Section 1: Introduction to Data-Driven Decisions and the Economics of Health Care

Section Overview

In this section, you will be introduced to key concepts pertinent to health economics and the role of data-driven decision-making for resource allocation in the context of long-term care (LTC) homes in Canada. This chapter refers to LTC throughout to illustrate the concepts of health economics, but this information can be applied to other aspects of the health sector as well.

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Application of Data-Driven Evidence in Health Care

Data-driven decisions refer to the use of scientific metrics, facts, and information to guide decision and policy-making to align with the overarching organizational goals and objectives (Provost & Fawcett, 2013). Real-time data pertinent to costs and health outcomes also plays a pivotal role in informing health care resource allocation decisions and guiding policies for maximizing the reach and quality of services in clinical and public health domains. To simplify, data-driven evidence not only addresses service delivery gaps but provides all the necessary information to increase health care efficiency.

When formulating policies, health system planners, administrators, and care providers often utilize data pertinent to the costs of interventions and programs, patients’ health outcomes, and quality of life. But one may ask, is it enough to simply know how much a given health technology program costs (in dollars) when making such decisions, or perhaps, do we need to know much more to make an informed decision? More importantly, health system stakeholders look for information that could affect costs and outcomes in health care. For example, when discussing the total cost of a given health technology over a long period of time, it is essential to consider other implementation factors such as additional training of health care providers, frequent patient follow-ups, and potential disruptions due to technology malfunctioning.

Externalities, such as environmental pollution, increase in productivity due to better health outcomes, and influence of social media on choices, can also be factored into data-driven decisions. One example of externalities is the consequence of air pollution on society caused by a hospital’s waste disposal process for plastic syringes, single-use gowns, surgical instruments, and sterile supplies. Externalities can play an important role in addressing why and how we allocate resources in health care. Thus, a comprehensive understanding of quantitative (e.g., frequency, proportion, mean, etc.) and qualitative data (e.g., voices, stories, perspectives, etc.) pertinent to externalities is the foundation of data-driven decision-making in health care.

Economics of Health Care

Health economics is a branch of economics in which fundamental principles such as supply and demand, efficiency, program effectiveness, value-based services, and human behaviour in the provision and consumption of health care are studied (Parkin, 2017). More broadly, health economists evaluate health care intervention design and implementation aspects to estimate a full spectrum of costs and outcomes. Health economic data (such as information about the frequency and extent of resource use) are primarily obtained from participants recruited in health care settings or intervention groups, institutional financial reports, and consultation with implementing partners, funders, and community members directly and indirectly affected by the decision. Most importantly, we want to ensure that enough medical supplies are on hand (especially during a crisis), enough medical professionals are available to provide necessary care and services, appropriate medical technology is available to address emergencies, and an advanced supply is available for further necessities. The COVID-19 pandemic, however, has changed the landscape of decision-making in health care to become one in which decisions need to be made in the moment and are not necessarily based on previous experiences due to rapidly changing situations.

Although this was not the first pandemic faced by humanity, organizations were ill-prepared for the novel coronavirus and therefore entered a vicious cycle of decision-making rooted in trial-and-error. To no surprise, health system planners and administrators were faced with issues related to resource scarcity and were compelled to make difficult choices, such as disinvesting or redirecting resources, in almost every health sector. Reflecting on situations emerging from the COVID-19 pandemic, we wonder if anything could have been done differently to balance the budget in health care or to reassess interventions and programs which drive higher costs but yield lower values? Of course, traditional economic principles of allocative efficiency can help organizations choose whether to procure a new piece of equipment, such as a Magnetic Resonance Imaging (MRI) machine, or to hire another staff member, such as a clinical psychologist for providing mental health services at the hospital. However, this pandemic is challenging organizations to think outside the box and apply a broader health economics framework (via multi-criteria decision-making) to study short and long-term costs and the impacts of choosing wisely in health care. While living through the COVID-19 pandemic, we also realized that certain situations require decisions to be made on the spot (most of the time there was premature or no available evidence) suggesting wider implications for the health care system and society at large.

In this section, a case study is presented to highlight decisions made in the context of LTC homes during the COVID-19 pandemic, focusing specifically on LTC homes in Ontario, Canada. LTC homes are facilities where adults (mostly older adults) require and receive 24-hour nursing and personal care services which are typically not provided in a retirement home or supportive housing environment (Ministry of Health and Long-Term Care, 2022). The LTC system exists to support the advanced care needs of the elderly population and serve as residents’ homes, where the elderly are able to live in a safe, secure, and comforting environment (Ministry of Health and Long-Term Care, 2020). For the purposes of this case study, information and examples provided are based on real-life experiences throughout the current COVID-19 pandemic in the LTC homes operated by the Regional Municipality of Niagara (Niagara Region) in Ontario, Canada, although LTC homes across Ontario and beyond may have had similar experiences or challenges.

