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Personalised Budgets - Financial
Sustainability Considerations
A document prepared by the Research Services Unit, Department of Health
on behalf of the Taskforce on Personalised Budgets
April 2018
health.gov.ie
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TABLE OF CONTENTS
1. Introduction and Scope …………………………………………………….… Page 3
2. Financial Sustainability- key definitions and concepts ………………………. Page 5
3. Financial Sustainability of Disability Services in Ireland ……………………. Page 6
4. Mechanisms for ensuring Financial Sustainability of Personalised Budgets … Page 18
5. Planning for Pilot projects- costs and Financial Sustainability considerations.. Page 26
6. Data Framework to guide planning and evaluation of Pilot phase ……...……. Page 32
References ………………………………………………………………...……… Page 36
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1. Introduction and Scope
The Taskforce on Personalised Budgets
In July 2012, Government approved the Value for Money and Policy (VFM) Review of Disability
Services in Ireland. Two key recommendations that emerged from it were:
Implement a more effective method of assessing need, allocating resources and monitoring
resource use in the Disability Services Programme; and
Move service provision from an approach which is predominantly organised around group-based
service delivery towards a model of person-centred, individually chosen, support.
Further to the recommendations the Disability VFM identified crucial actions among which were:
Appraisal of new policy approach of individualised supports
Taking into account the outcome of the policy appraisal, development of implementation
plan to roll out individualised supports
The Taskforce on Personalised Budgets came into being in response to the call to action identified in
the Disability VFM and as a key vehicle for progressing towards a model of person-centred,
individually chosen support.
The primary objective of the Taskforce is to make recommendations to the Minister on a cost-neutral1
approach to personalised budgets and a suggested implementation plan for a national system of
personalised budgets for Government consideration. Specifically, this involves:
Submitting a report setting out the evidence, analysis and preferred options in relation to each
of the matters in the Task Force Terms of Reference;
Recommending a proposed approach and implementation pathway with a timetable for
delivery;
Providing an outline of any legislative changes that may be required.
This approach to introducing Personalised Budgets should seek to give people with disabilities more
control in obtaining certain services and supports such as day services, residential care, respite care
and personal assistance, giving them greater independence and choice in accessing services which
best meet their individual needs.
While the concept of Personalised Budgets is not limited to health and personal social services, the
Task Force was charged with concentrating on personalised budgets for services for people with
disabilities currently funded by the HSE in the first instance. Any extension of the personalised
budgets model to other cohorts within the population, or other income streams, is outside the remit of
this Task Force.
Taskforce Work Streams
The work of the Task Force involved multiple work-streams, working collaboratively and in parallel,
to meet a tight project timeline. The work-stream identified at the outset included:
__________ 1 Cost-neutral has for the purposes of this Taskforce been interpreted as “within the current budget allocations”.
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1. Discovery phase
2. Eligibility/Resource Allocation
3. Financial Sustainability
4. Supports to Apply for & Administer Personalised Budgets
5. Governance & Accountability
Work Stream 3- Financial Sustainability
The key deliverable for this work-stream set out in the original Project Initiation Document for the
Taskforce was a report to be submitted by the Research Services Unit (RSU) to the Disability Unit in
the Department to include the following:
An outline of the mechanisms in place in other jurisdictions to address financial
sustainability;
Considerations in relation to financial sustainability for individuals as they age, and their
health, financial or personal/social circumstances change;
Considerations in relation to financial sustainability for the budget system;
Discussion on costs of a brokerage model; unit costs per person served;
Discussion on the concept of a reserve budget for possible unforeseen demand, and to address
requests for increased budgets where circumstances have changed;
Discussion on issues which need to be considered with regard to decoupling funding from
existing service providers where this applies;
Identification of current level of resourcing and potential availability for redeployment;
Discussion around the need for funding to manage the transition between personalised and
traditional approaches.
As findings emerged from the Discovery Phase, and following a number of meetings of the Taskforce
it became clear that there would not be sufficient clarity on the exact model/s to cost, so this could not
be included in the report from RSU. Furthermore, it was clear that there is an absence of availability
of robust or disaggregated cost/expenditure data in this sector which is a challenge in addressing many
of the issues included in the brief. That, combined with a decision of the Taskforce that any model/s
of Personalised Budget should be introduced on a phased basis, and ideally initiated via a number of
pilots which could include a thorough data collection, monitoring and evaluation component, resulted
in a revised focus by RSU for the analysis on financial sustainability.
To that end, RSU had to re-direct the focus of this ‘interim’ paper to provide an evidence-informed
overview on as many of the issues above as possible, in a way that could inform judgements and
decision making at a later stage in respect of both the design and evaluation of pilots, from a cost and
Financial Sustainability perspective.
The revised scope of work to be undertaken by the RSU in support of the Taskforce on Personalised
Budgets was therefore to:
Describe financial sustainability, including key definitions and concepts, from a health and
social care policy perspective;
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Consider the broader health-related disability area from the perspective of cost and Financial
Sustainability (even in the absence of a new policy such as Personalised Budgets), with a
focus on demographics, demand, supply, costs and expenditure;
Summarise the national and international evidence on financial sustainability of
personalised/individualised budgets, including a description of the mechanisms in place in
other jurisdictions to address financial sustainability concerns and an analysis of costs from a
risk-management perspective;
Suggest a high-level framework that could be used to inform proximate decision making in
relation to planning and implementing pilots or demonstrator projects, in a way that takes
into account key considerations in relation to financial sustainability for the budgetary
system;
Propose key variables for inclusion in a ‘data’ framework, which could be used to guide
critical data collection during the pilot evaluation stage– with a particular focus on costs and
financial sustainability.
Values underpinning this submission
Two overarching goals and sets of values were set out in the Value for Money and Policy Review of
Disability Services in Ireland, and these are useful to remember when discussing personalised budgets
in general, and specifically the issue of financial sustainability:
Full inclusion and self-determination for people with disabilities - the ultimate desired
outcomes for people with disabilities
The creation of a cost effective2, responsive and accountable system which will support the
full inclusion and self-determination of people with disabilities - expresses characteristics of
the disability service system which are required to support the achievement of the full
inclusion and self‐determination of people with disabilities while respecting the rights of
persons with disabilities, promoting maximum independence and self-determination.
2. Financial Sustainability – key definitions and concepts
The question as to whether health systems will be financially sustainable in the future is frequently
raised in health policy debate. The problem is often phrased in terms of the ability of governments and
others adequately to finance health care in the face of growing cost pressures, with population ageing,
new technologies and consumer expectations around health care coverage and quality being the three
most commonly cited challenges (WHO, 2009).
In general, the WHO concludes that there is little clarity or consensus about the term's meaning,
beyond it having something to do with ‘ability to pay’ or ‘affordability’. Financial sustainability
typically manifests itself as an issue (and usually a problem) in accounting. As such, it implicitly tells
us that expenditure and revenue must be aligned. However, it does not tell us anything about the
__________ 2 Cost-effective has for the purposes of this Taskforce been interpreted as an analytical term in which costs are
related to a single, common outcome (effect), and may differ in magnitude between alternative
actions/interventions being examined.
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nature of the problem itself – that is, about what causes the imbalance between expenditure and
revenue. Nor does it tell us anything about policy implications; and in particular, it does not tell us
anything about the level at which expenditure and revenue should be aligned.
The challenge relates to the ability and willingness to pay for health care in the face of rising costs and
resource constraints. Whether or not the economy can sustain higher levels of spending on health care,
and how much a country can or should spend, is a separate issue.
