In this report we consider the case for using population-needs based approach to the planning and allocation of health-care resources in Ontario. In section 1 the needs-based approach is contrasted with systems of allocation used currently in Ontario. These existing systems tend to allocate resources on the basis of past levels of service utilization which, in turn, are determined largely by historical patterns of distribution of health-care providers and facilities. Under these systems, any existing inequities in access to care are perpetuated. In contrast, the needs-based approach relates resource allocations to characteristics of the population being served on the basis of health risks, morbidity and the need for health-care services. Consequently the link between current use of future allocation is severed and a population's current level of service utilization. The needs-based approach therefore provides a financial framework for directing (or targeting) resources to populations with greatest need and hence allocates the capacity for caring in a way which promotes the efficient and equitable use of limited health-care resources. In section two the literature on population-based measures of health status and the relationships between these measures and other socio-demographic and socioeconomic indicators is reviewed. Because health care is not provided as an end in itself, but as a means to producing improvements in health status or health-related quality of life, then the need for health care is not the same as the presence of morbidity. In the context of Canadian health policy, health care is needed only where there is an expectation that the utilization of such care would improve health status or health related quality of life. Accordingly measures of morbidity may not be valid indicators of relative health-care need. Several characteristics are identified as required in an indicator, or proxy measure, of health-care need. These range from statistical characteristics of validity (indicator value responds to changes in need), to practical issues of administrative feasibility, (data are already available and updated at regular and frequent intervals) and resistant to manipulation by interested parties (low ‘gameability). In section three both direct and indirect approaches to measuring relative health-care need are considered. Particular attention is paid the whether the measures are a valid indicator of need for care, the form of the relationship between the measure and health-care need (i.e. the relationship linear), and issues concerning the combination of different measures to produce a single indicator of need. Little attention has been paid to these issues in the literature and applications of the needs based approach. To date, the Standardized Mortality Ratio, as a measure of premature mortality,- appears to come closest to meeting the required characteristics, although its validity as an indicator of relative need requires replication using Canadian-based data and for services other than acute care. Section four outlines several issues concerning the implementation of a needs-based approach, covering technical issues (the availability and use of appropriate data, the identiication of appropriate planning populations and the management of patient flows (across population boundaries), organizational issues (providing the appropriate levels and quantities of skills to support the approach, the method and rate of implementation of needs-based planning from a use-based system), institutional issues (the impact of the adoption of a needs-based approach on the population, health- care providers, employers, the Ministry of Health and other Ministries) and contextual issues (the scope of the use of a needs-based approach in terms of services and populations to be covered, and the planned levels of resources to be allocated to health care in total, within which the needs-based approach might be used). Experiences from other jurisdictions are drawn upon to illustrate many of these issues. In section five several research questions are identified, the answers to which would enhance or support the application of a needs-based approach. In particular more attention should be paid to the identification and validation of more refined measures of relative health-care need at the population level. It is suggested that existing data sources might be used to address this issue. Similarly attention should be paid to the identification of the determinants of variations between populations in the cost of providing a given level of care and hence the resource requirements to meet health-care needs. Finally it is emphasized that the needs-based approach provides a framework for allocating resources (i.e. inputs) efficiently and equitably between populations. How these resources are used within the population requires further attention which compares the levels of resources used with the outputs (i.e. health status improvements) produced (i.e. performance appraisal). In other words, the needs-based approach alone is necessary but not sufficient to ensure the efficient and equitable use of health-care resources. It is emphasized that the needs-based approach is proposed here, not as an ideal system of resource management, but as a method of resource allocation within a jurisdiction which provides a framework (or geographical allocation) consistent with the fulfilment of the objectives of health-care policy in Ontario, and which represents a considerable improvement upon the current system in place.
