgeting techniques, reaching into cost and budget centres in the nether regions of health expenditure. These would provide a rational basis for deciding on expansions, contractions and changes of use of services, for allocating resources accordingly and for monitoring the effectiveness of use of such allocations. In the health services, various alternatives have previously been proposed instead of the commercial model: functional budgeting, specialty budgeting4 and, more recently, proposals for budgeting by clinical teams5. Through the changing fashion, however, all experts have agreed that doctors must themselves be involved with and make decisions about resource allocation and usage in clinical situations. (Doctors themselves, however, have in practice not always been enthusiasts for budgeting6'7.) One of the main problems is the complexity of the systems which give rise to costs and budgets in the first place. Health systems are inherently complex, being a mixture of political, economic and technological forces, operating within an essentially interpersonal and professional arena. Even at the operational level, though, health care is delivered in a complex way. For instance, Figure 1 shows It r