In their paper on this issue, the WHO notes that if the need to achieve fiscal balance in the health
sector is seen as imperative, then it is easy to see the need to secure financial sustainability as an
objective in its own right, independent of and on a par with (or even overriding) other objectives for
the health system, for example health gain, efficiency, quality or equity. However, they stress that if
this way of thinking is taken to its logical conclusion, the most financially sustainable health system
would be no health system at all. They caution against viewing financial sustainability as a policy
objective in its own right as it may place the policy focus on achieving fiscal balance, without regard
for the consequences of the methods used to achieve this goal. Furthermore, a singular focus on
achieving financial sustainability may distract attention from other factors contributing to fiscal
imbalance, in particular efficiency problems. WHO advises, therefore, that is more useful to consider
the need for achieving financial sustainability as a constraint to be respected rather than as an
objective to be pursued for its own sake.
According to WHO, focusing on the attainment of health system objectives subject to the requirement
of financial sustainability provides policy-makers with a range of criteria to assist decision making.
This can clarify the choice of options for addressing the financial constraints because the trade-offs
can be made explicit – the consequences of choosing one option over another begin to matter.
In line with these WHO views on Financial Sustainability, the next section will explore financial
sustainability in the broader context of Disability Services in Ireland, even in the absence of the
introduction of any new policy or programme. Also, in a later section, simple graphical
representations will be proposed to assist those in choosing between options of models of personalised
budgets, and to highlight the trade-offs and compromises in play when making choices in relation to
factors such as eligibility, services, quality, governance or client outcomes.
3. Financial Sustainability of Disability Services in Ireland
Prior to assessing the financial sustainability of any new policy initiative in the disability sector in
Ireland, in this case the introduction of personalised budgets, it is important to have a sense of current
trends (demand, supply, costs and expenditure) in the overall disability sector and to be cognisant of
key challenges facing the system that might have implications from a financial sustainability
perspective.
Throughout this section of the report, as there is no one definitive and reliable source of data available
to review past trends and future projections, multiple sources and methods are used to demonstrate
trends and to estimate likely trends and challenges into the future.
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Expenditure
This section discusses expenditure on the Disability Services Programme under the Health Vote
including grants to the HSE and certain other services.
The HSE National Service Plan (NSP) sets out the type and volume of health and personal social
services to be provided in a given year, within the funding available. This level of funding is agreed
through official and Ministerial engagement in advance of the budget. The HSE deliver the National
Service Plan after the budget based on the funding provided. The plan details the delivery of health
and social services that the HSE will provide directly, and through a range of funded agencies, in a
given year. The National Service Plan details finance aspects, human resource aspects as well as
service delivery aspects of the HSE operation.
Exchequer funding to the HSE for Disability Services grew steadily between 2005 and 2009 (it rose
by more than a third between 2005 and 2009), with 2009 representing the highest level of funding
available ever to the disability services area. This included a Multi Annual Investment Programme,
the result of which saw waiting lists for services reduced. Figure 1 and Table 1 below show recent
trends in funding for Disability Services in Ireland, from 2009 to 2016. A provisional outturn figure
for 2017 available at the time of compiling this report indicates that €1,688.6m would be spent on
disability services.
While funding for disability services was at its highest ever in 2009, it then fell by approximately 5%
in the two years to 2011 due to Ireland’s declining fiscal position, culminating in the 2010 EU IMF
Economic Adjustment Programme. Funding continued to decrease through to 2015, after which it
started to increase again.
Figure 1: Gross Voted Expenditure – Disability Services – HSE
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Year 2009 2010 2011 2012 2013 2014 2015 2016
Outturn 1583 1582 1576 1554 1535 ** 1459.3 1592.2
Table 1: Gross Voted Expenditure – Disability Services– HSE
**Not provided in comparable form
The reductions in expenditure from 2009 to 2015 depicted above occurred at a time of rapid
demographic change which resulted in additional demand for existing services. In a recent analysis for
WG1 of Transforming Lives, the National Disability Authority (NDA) indicated that the numbers
registered on the National Intellectual Disability Database (NIDD) rose by 8.4% between 2009 and
2016, while gross disability spending fell by 7% over the same period (NDA, forthcoming
publication). This has resulted in the emergence of significant unmet demand for particular services,
including over 800 on an emergency list, prioritised by HSE and service providers for residential care
at the end of 2017. (However please note the overall requirement for additional residential services is
likely to be considerably higher. The 2016 NIDD Annual report places requirement for additional
residential services at over 2,100 places, together with significant waiting times for early intervention
and other child therapy services).
Beyond tracking expenditure at this aggregate level for disability services, the absence of an
integrated financial data collection system remains a significant barrier to conducting more detailed
analysis. Those involved in compiling the VFM review faced this same challenge and that exercise
required an extensive additional data collection exercise and analysis.
There is no routine information available on spending by programme type (e.g., residential, day
services) and there is no routine information on expenditure by type of disability across the broad
categories of disability including intellectual disability, physical and sensory disability, autism, autism
and intellectual disability, or multiple disabilities.
Similar to many other areas of health and social care, there is no national database, comprising
common definitions of unit costs and activity, which hinders the collection of the same information in
the same format across many agencies, and makes costing of new policies or programmes
challenging. Added to this, the VFM highlighted different organisational approaches to coding and
recording expenditure, making comparison across agencies difficult. The VFM concluded that “the
fact that there is no line of sight over expenditure by cost type across all agencies makes it difficult to
analyse spending for the disability sector” (p49). To begin to address this, the HSE Social Care
Division have established a Service Improvement Team (SIT) in Disabilities to review and analyse
the spending of the largest five disability services providers.
Providers
Fleming et al (2016) noted that “The disability sector in Ireland is complex with considerable
variation in models of service delivery…..Historically in Ireland, as in many other countries, family
and advocate-led organisations became the driving force of change, eventually forming voluntary
organisations and semi-autonomous non-governmental organisations (NGOs), funded largely by
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government….These became the main providers of …. sheltered work and other activities for people
with a disability, and continue to deliver services within geographical areas to this day”.
HSE National Service Plan 2017 does not give a breakdown in respect of how its funding is shared
across the range of providers. However the HSE does give a such a breakdown in the Social Care
Operational Plans for each year from 2014 to 2017. Table 2 summarises how the budget in 2017,
€1,688m, was distributed across agencies of varying type. This shows the complexity of the provider
landscape in disability services in Ireland, where the largest expenditure is directed at the top 50
Section 38 and Section 39 Agencies, but the remainder is distributed to a large number of agencies
and bodies, some of them for-profit bodies, and many of the entities vary greatly in terms of scale,
scope and reach.
This complex provider landscape, which has evolved over many decades, contributes to a large extent
to one of the key challenges that comes up repeatedly throughout this document - the lack of a
national, structured approach to data collection in the disability services, with fragmentation and
inconsistencies in the data that is collected.
Description of Body
Amount
(€m)
Voluntary Sector Providers (S.38’s & S.39’s) – Top
50 Agencies €1,126.164m
Other Voluntary Organisations (S.39’s) €117.701m
HSE as provider €176.175m
HSE as Other Community Services & Support €52.679m
HSE/Voluntary (respite/multidisciplinary) €128.030m
Private Provision €78.266m
Out of state €9.196m
Total 1688.212
Table 2: Disability Funding by Service Provider Area – Social Care Division – Estimate 2018
Services
As noted above, there is no routine information available on spending by programme type (e.g.,
residential, day services) and there is no routine information on expenditure by type of disability
across the broad categories of disability. However, from a breakdown of funding provided by the HSE
to the Disability Services Unit in the Department of Health in advance of Budget 2018, it is possible
to get an indication of the estimated breakdown of funding in the Disability Services area (Table 3).
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Service Provided Units of Service Budget 2017
Proportion
of Budget
Residential Places 8,371 €1,064.106m 63%
Day Services
18,000
places/24,540
people €364.441m
21.6%
Respite 6,320 people €41.595m 2.5%
PA & Home Support (Hours of Service) 4.15m hours €78.957m 4.7%
Multidisciplinary Support 1,324 WTE €86.435m 5.1%
Other Community Services and Supports - €52.679m 3.1%
Total - €1,688.212 100%
Table 3: Breakdown of funding in the Disability Services Area – Social Care Division – Estimate
2018
The largest component of expenditure is on residential care (at 63%). Expenditure on elements such
as respite care, personal assistance, home support services and community-based allied healthcare
professional services, form a small part of the total spending (together, they constitute approximately
11% of total spend). Day services which form another strand of support in some of the international
examples of Personalised Budgets represent 21% of total spend. This is worth noting as these are the
services most typically included in models of personalised budgets that have been introduced
internationally as they are critical to sustaining people to live at home and to avoid more expensive
forms of support. In a phased and targeted approach to introducing personalised budgets in Ireland, it
is these services, this client population, and this proportion of the current budget that will most likely
come under consideration.
