The complex task of Health Economic Evaluation in Integrated Care in New South Wales

Read about The complex task of Health Economic Evaluation in Integrated Care in New South Wales, Australia, by Liz Schroeder, Macquarie University (MUCHE) in Sydney.

Economic evaluation for integrated care is a peculiar task, perhaps not unlike tunnelling through spaghetti in a black hole, or aptly described by Tsiachristas et al as ‘a stairway suspended somewhere between heaven and hell’ [1]. In Australia, commissioners, health service planners and economists grapple with pre-implementation design and post-implementation evaluations of integrated care programs, which are delivered primarily through Local Health District (LHD) or Primary Healthcare Networks (PHN). They look to international examples of evaluations for inspiration whilst innovating their own.

More broadly, the Australian health care system boasts complicated funding arrangements that involve public, private, state and federal parties resulting in “complex, overlapping and fragmented responsibilities”[2]. Health economic research occurs within a landscape where government initiatives to fund integrated care programs have responded to key reports recommending greater integration across care types. There has been significant investment over the past two decades in New South Wales in particular, including:
• The NSW Chronic Care Program (2000).
• The NSW Chronic Disease Prevention Strategy (2003-2007).
• Rehabilitation for Chronic Disease Guidelines (2006).
• The Chronic Care for Aboriginal People (CCAP) Program.
• Integrated Primary and Community Health Policy (2007-2012).
• NSW Integrated Care Strategy (ongoing).

Evaluations of these initiatives were commissioned to measure the impact, reach, equity and costs. A key evaluation of the CDMP (Chronic Disease Management Program) completed by the George Institute in 2014 reviewed impacts across several performance indicators[3]. They highlighted the complicated task of selecting participants, and of delivering integrated care across a diverse healthcare environment. More specifically in the CDMP cohort, they found an increase in unplanned hospital admissions and emergency department presentations, a decrease in planned hospital admissions and ‘regression to the mean’; i.e. selection of participants into CDMP after peak healthcare use. Unfortunately, insufficient information was available to them to analyse reconfigurations of services and changes to cost structures. Nor were these able to be mapped to health outcomes to inform cost-effectiveness or return on investment.

It is no easy task. In design, commissioners need to hone their skills to appropriately identify and to predict intended and unintended consequences of changes in financial incentives or funding models. Economic evaluations of these initiatives then require shared cost and performance data. The data is required to evaluate the process aspects of model development, implementation, throughput, service reconfiguration and scale-up notwithstanding identifying the causal and environmental mechanisms associated with changes to health outcomes.

Commissioned evaluation is being undertaken for realigned integrated care initiatives in Australia. The Central Coast Local Health District (CCLHD) Integrated Care Demonstrator site is one example. It includes Outcomes based care, an innovative approach to incentivise community providers to deliver their own care coordination model. Provider payments were linked to the level of funding risk chosen by a provider, and their capacity to reduce unplanned acute hospital bed days for their patient cohorts. Another integrated care initiative commenced further north in New South Wales in 2017, where fifteen practices within the Hunter New England and Central Coast PHN were selected to establish integrated services. The funding model of choice here is capitation-based payment.

To accompany these developments, the Ministry of Health is investing in new information technology systems to enable shared care planning and better information exchange across PHNs and LHDs. The NSW Agency for Clinical Innovation (ACI) is also pursuing the collection of Patient Reported Measures through the PROMIS Global Health 10 instrument, to identify changes in relevant health outcomes[4].

Health economists in Australia are invested in addressing the paucity of evidence. For example, research is being conducted to create frameworks to inform decision-making at a commissioning level as part of a Collaboration to promote Health System Sustainability[5]. Economic mapping between instruments used to derive health outcomes and those more useful to health economists; i.e. to obtain quality adjusted life years (QALYs) to inform cost-utility analysis is also being conducted [6]. There remains more work to be done, and areas awaiting research and innovation include frameworks for delivering ‘value-based care’ in terms of the specified triple aims of maximising health outcomes and patient experience whilst minimising cost [7].


1. Tsiachristas A, Stein KV, Evers S, Rutten-van Mölken M. Performing Economic Evaluation of Integrated Care: Highway to Hell or Stairway to Heaven? International Journal for Integrated Care. 2016 vol 16.

2. Hall, JP. Australian health care: The challenge of reform in a fragmented system’, New England Journal of Medicine, 2015 vol. 373, no. 6, pp. 493-497.

3. The George Institute. State-wide Evaluation. NSW Health Chronic Disease Management Program. Sydney; 2016.

4. NSW Agency for Clinical Innovation. Patient Reported Measures 2018. Available from:

5. NHMRC Partnership Centre for Health System Sustainability. Webinar: Designing evidence – informed and cost-effective Primary Health Services. Panelists: Jade Hart, Jonathan Karnon, Kenneth Lo. Australian Institute for Health Innovation.

6. Macquarie University Centre for the Health Economy, Sydney: work in progress.

7. NSW Agency for Clinical Innovation. Leading Better Value Care. Available from:

Liz holds a doctorate in Public Health from the University of Oxford and is a Senior Research Fellow at the Centre for the Health Economy, Macquarie University (MUCHE) in Sydney, where she leads the Integrated Care stream of research. Liz was recently appointed Topic Editor in Health Economics with IJIC, the Integrated Journal of Integrated Care.