CASE STUDY: The Chronicles of COVID-19 in LTC Homes

The COVID-19 pandemic was declared by the World Health Organization (WHO) on March 11th, 2020 (Detsky & Bogoch, 2020). This pandemic caused many challenges for those living in, working in, and visiting LTC homes, as this environment was hit incredibly hard with illness and death from COVID-19 due to rapid spreading of the virus, especially among residents with pre-existing health conditions. In an attempt to keep LTC residents safe, Ministry of LTC directives and public health regulations in Ontario were implemented and continuously updated as the pandemic progressed and as more information was released about the novel coronavirus.

Due to the pandemic, many restrictions were introduced into the LTC environment (e.g., social distancing, cohorting, increased infection-prevention and control practices, etc.), with one of the most significant measures being the temporary ceasing of all in-person visits for approximately three months from March to June of 2020, as well as additional periods of visitor restrictions where only those identified as Essential Caregivers were permitted. These restrictions led to some residents exhibiting increased rates of responsive behaviours and adverse mental health outcomes, such as depression, anxiety, agitation, cognitive decline, and decreased social activity, alongside the risk of social isolation.

Responsive behaviours represent meaningful responses to an environment and may reveal underlying concerns such as pain, loneliness, or not wishing to receive personal care, and can be defined as the verbal or physical actions that can cause disruption or challenges to other people living in the environment (Song et al., 2019). Other examples of responsive behaviours include, but are not limited to, physical responses such as hitting, spitting, and resisting care, and verbal responses, such as yelling, swearing, and crying.

To address these mental health concerns and keep residents and families connected during the visitor restrictions that were put in place, virtual visits were implemented across all eight of the not-for-profit LTC homes operated by the Niagara Region as well as many other LTC homes across the country. Virtual visits consisted of technology-driven communication methods such as Facetime and Skype, telephone calls, and emails, as well as other activities, such as handwritten letters and window visits where loved ones could see and communicate with residents from the safety of outdoors. Additionally, recreation staffing was increased in these LTC homes to help keep residents connected and engaged in activities of interest to support their mental health and well-being during this challenging time. Staff from other departments across the organization were also temporarily redeployed into the Niagara Region LTC homes to assist with these virtual visits, recreation programming opportunities, screening of staff and visitors, and additional high touch point cleaning.

Despite substantial financial investments in LTC, many LTC homes experienced devastating levels of loss of life of residents due to COVID-19. This brought to the forefront the need for increased care measures and additional expenditure capabilities granted by provincial and local governmental authorities, such as the Ministry of LTC in Ontario and the Regional Municipality of Niagara (Niagara Region). In addition to financial support, emergency pandemic supplies were necessary, which meant keeping a larger supply of Personal Protective Equipment (PPE) on hand. PPE supplies included surgical masks, N95 masks, goggles, face shields, gowns, and gloves, as well as an increased supply of wipes and disinfectants. LTC homes were encouraged (whenever possible) to keep additional PPE supplies on hand because supply chains were detrimentally affected.

It is important to note that access to appropriate medical supplies was limited due to restrictions brought on by COVID-19 and the sheer volume of required supplies needed everywhere in the health care sector. Having additional supplies on hand helped to decrease staff anxiety levels, allow corrective measures to be followed throughout the pandemic, and prepare for further cases. However, in addition to supply concerns, we must also consider the human factor when we think of the challenges caused by COVID-19. One can imagine how difficult it must have been for LTC residents when they had to be isolated (for up to 14 days at a time) due to either experiencing possible symptoms of COVID-19, testing positive for COVID-19, being exposed to someone who contracted COVID-19, returning from hospital requiring a mandatory isolation period, or just because of the changing directives put in place to keep them safe. Imagine how emotionally and physically exhausting it must have been for the staff working in these LTC facilities, as well as for the family members and residents that were temporarily separated. Also consider the financial costs associated with the supplies and human resources necessary to support the Ministry of LTC and public health directives, especially in situations when there were cases of COVID-19 present in the LTC home.