Drivers of cost
The largest driver of costs in this sector is staff-related costs. In 2014 24,488 persons were employed
under the aegis of the Social Care Division and 15,230 of these were employed in the provision of
Disability Services. This includes 89 medical/dental professionals, 4,091 nursing staff, 2,900 health
and social care professionals, 1,098 management and administration staff, 1,098 general support staff
and 5,862 other patient and client care. These figures reflect HSE and Section 38 agencies only, as
census of other agencies staff is not readily available. In 2017 26,764 persons are employed under the
aegis of the Social Care Division. No further breakdown of this staffing figure for 2017 was available
at the time of compiling this report. Routinely available data on staffing in the disability services
sector does not capture the total staffing delivered by the voluntary and statutory sectors as the HSE
HR Staff Census includes Section 38 agencies and HSE services but does not include staff working in
Section 39 agencies. In addition, as Section 39 agencies and certain Section 38 agencies are outside of
the scope of HSE Accounting systems, there is no way of capturing the total pay bill for all providers.
Section 39 agencies staffing is collected as part of the Service Arrangement process.
Notwithstanding the challenges above, the VFM analysis noted that pay costs are the main component
of the disability services’ budget, accounting for approximately 82-85% of total expenditure. The
most important factors affecting pay costs over time are likely to be changes in staffing numbers and
pay rates but it is impossible to assess the impact of these and other factors (e.g., changes in staff mix)
in any robust manner. It is also difficult to assess any trend relating to pay/non-pay split for disability
spending because of lack of routine data collection. Furthermore, there may be an arbitrary distinction
because some costs which are more related to pay but which can be categorised as a non-pay cost
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(e.g., agency costs) in different analyses. Finally, the VFM noted the lack of availability of data on
HSE overhead apportionment to the disability care group.
In addition to concluding that the largest driver of cost in the disability sector is staffing-related costs
(numbers and pay rates), a number of other drivers have been noted in recent years in this sector.
These include:
costs associated with a changing demographic profile and age structure of the client
population;
costs required to deal with unmet demand;
costs associated with a need to change from the current medical model of care (nurse-
intensive) to one more directed to social care;
costs associated with compliance with new HIQA standards,
costs of complying with additional obligations under the Disability Act 2005; and
costs associated with the movement of clients from congregated to community settings
Demographics and Demand
Demographic projections indicate that the population is living longer, and people with disability are
living longer, potentially impacting the types and severity of disability. Furthermore, informal carers
are ageing too, which directly affects supply of care. The needs of individuals change as they get older
and there is evidence to support the view that the health needs of people with disabilities increases as
they get older (McCarron et al., 2017).
Assessing current trends and projecting future estimates of demand for disability services in Ireland
revolves largely around data collected through the Health Research Board’s two national disability
databases.
The Health Research Board (HRB) manages two national service-planning databases for people with
disabilities on behalf of the Department of Health and Children:
The National Intellectual Disability Database (NIDD), established in 1995, provides information on
the specialised health services currently used or needed by people with intellectual disability. The
database informs the regional and national planning of these services by providing information on
trends in demographics, current service use and future service need. The database has in excess of
25,500 registrations and seeks to answer three main questions:
What is the demographic profile of people with intellectual disability in the Republic of
Ireland? What are their ages, gender and level of intellectual disability, and how have these
changed over time?
How many people with intellectual disability are receiving specialised health services and
what services do they receive?
How many people with intellectual disability are waiting for specialised health services, what
service are they waiting for and when, in the next five years, do they need these services?
As not every individual in Ireland who has disability is availing of, or requiring a specialised health
and personal social service and as the registration on to the database is voluntary, the NIDD cannot
provide any definitive epidemiological statement on the number of people with an intellectual
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disability. However, data for NIDD is collected through disability services providers and is used in
their funding discussion with the HSE so coverage is excellent. However, all people with disabilities
do not meet the criteria for inclusion on the database e.g. ASD without ID. This cohort and others
with ASD who choose not to have their needs recorded are often part of the HSE’s unplanned
responses. Families also choose not to have their children with disabilities included but services still
have to be developed to meet their needs.
The National Physical and Sensory Disability Database (NPSDD) was established more recently in
2002. This, combined with the fact that most people with physical and sensory disabilities do not have
the same level of interaction with specialist providers, makes data capture more difficult, and renders
the NPSDD less robust currently for supporting service planning. Coverage of the NPSDD is
estimated to be around 67% of the target cohort.
Developments are advanced to integrate the two HRB disability databases above into one National
Ability Support System (NASS). This will cover physical and sensory disabilities, intellectual
disabilities, along with autism diagnoses. Until then, the current NIDD is the most reliable data source
to analyse trends in demand for disability services.
Figure 2 below shows how the total numbers registered on NIDD have increased over time. In 2003
the total number registered on the NIDD stood at 25,557 which by 2015 had risen by 2,551 (9.99%) to
28,108 persons. It is interesting to note the trend over the same period for numbers of individuals over
20 years or age, particularly from 2007 onwards, which suggests that the growth seen in the recent
decade in total numbers can be largely attributed to growth in the cohort under 20 years of age, which
in turn is indicative of future demographic driven demand for disability services in the decades ahead.
Figure 2 –Total Registration on the NIDD 2003-2015
It is a crude but interesting exercise to conduct a simple calculation to estimate the relationship
between changing demand and expenditure patterns over the recent decade to calculate the average
expenditure per person identified as having one disability or more on NIDD over time, by dividing
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numbers registered on NIDD by levels of exchequer funding in any given year. Table 4 below
summarises the results of this exercise for 2005, 2010 and 2015.
Table 4: Estimates of Average Cost per person, derived from total Registrations on NIDD and
Exchequer Funding in selected years
Based on the 2005 level of expenditure, the average cost per person with one disability or more is
€63,531 (holding all other factors constant). As referred to earlier, 2005 represents a pre-austerity
level of funding, but it was not necessarily the peak level of funding - exchequer funding for
Disability Services grew by more than a third between 2005 and 2009. Exchequer funding in 2010
was very similar to that provided in 2005, but when one considers the numbers of people registered on
NIDD in 2010, the average cost per person in 2010 reduces by almost 6% on that from 2005, to
€59,734 per person. Similarly, the average cost per person in 2015 is further reduced to €51, 960 per
person, a 13% decrease on the amount per person from 2010 and an 18% reduction on the average
cost per person in 2005. While this is a very simplistic analysis, it paints a picture whereby even the
more recent increases in funding for the disability services sector is resulting in less funding available
per person.
Age is an important factor to consider in the examination of any mixed population group. Different
age groups require different services, access different services and often access services in different
ways. Changes to the life expectancy rate and increasing numbers in older age groups represent
drivers of cost.
Along with growth in the younger cohort highlighted earlier (under 20 years of age; Figure 2), Table 5
below highlights that there is a long-term trend of significantly increased numbers of those over 45
years of age registered on NIDD. This most likely represents a cohort effect of a baby boom in the
1960s and 1970s but may also reflect a subtle increase in life expectancy for people with a disability.
This trend can also be seen graphically in Figure 3 below, which depicts the changing age structure of
NIDD registrations from 2007 to 2015 for all over 20 years of age. NIDD also shows the number of
people with Moderate, Severe and Profound ID has increased from 28.5% in 1974 to 49.3% in 2016.
