Operating Grant: Economic Forecasting

In 2015, Canadian health care spending was over $219 billion. Health care funding, financing and sustainability is a top priority across the country and innovative approaches are required to finance community-based services that improve health outcomes and generate value for money, while not increasing health care spending. 

One opportunity to achieve this result is through the scaling of successful primary and secondary prevention health services and social programs. Investing upstream in such interventions in many cases has demonstrated to improve clinical and social outcomes of individuals and save government money in the form of reduced service costs, avoided future service costs, and increased tax revenue resulting from increased labour market activity. It will be in part through such upstream investments, that demand for expensive late intervention and emergency health and social services can be reduced.

All too often, prevention and early intervention investments are left at the pilot or demonstration project stage and are never scaled to the entire population. There are numerous barriers to scaling up, including the lack of a well-articulated framework to determine whether there is a strong enough evidence base to reassure investors that scaling the project will produce the health economic benefits promised by the pilot or demonstration project. Equally, there is limited capacity to produce financial projections that would more easily allow government departments to understand the impact of scaling evidence-based primary and secondary prevention interventions on their budgets over time. 

Governments and communities have faced similar challenges over the years, with the monumental costs incurred to build public physical infrastructure. The challenges in investing in public physical infrastructure have been addressed, in part, through the ability to project with significant reliability, the streams of benefits and costs both to users and investors. Such reliability of economic forecasting has generated a highly sophisticated private market for investments in public infrastructure projects.

It is this reliability that has given sufficient comfort to those who set standards in the accounting profession to allow for the spreading of the cost of infrastructure projects over time through the creation of amortization rules. Amortization allows investors to spread the cost of infrastructure investments over the useful lifetime of the asset thus reducing the impact of the initial spending on the investor’s income statements in a given year1.

It is time to develop similar tools for early interventions in health and social services in order to create an environment wherein greater investments in primary and secondary prevention might be possible. This would allow governments and health care organizations to make larger intervention investments to help meet the great health and social challenges of this age.

Deploying such tools may create significant and numerous opportunities to increase investments in the early intervention space, such that:

  • If governments and philanthropic foundations had more assurance that their investments in select early interventions would produce reliable streams of economic benefits over time, they may be more willing to scale the intervention more widely through complex social finance arrangements2 or other investment vehicles.
  • If government departments also understood how scaled interventions would specifically affect their budgets over time, they would be more inclined to consider making the necessary investments. 
  • If accounting standard setters felt the health economic forecasting of benefits over time was reliable, they may be more open to adapting their rules to require the different accounting or reporting of such investments in government’s public accounts, whether through amortization or otherwise. Such a rule change may have a positive impact on how government departments view and act upon solid health economic evidence in the prevention space.

This funding opportunity aims to provide relevant audiences with the frameworks and tools that can support the economic analysis of  investments in primary and secondary health prevention, identify the scientific and policy challenges that must be addressed if the costs of such investments are to be amortized over time, and outline the changes required to accounting regulations that would allow the costs of primary and secondary prevention and early intervention services and programs to be amortized.

The objectives of the funding opportunity will be accomplished through the following deliverables:

  • Development of a framework that lays the analytic foundation to support implementation of cost amortization for investments in prevention and early intervention. This framework should only consider health economic evidence for primary and secondary prevention initiatives that is sufficiently strong to be able to be relied upon by government and private investors to generate predictable streams of benefits over time.
  • The application of the framework by developing a minimum of three simulations of the analytical framework in action. The simulations must be drawn from three of the four following focus areas: mental health; child and youth health; food security (e.g., nutrition, diabetes); or intergenerational trauma (e.g., domestic violence prevention, depression). There can only be one simulation per focus area. It is expected that each simulation will include a long term health economic forecast and be aligned with the actual government budgeting process so as to allow officials to better understand the tangible implications of investing in prevention.

Research Areas

This funding opportunity will support projects relevant to the following research area:

  • Health economic forecasting in primary and secondary prevention and early intervention services.
Agency Name: 
CIHR
Contact Name: 
Penny D'Agnone
Grant Amount: 
The total amount available for this funding opportunity is $265,000, enough to fund approximately one grant for up to one year. Of this amount: The J.W. McConnell Family Foundation will contribute up to $90,000; CIHR-IHSPR will contribute $116,700; and CIHR-IHDCYH will contribute $58,300.
Grant Location: 
External
External Deadline: 
Tuesday, November 28, 2017
Grant Type: 
Research
Grant Area: 
Health
Grant Eligibility: 
Faculty