 

Emerging Problems and Mitigation Strategies

Throughout the COVID-19 pandemic, health care costs have been rising dramatically, particularly in LTC. This is mainly because of increased demand for staffing (including nursing and recreation staff as well as staffing from other departments), supplies, and technological needs associated with medical care and social connections (Estabrooks et al., 2020). In order to conceptualize this problem, it is crucial to understand that prior to the COVID-19 pandemic, most decisions were budget-driven, whereas during the pandemic, many decisions were made by prioritizing safety over budget. For example, although not included in the allocated annual budget, the number of staffing hours in each department was temporarily increased in the LTC homes operated by the Niagara Region during different waves of the pandemic (including support from redeployed staff) to ensure appropriate levels of care could be provided if/when staffing challenges were present. The Niagara Region was fortunate to be able to utilize these additional human resources to ensure residents’ needs were met and share the financial burden across the organization in combination with the additional funds provided by the Ministry of LTC.

LTC homes everywhere were challenged with staffing shortages due to a variety of reasons, such as Ministry directives, which required staff to only work in one care environment for a period of time, lengthy periods of isolation and outbreaks, as well as the implementation of a mandatory COVID-19 vaccination policy which saw some staff choosing layoffs or termination rather than becoming vaccinated. Due to these requirements and outcomes, many LTC homes were trying to hire additional staff from all disciplines, as were other health care sectors, such as hospitals, which presented additional human resource challenges across the entire health care system. In addition to staffing challenges, a large number of pandemic supplies were needed and purchased, causing increased demand for supplies across the entire health care sector. Fortunately, the Niagara Region had pandemic supplies in place as part of an organized pandemic plan that was put into place after SARS which immensely helped with the supply challenges experienced.

On a positive note, there is emerging evidence that shows increasing staffing and programming opportunities can positively impact or improve residents’ well-being and mental health outcomes (Bethell et al., 2021). A recent study conducted at Upper Canada Lodge in Niagara-on-the-Lake, Ontario, Canada (which is one of eight LTC homes operated by the Niagara Region) indicated that the increased level of recreation staff improved the mental health outcomes of residents by decreasing responsive behaviours and improving overall wellness. It was observed that, as residents connected more with staff and their family members amidst the pandemic restrictions, these closer relationships and communications led to residents exhibiting positive behaviours, healthy relationships, and efforts towards their personal growth. It was determined that these interventions helped to minimize anxiety and worry about loved ones, which positively impacted rates of depression. Residents with little to no levels of depression were also positively affected by the increased recreation staffing and activities provided.

The findings from this project highlight substantial financial implications for LTC homes and the wider health system in the Niagara Region, and elsewhere. It is important to note that budget decisions for staffing (in all departments including programs and support services) and supplies is allocated by the Ministry of LTC. Bearing this in mind, in order to appropriately address all tangible needs of LTC homes throughout the pandemic and beyond, further conversations, advocacy, and planning are required because of supply chains and the increased need and demand for resources across the country. Assuming that allocation of resources was made pre-pandemic, how could we possibly prepare for a tragedy like the COVID-19 pandemic without going over the financial resources that were allocated? Would this even be possible?

The reality is that the entire world was experiencing this pandemic, thereby demanding supplies and resources (driving up supply and demand), struggling to retain and hire staff, and requiring additional funding to maintain operations was a much larger challenge than anyone could have imagined (O’Sullivan et al., 2021). In addition, robust data on costs relative to improved health outcomes is required to demonstrate the economic impact and cost-effectiveness of health interventions, such as the increased recreation staffing, particularly in a situation such as a pandemic. Demonstrating documented decreases in responsive behaviours, improved depression rating scales, and decreased falls across the organization while recreation staffing levels were increased would help direct best practice decisions in the future. Further preparing for contingencies and reinforcing the importance of designating appropriate resources to create better health and well-being outcomes will be increasingly important. Demonstrating cost-effectiveness can highlight how certain health interventions prove futile as new interventions emerge. For example, the expansion of recreation staffing during the pandemic highlighted the positive outcomes experienced during this difficult time by keeping residents engaged and connected, so why would we not want to find ways to increase recreation staffing on a permanent basis so our residents can always have these additional opportunities? In the subsequent sections of this chapter, we will shed light on key theoretical as well as translational aspects of health economics and how this relates to data-driven decisions in the context of LTC.

Summary

Data-driven decisions in health care encompass a wide array of information processing, analyses, and interpretations that seek to lower costs and maximize health gains for patients, care providers, and health system administrators/planners. However, the COVID-19 pandemic challenged the decision-making dynamics associated with resource scarcity and information gaps. Thus, preventing the morbidity, mortality, and adverse mental and physical health outcomes brought on by COVID-19 were mitigated alongside the rising health care costs to allow for safer and more optimal outcomes for residents in LTC homes. The road to recovery from the COVID-19 pandemic will continue to rely heavily on emerging data, further preparing for contingencies alongside designating necessary resources and demonstrating the cost-effectiveness of current and new health care interventions.

Test Your Knowledge

Complete the following activity to assess how much you learned about the content that was covered in this section.