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Figure 3: Changing age structure of NIDD registrations from 2007 to 2015 (Information not
consistently available each year due to suspension of data collection in some areas/services for a
period of time)
It is also useful to look at current and future trends in disability services by examining needs of the
client groups. In the examination of the disability client group ‘need’ can be described in a number of
ways, e.g. low needs to high needs, but also may be described in terms of the disability type, e.g.
physical or sensory or intellectual. Individuals have large variations in ‘need’ so this means there will
be large variation in the quantum and intensity of resources required.
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Table 5: NIDD registrations by age groups (Information not consistently available each year due to suspension of data collection in some areas/services for a
period of time)
Age group 2003 2004 2005 2006 2007 2010 2012 2015 2015 as %
of 2003
20-24 years 2,521 2,467 2,365 2,413 2,281 2,234 2,239 2,391 95%
25-29 years 2,297 2,185 2,122 2,167 2,140 1,975 1,926 1,943 85%
30-34 years 2,358 2,202 2,162 2,106 2,077 2,071 2,021 1,923 82%
35-39 years 2,389 2,290 2,123 2,084 2,055 2,011 1,955 1,923 80%
40-44 years 1,954 2,042 2,035 2,133 2,149 1,985 1,995 1,958 100%
45-49 years 1,618 1,671 1,643 1,700 1,748 2,049 2,041 1,963 121%
50-54 years 1,310 1,373 1,319 1,344 1,435 1,629 1,686 1,850 141%
55-59 years 983 1,048 1,052 1,101 1,107 1,266 1,305 1,404 143%
60-64 years 668 723 670 723 776 947 974 1,022 153%
65-74 years 717 775 682 714 725 933 948 1,137 159%
75 years + 191 197 207 226 236 306 311 311 187%
Total (20
years and
over)
17,006 17,001 16,380 16,711 16,729 17,406 17,401 17,872 105%
Total on
NIDD 25,557 25,416 24,917 25,518 25,613 26,484 27,324 28,108 110%
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There is no standardised assessment tool used in all disability services area, which makes it
challenging to conduct a robust analysis of the implications of changing trends in level of need of the
client population. Table 5 below summarises data categorised by need for those registered on the
NIDD who require full-time residential care. Although this group does not represent the entire client
group, it is a source of validated information disaggregated by level of need and it provides a general
and useful insight into trends and implications of those trends for illustrative purposes only. Within
NIDD, need was captured as Minimum, Low, Moderate and High for the period up to 2007 but the
categorisation changed after that, to include an additional category of Intensive. In light of the change
in categorisation over time, an additional category is considered, made up of both High and Intensive
(in an attempt to deal with any potential confounding resulting from addition of the Intensive category
and recoding issues).
Table 5: Numbers registered according to level of need on NIDD as requiring full time residential
care.
The total numbers of clients requiring services increased over this period, with increases most evident
in the minimum need and moderate need category. In addition to examining the actual numbers in
each group over time, it is also interesting to examine how the proportions of the overall cohort
categorised by need have changed over time. This is depicted in Figure 4. In examining the trends by
proportion, it is interesting to note that the proportions over time have remained relatively stable. But
as the age structure changes over time, this may change, as evidence suggests that as people age their
needs and requirements get more complex, and they require more and different services.
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Figure 4: Proportions of clients registered on NIDD (full-time residential care) according to
categorisation of need
There is very little information available examining future demand of the HSE’s disability services. In
their recent publication entitled “Projections of Healthcare Demand 2015-2030” the ESRI did not
include projections of demand for the disability services due to challenges with compiling the
requisite data (plans are underway, however, to progress this analysis). In the recently published
SláinteCare Report, produced as a 10 year vision by the Oireachtas Committee on the Future of
Health Care, the Committee acknowledged that it had not included any detailed analysis of needs in
disability services, but they recommended earmarking €290million for expansion and reform in the
disability sector as a result of legacy under-funding, current unmet demand for services, and the need
to move to more personalised models of care.
A report conducted by the Department of Health/Healthcare Pricing Office (2015) entitled
Demographic Effects estimated demographic effects on disability services using trends in numbers
registered and the age distribution of clients registered on the NIDD and/or NPSDD in 2013. The
estimated demographic effects were 1.0% and 0.7% increases respectively for physical/sensory and
intellectual disability services. Since the estimated costs in these areas are divided in a ratio of
approximately 70 to 30 between intellectual and physical/sensory disability services, a blended rate
was calculated to give an overall average year on year upward change of 0.8% out to 2021.
In their document “Planning for Health – Projected Demographic Effect 2017”, the HSE adopted the
general population demographic cost pressure (of 1.4%) in their projections of future demand for
disability services, while pointing out that neither their approach nor the Department’s approach takes
into account the fact that persons with disabilities will have more complex health needs at a younger
age than the general population.
Analysis conducted by the NDA and Eithne Fitzgerald (Chairperson WG1) in a forthcoming report
for WG1 of Transforming Lives examines forecasts of demand for disability services out to 2025.
Their analysis suggests that the number of young adults (under 30 years of age) is set to rise (6%
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increase by 2020 and 18% rise by 2025); those between 30-49 years of age are set to fall (by 4% by
2020 and by 7% by 2025); and the numbers over 50 years of age are set to rise (by 12% by 2020 and
by 21% by 2025).
Overall, what this section highlights is that the disability services sector is already showing significant
pressures due to fiscal constraints, growing client numbers, changing age structure and needs
requirements of the client population. Combined with the earlier section discussing the most likely
drivers of cost in the disability services budget, we can see that in a situation of growth and enhanced
life expectancy, and even if life expectancy stays static, there will be higher numbers in the younger
group leaving school and in the over 45s (as these have been growing for some time now). All
forecasts, despite methodological differences and data challenges, all point to year-on-year increases
between now and 2025. While it is not possible to conduct robust cost analysis, based on either client
or provider characteristics, it is clear that costs tend to be higher for older age cohorts and those with
higher needs.
The NIDD is a very useful database for assessing trends in the needs of the client population.
However, as there is no way of linking or aligning this data with equivalent staffing or cost data from
the various providers of services, this limits the analysis that can be conducted to project future
demand and costs, to determine variations in costs per service or per client by the many providers, to
establish where efficiencies can be secured, to establish what the outcomes are for clients based on
level of investment or to consider what funding is available for redeployment to new or alternative
programmes or services. To secure this data, a purposeful data collection exercise would need to be
conducted and this was outside the scope of this analysis.
4. Mechanisms for Ensuring Financial Sustainability of Personalised
Budgets
The HRB Evidence Review noted that the introduction of Personalised Budgets is still “a work in
progress” with Personalised Budget schemes only recently introduced or significantly revised in
recent years in many countries. As such, they highlight a lack of evidence regarding the financial
sustainability of Personalised Budgets. Any comparisons or conclusions are rendered more difficult
when one considers that varying contexts, economic models and systems in the countries examined.
However, a number of issues emerged which can be used to inform the planning, implementation and
monitoring of any system of Personal Budgets in Ireland.
A point that came up during Taskforce deliberations related to the potential for unprecedented or rapid
expansion of a system of Personalised Budgets beyond planned or expected numbers. Although
evidence is limited some countries have modified schemes or temporarily suspended schemes due to
unpresented demand.
Below are examples of methods other countries have introduced to manage costs and control numbers
eligible for and accessing schemes.
It may be worth noting that at the same time that Personalised Budgetss were introduced in other
countries, circa 2008-2010, economic conditions were extremely negative with many countries
looking for cost savings and many new policies being delayed and/or suspended. It is not possible to
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disaggregate on the basis of available information whether Personalised Budgets were modified or
suspended due to serious economic downturn or due to being over-prescribed.
The evidence cautions against open-ended eligibility or open-ended budgets. Where eligibility criteria
are narrowed and controlled, this limits either the number of clients that can avail of the Personalised
Budgets or limits the range of services available or limits the expenditure.
