BOOKS OF RtfiDIfGS - PAHO/WHO

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Application of Cost-Benefit Analysis to Health Services /
achev~d, so that savinga are realized? The second application can be judged on it owM
merits as an intermediate good: of what value is such information and to whom?
3. la the health field there ia a tendency to adopt the best available and atost
teohnology in every institution. This drive is promoted by the medical ethic of dolng tbhe
utmost for the individual patient and reinforced by current methods of paying providera
by third parties. The voluntary nonprofit form of organizing hospitals is frequently
mentioned *s a factor. Still another factor is usually neglected, namely, the nature of tho
physician-hospital relationship in this country. Physicians who specialize in treating
patients with a given disease will not accede to its exclusion from hospital A, where thoy
hold a staff appointment, unless they are granted staff privileges in hospital B, where the
planning agency would like to concentrate all facilities for diagnosis and treatment. Only
in part are financial interests involved; equally, or even more important, is the
preservation and application of professional skills
4. Economic valuation has no meaning without a firm basis in the underlying data on
the link between the inputs and outputs of specific programs. It is not often that
economists can develop such data. Other investigators must be persuaded and enabled to
do this by investing their time and energies in longitudinal studies.
5. It is discouraging to perform technical analysis, to persuade the decision makers of
its usefulness, to have it adopted, and then to discover that funds for health services are
cut off because total government spending is being curtailed. Adjusting aggregate demand
in the economy through changes in total expenditures is bound to result in the
stop-and-go operation of individual programs. This is both wasteful and frustrating, and
poses a substantial threat to continuity in the provision of health services through public
financing.
6. Since cost-benefit or cost-effectiveness analysis is economic evaluation of public
projects or programs, it must inevitably take place in a political climate. While the
economic tool of cost-benefit analysis implies a delineation of goals and an articulation of
values, the imperatives of the political process may call for a blurring of differences and
potential conflicts, in order to facilitate the building of coalitions aimed at the
accomplishment of particular ends. Schultze(31) has observed this paradox: PPB has
been applied most in an area, national defense, where future uncertainty is greatest but
value differences among citizens have been traditionally least; PPB is not applied much in
the human resources area, where the problem of uncertainty is not so serious, but
differences in values among citizens prevail, as well as a great many vested interests.
Some political scientists, such as Wildavsky (120, 121), would agree with the above
description and conclude that such are the facts of life. Most changes in governmental
budgets are incremental anyway and do not-indeed cannot-derive from base zero (122).
Within the boundaries set by defined political understandings, there are ample
opportunities to improve decision making through systematic analysis. There is no reason
to believe that politicians prefer to make poor decisions over good ones. In cases that are
of vital importance to the body politic, many politicians, when persuaded of the right
thing to do, would be willing to use up some of the credit they have accumulated and
make the tough, though unpopular, choice. They cannot take such a stand on every issue,
however. Therefore, the exceptionally capable practitioner of economic cost-benefit
analysis must know how and when to make an allowance for the existence of a political
cost-benefit calculus (120).