Feasibility of input/output analysis for regional health planning

• Published in: Social science & medicine. Medical economics 1978, Vol.12 (1), p.99-112
• Main Authors: Cowen, Joel B., Broida, Michael S., Gaumer, Gary L.
• Format: Article
• Language: English
• ISSN: 0160-7995; 1878-3902
• DOI: 10.1016/0160-7995(78)90026-6

Input/output analysis can provide an economic model of the health care system which is capable of characterizing financial flows, describing health system interrelationships and predicting the impacts of policy alternatives on the entire health care system. The need for such a model is demanded by ever increasing health care expenditures made without proper planning and the necessity that Health System Agencies have available a conceptual framework for collecting, organizing and analyzing the regional health care industry. Most previous regional economic efforts have been community flow of funds studies modeled after the SSA national expenditure series. Such studies have been descriptive, lacking a fully interactive interpretation of local health care. Econometric models usually deal only with specified sets of relationships and require great technical expertise. While input/output has been recognized as a superior model, its feasibility has been questioned. Input/output can provide a useful summary of finanacial interpendencies and a powerful forecasting tool. The input/output matrix describes the regional financial flows. Predictions of impacts for various policy alternatives are derived from fixed linkages between elements of the model through the development of coefficients indirecting direct and indirect relationships. An input/output study conducted in the Rockford, Illinois SMSA for 1972 indicates that the methodology is feasible for organizations with good local rapport. Key methodological problems, sectoring and data requirements, can be overcome, though stability of coefficients is still a valid concern. Examples are shown how the model can provide increased understanding of the local health care system in the local economy, including knowledge of impacts of potential changes such as conforming to plans, using alternative delivery methods or variations in demand.