In the Canadian province of British Columbia, a series of legal decisions led to the broadening of
eligibility criteria for personal or individualised budgets. The broadening of the criteria, combined
with less available funds, raised expectations and higher labour costs, resulted in considerable stress
on the system, and led to a re-evaluation and revision of the scheme. A similar situation occurred in
the Netherlands when they introduced Personalised Budgets in 1997. Eligibility was not policed in a
rigorous fashion and the Government had to suspend all new applications by 2010 and new
regulations were introduced which were more targeted at 10% of Personalised Budget holders at the
time.
In terms of the measures used to limit eligibility internationally, these typically include limits to
eligibility of participant, limits in services covered and/or limits on expenditure. The evidence
highlights four key factors in determining eligibility of participants for individualised budgets in other
jurisdictions, namely:
Age restrictions;
Nature of the disability;
Severity of the disability;
Likely trajectory and long-term effects of over time can lead to the justification for an ‘early
intervention’.
The process for determining eligibility varies between jurisdictions and some examples for the first
three factors are presented in Figure 5 below.
In some jurisdictions (e.g. New Zealand and Canada) guidelines tend to provide specific lists of what
services be provided and what should not be provided. For example, providing clear definitions such
as: personal care as assistance with personal hygiene, dressing, toileting, mobilisation and
transferring, eating, oral care and medications; home support services as services that meet the
therapeutic and socialisation needs of clients, and they may also support activities needed to live
independently in the community, such as assistance with preparing meals, homemaking, and
recreation activities; and respite care such as a break from caring duties, for primary caregivers.
That being said, the HRB review notes that “The new legislative frameworks that focus on
personalisation and self-direction shift from lists of specific services that are included or excluded to
requiring that ‘eligible needs’ be met (England) or that ‘reasonable and necessary supports’ be
provided (Australia). These broad terms are hedged around by specification of outcomes and
underpinning principles and values, the requirement for planning and co-production, regular
monitoring and reviewing, in order to ensure that appropriate services are provided.”
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Age restrictions: may include an upper and/or a lower age limit for making applications, or may
involve targeting particular age groups. Age restrictions may reflect the existence of other schemes
which address the needs of the excluded age groups; for example, children up to the age of 18 years or
those over the age of 65 years.
Nature of the disability: the recent planned models adopted in Australia, England and Scotland cover
a wide range of disabilities – ‘intellectual, cognitive, neurological, sensory and/or physical
impairments and attributable to a psychiatric condition’ in Australia, whereas Scotland seeks to
address needs arising out of ‘infirmity, youth or age, illness, mental disorder or disability’. In Canada,
several provincial governments provide separate schemes for different categories of disability –
distinguishing between provision for people with a physical disability and people with a
developmental disability.
The severity of a disability: i.e., its impact on the life of the person who has it, is also taken into
account in determining eligibility. Schemes providing care and support for living at home tend to
assess the impact by means of calculating the resulting ‘deficit’, which translates into the ‘amount of
care hours required’. The recent Australian, English and Scottish legislation assesses the impact as
follows: Australia: reduced functional capacity and impact on ability for social and economic
participation; England: well-being significantly impacted upon; Scotland: level of risk – from critical
to low.
Figure 5: Examples of the application of participant eligibility criteria identified
A number of jurisdictions mention operating an upper limit on expenditure. For instance, see Figure 6
below for examples from England and some jurisdictions in Canada.
England: from April 2016, it was intended that adults up to the age of 25 would have a zero cap on
care costs for life, and everyone else would have a cap of £72,000. However, in 2015, the government
announced that it was deferring the introduction of the cap until April 2020.
Canada:
Prince Edward Island – Disability Support Program (DSP): The programme budget is not unlimited
and therefore parameters around funding have been established (Disability Support Program 2010e).
Overall monthly maximums for the DSP portion of the support plan are determined according to
levels of functioning, as: 75% or more functioning (high) = $400/month; 51–74% functioning
(moderate) = $800/month; 26–50% functioning (low) = $1,600/month, and 25% or less functioning
(very low) = $3,100/month (overall programme funding ceiling).
Ontario – Passport Program: In Ontario, the maximum annual funding an individual can receive
under the Passport Program is C$35,000; there are no caps on the amount for each type of support
apart from administration (up to 10% of allocation) and person-directed planning (C$2,500 annually).
Figure 6: Examples of expenditure limits (extracted from HRB evidence review)
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In addition to alternative eligibility criteria, the HRB Evidence review noted that transaction costs
such as implementation costs, costs of commissioning or arranging services were almost always
underestimated in plans for introducing Personalised Budgets. However, the extent of under-
estimation was not available in any of the documents reviewed. All evidence reviewed highlights the
need for transitional and set-up funding to develop new systems, train staff and to test and evaluate
the new processes.
Industrial relations issues and the supply of staff are issues identified from the evidence review that
have potential to affect financial sustainability. In some instances, existing staff felt that their roles
and responsibilities were diminished, countries have experienced difficulties in recruiting personal
assistants, meaning that they have had to opt for costlier alternatives than planned, and other authors
have flagged a risk of a two-tier workforce emerging with unregulated and unprotected personal
assistants who are cheaper to hire than regulated workers.
The issue of ongoing security on the supply chain was raised at the Taskforce. Moving from the
traditional model of service provision to a model of Personalised Budgets would mean reallocation of
funds around service user’s preferences. This risk is particularly relevant in rural areas or areas where
choice of service providers is low and might be reduced further by reductions to budget allocations.
This highlights a particular issue when moving from older, perhaps inappropriate models of care
towards newer forms of service provision including Personalised Budgets.
The UK Audit Commission identified key financial risks in introducing Personalised Budgets for
health, which particularly impact on the supply side and the effects of changing patterns of
procurement. These include double-running costs associated with implementing Personalised
Budgets alongside the old systems, existing unmet need, infrastructure and working with the provider
market.
Allowing personal choice may give rise to increasing popularity of some services and reductions in
demand for others. In developing choice, conflicts can arise with price and economies of scale can be
lost. As the numbers of people with Personalised Budgets increases, providers may be left with sunk
costs for services that are not in demand. The HRB Evidence review also identified a risk of
competition between private suppliers, which could result in cherry-picking and leave the State
providing the uneconomic services. The evidence suggests the need for constant monitoring at local
level to ensure that prices being offered are attractive to providers but offer choice to service users.
Often, funders of the system need to undertake market development to ensure that service users have
real choice. Where more providers enter a market, existing providers are often exposed as offering
services at a higher prices or inefficiently.
Personalised Budgets may lead to increased health spending as individuals may use some of their
Personalised Budgets to pay for things that they have paid for out-of-pocket previously. Similarly,
carers who are family members giving care without charge may be displaced by professionals who are
paid.
A key element discussed in the literature in relation to financial sustainability is that of fraud, and
how to minimise it, during the assessment phase and the payment phase. At the assessment phase,
fraud can be minimised by having clear criteria and through providing good training to assessors. One
way to minimise fraud at the payment phase might be to have high levels of reporting requirements
and regulation. However, there is no available evidence in the literature to indicate that high levels of
regulation resulted in less fraud. That said, evidence from England and Scotland would suggest that
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the level of abuse and fraud is low. Furthermore, England, which has a high level of regulation, found
that this resulted in such an administrative burden for service users and care workers that it led to
people opting out of direct payments. Evidence from other countries suggests that fraud can be
prevented from the use of online systems of payments as they provide an audit trail.
The number of studies exploring the cost effectiveness of Personalised Budgets compared with
traditional approaches is limited. However, those conducted found Personalised Budgets to be cost
effective (as outcomes were greater). Patient satisfaction, well-being and quality of life are constant
positive outcomes of Personalised Budget evaluations. However, according to the Health Foundation,
2010), it is difficult to evaluate the cost or value for money of these schemes due to paucity of
expected outcomes, dearth of financial information and lack of accurate costings available.
