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Prepay or prepare to flex?

Principal Advisor, Productivity Commission
30 April 2020

As we (hopefully) exit from the constraints imposed to control the COVID-19 virus, it’s worth thinking about how New Zealand should prepare for the next pandemic.

Chances are you’ve come across this great graph from Dr Siouxsie Wiles and Toby Morris during the past four weeks.

The graph captures the essence of the ‘flatten the curve’ public health strategy – namely, that the health system has a limited amount of resources and you’d want to avoid these being overwhelmed by a flood of very sick people.

You can think about this strategy in a couple of ways:

  • the supply-side (ie, what you do to increase the ability of the health system to deliver desired services) vs the demand-side (ie, the steps you take to reduce the need for health care); and
  • the short run vs the long run.

On the demand side and in the short run, there is a range of choices. As the variety of national responses to COVID-19 around the world illustrates, there are different ways of controlling the spread of the virus and keeping pressures on health systems down. The more you can manage flows of people into your country and quickly track and trace contacts, the less you have to rely on heavy restrictions on individuals and businesses – with all their personal, social and economic costs. Over the longer-run, vaccinations and other public health interventions help build up immunities and resilience.

In the short run, capacity in the health system is assumed to be more or less fixed. This was the working assumption in early modelling of virus spread undertaken by researchers in New Zealand.1 In practice, you can defer less urgent care, redeploy health staff, and call upon retired health professionals and private hospital capacity. But at a certain point, the health system simply runs out of space, materials and people.2

In the long run, there are fewer constraints and you have choices about how much you spend, where you should invest and how you should deploy your resources to fight future threats. Two possible approaches can be broadly described as ‘prepay’ and ‘prepare to flex’. They’re not mutually exclusive and a mix of the two is probably optimal, but you want to get the balance right.

‘Prepay’ involves buying up the resources you think you’ll need in advance, so that they can be rolled out in times of crisis, effectively ‘raising the line’ in Dr Wiles and Toby’s graph. Having spare supplies handy is often sensible, but it’s by no means a failsafe strategy.

For a start, it can be hard to muster up the political will and resources in safe times to invest for the future. Tim Harford has a good article in the Financial Times, which lays out the cognitive biases which make it hard to prepare for the future. Even if you do manage to buy up the resources, they need to be retained and maintained. When he was the governor of California, Arnold Schwarzenegger spent a lot of money to build mobile hospitals that could be activated in times of crises. These were subsequently abandoned when his successor cut their funding.3 In a small country like New Zealand, it’s hard to maintain a “standing army” or stockpile for every possible threat to our wellbeing.

It’s also easy to prepare for the wrong threat and buy the wrong gear. The US national stockpile, for example, included anti-influenza medication (purchased in response to the swine and avian flu outbreaks). This isn’t a bad idea, but it’s not much use against COVID-19.

‘Prepare to flex’ involves creating the ability to readily free up more space in the health system and to work flexibly as circumstances dictate. The New Zealand system did some of this during the early phase of COVID-19 here, but mainly in hospitals. 4

In primary care, face to face consultations with a practice nurse or doctor might be the preferred model, but virtual health care, consultations by Zoom and getting your flu shot without having to get out of your car are really useful in a crisis, or anywhere where resources are chronically constrained – provided practices are able to use technology effectively and have good systems in place for when they are needed.

Having processes and permissions in place for contact tracing – and having the public debate about it – could make the deployment of apps or other technology much quicker the next time they are needed.5

Having a truly systemic response poses some tricky questions, such as – are decision rights held at the right places in the health system? And how smoothly and efficiently do the various components of the health system work together? We need to engage with these sorts of questions sooner rather than later in the light of COVID-19, knowing that COVID-19 will not be the last pandemic we face.


Illustration
Toby Morris, The Spinoff

Notes
1. And by the influential Imperial College study.
2.Some countries were able to increase capacity by building field hospitals, but they also have to be staffed, and in some places, hospital staff have been overwhelmed and at the brink of exhaustion.
3.The US federal government also had a national stockpile of medical equipment like ventilators, but the contract to service them lapsed and wasn’t renewed in time for the COVID-19 virus. Contracts were also signed to expand the national stockpile of ventilators, but never fulfilled.
4. Under alert level 4 hospitals in New Zealand were operating at 50% capacity compared to up to 120% capacity in the winter months of previous years.
5. Technology can also help create much-needed space in the health system. For example, the recent clinical trials of a potential COVID-19 drug (Remdesivir) suggest it can speed up recovery and reduce the time a patient spends in hospital by 30%.

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