Some countries found that costs were higher than they had expected in the early years after
introduction, mostly due to unmet need in the existing system. Individualised budgets were found to
be cost-effective overall, but with a great variation between people with physical disability, learning
difficulty, mental health and older people. Most of the benefit was derived by young people with
physical disability, and virtually no benefit was derived by older people.
While available evidence points to cost-effectiveness over time, there is mixed evidence on whether
introduction of Personalised Budgets results in cost-savings. Furthermore there is insufficient
evidence to assess if a system of Personalised Budgets can be introduced within existing expenditure
levels and in introducing such a scheme that existing services and existing users of services are not
detrimentally impacted. Figure 7 below provides a summary of evidence around cost neutrality.
Jones et al. (2013) used ‘willingness to pay’ measures to compare a cohort of individual health budget
(IHB) group to a control group in order to estimate whether the IHB group was more cost-effective
than conventional service delivery. They found in favour of IHBs and say that this finding provides
support for the further implementation of such budgets. Both the IHB group and the control group
comprised 1,000 individuals. The IHB group demonstrated greater benefit (quality of life) at less cost,
on average, than the control group. Net quality of life benefit was between £1,520 and £2,690 greater
for the IHB group than for the control group.
Glendinning et al. (2010) measured quality of life (ASCOT) against costs in order to determine cost-
effectiveness. They used 268 records of people with individualised budgets compared with those
receiving conventional support. The overall weekly social care cost for those with individualised
budgets was £279 and the comparison group was £296. The difference is not large and the authors
make the point that there may be hidden (transactional) costs in the calculation of individualised
budgets not taken into account, and that this is likely to add considerably to the costs of introducing
individualised budgets. Transaction costs again come into the frame in the individualised budgets
calculation. When it came to healthcare, the individualised budgets cost significantly more than the
conventional support: £83 per week against £59. There is a suggestion that higher costs may be
related to lack of experience and a steep learning curve on the part of those managing the system.
Much of Glendinning and colleague’s research was carried out at a time when local authorities were
still in a learning process with regard to individualised budgets, and therefore longer-term
comparisons could not be made. This learning process gave rise to a lot more interaction between care
managers and people opting for individualised budgets.
Synergia (2011) undertook a wide-ranging evaluation of the Individualised Funding (IF) scheme for
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the Ministry of Health (MoH), which included financial analysis and modelling of the scheme for
sustainability. Most stakeholders considered IF to be the ideal way to support disability into the
future. In many cases, costs for people who moved from traditional methods of resource allocation to
IF were on average 14.9% higher in year one and a further 25.5% higher the following year. Non-IF
users’ allocation increased by 2.9%. However, these increases could be explained by the fact that
many people moving to the new system had been re-evaluated, which identified unmet needs. Many
of the people who opted for IF initially were well informed and able to articulate their needs. Much of
this evaluation concerned only two years of the scheme (2010 and 2011) and did not evaluate the
potential for the coming years. In 2010, there were 421 users of IFs and this increased to 934 in 2011.
The first people who adopted the IF scheme were those who needed higher allocation of funds in the
existing system. The pre-IF cost for these users was $21,624. The annualised cost for these users
under the IF scheme was $24,840.28 Synergia’s conclusion was that the higher payments for support
were driven by higher need and it expected the average to level off as more people transitioned to the
IF scheme.
In British Columbia (BC) personal or individualised budgets have been in place since 2005, delivering
support services to adults with developmental disabilities and their families. Stainton et al. (2013)
analysed data on service usage and the cost of four IF modes compared with block funding methods.
They found that costs were either lower or on a par with traditional methods, but with some variation
across modes. IF is available through different options. These include direct-funded respite, direct
funding, host agency funding, and Microboard funding.
Figure 7: Summary of evidence on personalised budgets and cost neutrality (extracted from HRB
Evidence review)
Fleming (2016) evaluated the implementation of four pilot individualised funding initiatives in
Ireland. The models used varied, but included examples of direct payment, direct payment using a
broker, independent support broker and a self-management model. While the evaluation concluded
that the introduction of Personalised Budgets is feasible in Ireland, two of the four pilots ceased
operation after the end of the pilot as no mechanism was available for unbundling existing HSE
funding from existing services. The ability to unbundle funding is critical to introducing a system of
Personalised Budgets if the system is to be financially sustainable (excluding set up or transition
costs). Unbundling of existing funding for any individual must not impact on others availing of the
same service.
All available evidence emphasises the need to adopt a phased approach to the introduction of any
Personalised Budget scheme, and to evaluate pilots in depth to assess outcomes, costs and risks and to
avoid overextending existing resources. Evaluation from a pilot will indicate if it is necessary to have
a minimum number of people being supported in order for a Personalised Budget initiative to be
financially viable. It can also highlight any issues emerging geographically, for people who are more
geographically remote compared to those who live in close proximity to the agency.
Learning from recent evaluation of pilots in the PossibilitiesPlus programme (Kendrick 2016)
highlights a focus on depth and quality rather than scale of support services. This evaluation also
recommended that an agency should operate with funds in reserve such that it carries a surplus from
year to year to safeguard against any unexpected expenses.
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The National Disability Insurance Agency (NDIA) in Australia developed a Framework to assist them
in monitoring financial sustainability. The agency engages in continuous monitoring and evaluation of
its outcomes and costs monitoring, comparing actual experience with expectations. This involves
collecting data on the number of participants, their characteristics, the outcomes for participants and
the costs of supports provided to them. This information can be used to make changes if necessary to
ensure that the scheme remains financially sustainable. The NDIA identified factors which contribute
to variations in costs such as:
cost of support
characteristics of participants
geography
availability of support
service providers
family and friends
To help them plan the financial sustainability of the project, they consider:
incidence of disability by age
rates of exit from the scheme, both though mortality, increasing morbidity or recovery
ageing within the scheme
package costs over the Personalised Budget holder’s lifetime
inflation (and health inflation)
operating costs (transactional costs)
In 2016 the UK National Audit Office published a report reviewing personalised commissioning in
Adult Social Care in the UK. The aim of this report was to examine practical challenges and
opportunities associated with implementing personalised commissioning as well as the extension of
personal budgets into healthcare. One of the central findings of the paper is that due to poor data
availability it is not possible to analyse the best way to implement personal budgets to maximise
improvement in user outcomes. The report did find ‘widespread support across local government and
the adult care sector for the concept of personalised commissioning’, seen as a ‘broader movement to
give care users more control over their services’. Around 500,000 adults in England received personal
budgets in 2014-2015 with primary support reasons relating to physical or learning disabilities.
The report found that if a personal budget is put in place without adequate support and information,
and without being aligned to a user’s circumstances, it may not benefit the user. The report noted that
the user may not benefit if authorities are pursuing personal budgets as an end in themselves, rather
than as an enabler of personalised care. These considerations are particularly important for direct
payments, which require users to manage their own spending. The report found that there is no
association between higher proportions of users on personal budgets and overall user satisfaction or
other outcomes. Speaking to the data issues in the area, the report noted that indicators were set up to
measure take-up rather than user outcomes.
The report found that some local authorities are constrained in how, and the extent to which, they can
personalise care by the need to reduce overall spending. The report also noted that authorities cannot
afford to lose the economies of scale they achieve through large framework contracts. The report
found that direct payment rates relate to authority’s own commissioning rates, rather than the market
prices available to members of the public. This means that users cannot attain the same price value as
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an authority might. The report also found that care packages were not more expensive for people with
personal budgets, but that care management costs were higher. Some authorities are identifying
services provided by voluntary organisations at no or little cost. These include social activities, which
meet a user’s needs more cheaply than a traditional approach, such as a place at a daycentre. This
relies on such services being available and adequately funded. Authorities attribute some savings to
process efficiencies such as taking back unspent direct payment monies when a certain number of
weeks’ funding remains unspent in users’ accounts. The report found that some providers are under
financial pressure because authorities have driven fee rates down to potentially unsustainable levels.
The report found that different authorities are taking different approaches to implementing personal
budgets and that some are struggling to find workable approaches. Some authorities appear to be
struggling as guidance requirements are not yet established in all areas. Some of the approaches
identified in the report are around the beginning of the process whereby authorities start the process
by looking with each user at their needs and based on the needs identified, giving users indicative
budgets. However the report found that indicative budgets were inaccurate and unhelpful. Some
authorities had taken the approach of providing an overview of services for staff and users including
knowledge of providers and directories of services. Staff and users were able to identify services
around the care outcomes identified, an example of outcomes based commissioning. Some of the
authorities included in the report identified that they did not have enough capacity to provide effective
support or review.
In summary, this section has presented evidence from international literature as well as relevant Irish
work. There is useful and timely learning to draw from this evidence for the purposes of planning and
implementing a Personalised Budgets scheme. There is also useful learning for managing potential
risks (cost containment and financial sustainability related risk) associated with the introduction of a
scheme in Ireland. Some of the key risks (which might need to be considered in conjunction with a
parallel analysis of policy objectives and outcomes) are as follows:
(A) From the perspective of Clients
Population growth, an ageing population, and more complex needs is already creating
pressures on existing funding and services, and this will impact on the introduction of any
new scheme
A very limited budget and/or a very limited eligibility criteria will restrict the number of
clients that can avail of the scheme and/or restrict the range of services that can be provided
There is some evidence that personalised budgets might benefit better educated, higher-
income families disproportionately as they can better navigate the processes and systems
involved
While choice and preferences are significant aspects of Personalised budgets, this can lead to
apprehension and worry for some clients, and does not necessarily align with their needs
Depending on the budget available, demand and the costs associated with implementing a
scheme of Personalised budgets, there may be less funding available for those clients not
availing of the scheme or for investment in additional services
(B) From the perspective of the Providers
Changing patterns of procurement may lead to losses in economies of scale
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Providers may be left with sunk costs that are not in demand
Some countries experienced difficulties with recruiting personal assistants, resulting in higher
staffing costs than envisaged
Whilst the opening of the market for disability services could lead to increased choice, this
may also lead to more financial risk for providers due to the increased competition
A dual system of provision may result in additional insecurity for frontline staff and other
countries have flagged the risk of a two-tier workforce emerging with unregulated and
unprotected personal assistants (cheaper to hire than regulated workers)
There are costs associated with education, training and capacity building to support any
model of Personalised budgets
(C) From the perspective of the System
Costs may be higher than anticipated if eligibility criteria or overall budget is left open-ended
Care should be spent in projecting costs associated with set-up and transitioning as the
evidence notes that these have typically been under-estimated in other countries
Transaction costs are a key component of any scheme of Personalised Budgets, and will vary
in scale landscape
Some costs may be duplicated where there is an overlap of services
As a result of competition between providers, there may be cherry-picking and the State may
be left with providing any uneconomic services
There may be increased health spending as individuals pay for things they have paid for
previously as out-of-pocket expense and/or had delivered free of charge by family carers
Overall, there is little/no robust evidence available in relation to cost effectiveness and there
is mixed evidence that a scheme can be introduced within the existing budget allocation or
with cost savings (without impacting on the original policy objectives of autonomy and
choice)
5. Planning for Pilot Projects Costs and Financial Sustainability
The financial sustainability of the final system of Personalised Budgets introduced in Ireland will be
contingent on the design and implementation of that system. Furthermore, different design options
will be associated with different demand and supply implications, and potentially different cost
implications. In order to model the possible cost of different options it is necessary to have
appropriate data:
1. Service costs per participant, per service type and per geographic region.
2. Transition costs of operating the scheme at present and likely change in costs associated with
operating the proposed scheme(s).
3. Transaction costs.
4. Population parameters and linkages with existing services.
As outlined in previous sections, analysis of the health-related disability area is constrained by
significant data limitations. In the absence of repeated consistent cost data, and in the absence of
agreement on the exact model/s to be implemented, it is not possible to evaluate how much a model/s
might cost or to compare the cost of one type of model against another.
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However, it is possible to look further at some of the key drivers of cost within a system of
Personalised Budgets. Three key factors are discussed below and these were identified through
reviewing available evidence as well as through the interaction, learnings and directions emanating
from the Taskforce - Services, Staff and Governance – are considered in graphical representations to
give a sense of the choices and trade-offs to be made, particularly in a resource-constrained
environment.
Services
Currently the HSE, and through funded agencies, provides a range of disability services, and it has a
large number of arrangements with providers to deliver health-related disability services, set out in
service arrangements and grant aid agreements, negotiated and agreed in advance of each service
year.
Figure 8 below considers the relationships between the services provided under a model of
Personalised Budgets and cost, where cost is on the Y axis and Services provided/demanded is on the
X axis. This enables consideration of the relationship between a variety of service-related factors and
costs including the range of services provided through Personalised Budgets (from a limited choice, to
a core suite to an extensive choice of services, up to and including residential services), the quality of
the services provided, whether the services are centralised or decentralised, the flexibility and choice
for users and the speed of access to these services.
In the pilot phase, the model is likely to impact predominantly on clients already receiving health
related disability services, i.e., the pool of existing users. For those who have not been known to the
disability services previously but who apply to avail of (e.g., those entering the 18 years and over age
category for the first time), these will be subjected to a standardised assessment of need to satisfy
defined eligibility criteria (yet to be formally defined) and if they are deemed eligible this will largely
involve redeployment of resources.
During the pilot phase a group of service users will trial Personalised Budget models identified by the
Taskforce. Some service users will see no change in ‘who’ may be providing health related disability
services whereas others will see a change.
A review of available evidence from other countries indicates that most jurisdictions permitted
funding to support home and personal services and participation in the community, but there is a lot of
variation in the other supports that are allowed under a system of Personalised Budgets. Some
countries allowed funding to be used for residential or respite support but many others argued that
there is less flexibility in how a Personalised Budget can be used to personalise these services, and
they reason that Personalised Budgets was established as a tool to retain more people in their homes
and their communities.
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Figure 8: The relationship between services provided and costs
If considering services on a spectrum of quality, higher quality services will cost more than services
of reduced quality. Evidence from the UK and elsewhere suggests that if services are fragmented and
decentralised they will cost more than a centralised model of service provision, as a system where
clients and staff are centralised will cost less as a result of economies of scale. Furthermore, a system
which delivers access to rapid and/or unlimited services will cost more than one with slower access or
less choice, as the latter can be planned and staged more effectively and efficiently.
Like any service, there will a certain amount of exits over time, with changes in the level of funding
required at different time-points depending on the age-profile and complexities of need of the client
population.
Technology and innovation, in terms of delivery and reporting on services, should result in costs
savings over time through increases in efficiency and effectiveness, but requires an upfront
investment.
Staffing
Staffing, and associated pay-related expenditure, as described earlier is the biggest cost component of
providing health services across the health sector, and the disability sector is no different. Indeed, in
the disability sector, care needs of the client group require a large staff commitment, shift work by
teams and round-the-clock care.
Figure 9 below depicts a graphical relationship between staffing options and cost, with cost on the Y-
axis and Staffing options on the X-axis. In addition to the issue of volume of staff, it allows one to
assess the implications for cost of other staffing-related choices such as location of staff (centralised
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vs decentralised), type and grade of staff (which in turn is dependent on decisions around type of
services, level of choice, access, quality etc), substitution and skill mix, quality and choice.
Figure 9: Relationship between Staffing Options and Cost
A potential downward force on costs in relation to staff may be seen through substitution of staff from
higher grades to lower grades, where appropriate. However, existing contractual arrangements for
employers in relation to their employees may mean that they have limited flexibility in the shorter
term to substitute staff in higher grades doing work which could be delivered by others at a lower
grade (lower skills and lower complexity). In the mid- to longer-term this would typically be less of a
constraint.
Governance and Administration
Governance describes the way the rules, norms and actions within a system are structured, sustained,
regulated and held accountable. The degree of formality depends on the internal rules of a given
organisation and, externally, with its business partners. As such, governance may take many forms,
driven by many different motivations and with many different results. Governance frameworks are
built into relational contracts that foster long-term collaboration and innovation. Poor governance can
lead to contract failure.
In circumstances where public money is being employed, arrangements are put in place to satisfy a
minimum level of accountability, ensure value for money has been achieved and that the operations in
question can perform well under scrutiny and that at all times the needs of people with disabilities are
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being met appropriately. In the specific example of Personalised Budgets and a move from a
centralised funding stream towards individual funding oversight, management and governance
arrangements will ensure the Personalised Budgets will be successful and sustainable on an on-going
basis.
In progressing personalised budgets, governance arrangements will potentially change. Currently,
services are provided by HSE providers or established (non-HSE) service providers. Where services
have been provided by non-HSE service providers a service arrangement or a grant aid agreement
must be in place and providers must satisfy a range of criteria such as having a current tax clearance
certificate. With the introduction of personalised budgets, governance arrangements may be at
individual level, where possible. In traditional models the role of the funder is to identify suitable
service providers and either fund or commission these services on behalf of the population. In a
Personalised Budget model, this will shift to the funder needing to develop a local market from which
service users can purchase services independently.
Typically, Personalised Budget recipients contract with an agency or agencies to fully manage the
Personalised Budget monies on their behalf, manage the payroll of support workers employed by the
Personalised Budget holder, or to employ or contract directly all caregivers and support workers who
are required to support the Personalised Budget holder. From reviewing other countries, different
arrangements are in operation in different jurisdictions and there is no substantial evidence to date on
which configuration of support arrangements works best or is most cost effective. Regardless of the
arrangement, a package of services is typically provided by the funder, or organisations on contract to
the funder, at no cost to the person availing of the Personalised Budget. These supports include
assessment of needs, person-centred planning, guidance on the use of the Personalised Budget and
guidance and support on employer’s obligations.
One of the key considerations in relation to governance arrangements for any system of Personalised
Budgets is ‘who’ is doing the governance. If clients can manage their own governance arrangements
the per-hour costs would be expected to be at the lower end of the scale. If governance is supplied
through a third party or a governance ‘expert’ (e.g., a chartered accountant with specific and relevant
experience) the per-hour cost and total cost would be expected to be at the high end of the scale. If
governance arrangements are high-involvement, i.e., involving many hours occurring periodically,
this will increase total costs (however, it must be noted that this will have lower risk).
In reviewing the international experiences there are three main ways that a client can access a
Personalised Budget payment – a direct payment to their bank account (please note, at the time of this
report going to print this is currently not an option in place in the HSE in relation to provision of
services), a payment to an account held by a statutory funding body or a third party who manages it
on their behalf, or a mixture of the two. This results in different levels of reporting requirements for
individuals, families and others to account for the use of the funding.
From the HRB evidence review, we know that it is either the funder directly who provides support
and guidance for Personalised Budget holders who wish to become employers, or they provide it
indirectly through a contract with a host agency or brokerage service. (Please note, at the time of this
report going to print there are no brokerage services operating in Disabilities at this time.) There is no
published evidence regarding if and how brokerage services are regulated in other jurisdictions. A
review in New Zealand of host agencies selected by the individual or their families indicated that the
HR support and advice and payroll functions they carried out might be provided more efficiently by
aggregated host entities at national level or regional level rather than local level. Evidence from early
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adopters and pilot schemes suggest that in some instances experienced providers have continued to
provide an administration function or support to individuals for a fee. It would be possible to achieve
a level of economy of scale in this way but as more individuals migrate to Personalised Budgets this
form of providing administrative support may become unsustainable for providers.
Those individuals who may require disability services may have impairments of a nature that will
render their undertaking of governance duties a challenge, and indeed this option may be impossible
for some. Individuals who use disability services may experience additional or unfair burden if
discharging overly cumbersome or highly involved governance.
In an attempt to assess the impact that the many variations in governance and administration
arrangements will have on costs (and furthermore on financial sustainability), Figure 10 below shows
a simple representation of the relationship between costs and governance arrangements. Costs are
shown on the Y axis and governance arrangements are shown on the X axis. The logic behind the
relationship shown is price by level of governance, i.e., increasing the level (or intensity) of
governance will lead to increased costs.
Figure 10: Relationship between Governance Arrangement and Cost
As discussed in this and in previous sections analysis of the health related disability area is
constrained by significant data limitations. To make judgements around costs and the potential
financial sustainability of any scheme it is unavoidably necessary to have regular, consistent, all-
Page 32 of 37
encompassing sources of data. In particular it is necessary to have satisfactory information and to
have such information disaggregated to a high enough level to allow scrutiny on firstly the services,
secondly the staff complement and thirdly to have reliable information about governance and
administration functions within a scheme or service.
In response to the data limitations evident in the disability services space a series of graphical
representations were suggested in an effort to aid decision makers and readers get a sense of the suite
of choices available in the space and any potential trade-offs that might occur in choosing one option
over another, or choosing between different levels of intensity within the same option.
Although these graphical representations cannot be all-encompassing they are useful in signposting
the direction of travel in this policy area as well as prompting thought on what might happen post
introduction of a system of personalised budgets.
6. Data Framework for Planning the Pilot Phase
As outlined earlier in the Introduction, and in line with the overall goals of the Taskforce on
Personalised Budgets, it is important to know what the system of personalised budgets might look like
in order to assess the impact that this system will have on the financial sustainability of the wider
delivery of disability services by the State. In particular there is a need to understand what the
provider response to the system will be in terms of their
Ability to unbundle costs across capital and staff expenditure items
Ability to deliver potentially different services in different formats in different places to
service users
We know from our summary of the international evidence review on personalised budgets that there is
limited evidence on the financial sustainability of personalised budgets – largely due to the fact that
they are recent developments and limited time has elapsed since their introduction. The lack of
evidence is also due to the fact that a number of the jurisdictions which have implemented systems of
personalised budgets have subsequently amended their model to allow for changes in eligibility (the
Netherlands) or changes in model of delivery (The Local Authority Delivery Model, England).
However, while lacking in robust analysis, we can glean useful insights from the various case studies
published as to the key factors that are likely to result in higher costs, and the issues to consider in
introducing any new model/s of Personalised Budgets, and these insights were used to suggest
possible frameworks to help in decision making into the future.
In looking at the type of factors that one should seek to measure when planning, monitoring or
evaluating any new model of Personalised Budgets, it is clear that Ireland has a real deficit in unit
cost, expenditure and staffing data. For example, although we know that the state currently is
spending €1.6bn on disability services, there is no one single source of information on a breakdown of
this amount, either by service types or the outcomes for clients and how this varies across the country.
Despite considerable advances in data collection resulting from the work of the SIT from a detailed
costing and financial sustainability standpoint it is still not possible to provide a robust and accurate
analysis with consistent definitions of ‘services’ at local level. With regard to transition costs,
estimates are not available internationally and it is not feasible to estimate across a range of options
from Irish data. With regard to transaction cost, the OECD does provide overall data on health system
regulation and administration costs by country (a rough proxy for existing administrative/transaction
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costs) but data is not available for Ireland. With regard to population parameters and likely service
usage it is not possible based on current data to estimate key issues such as likely uptake by
category/service type or exits.
While much of what is included in this discussion paper can guide decisions around the model/s to be
tested, only when the model/s to be tested are defined (type of brokerage model, services to be
included, eligibility criteria) can one set out in any detail an optimal monitoring and evaluation plan,
including key measures to inform financial sustainability discussions. It has not been possible at this
juncture to answer some of the obvious financial sustainability questions:
Can the implementation costs of Personalised Budgets be absorbed into the current system,
without impacting on existing services?
Will the number of individuals wanting a Personalised Budgets increase rapidly?
Might the introduction of Personalised Budgets lead to increased costs?
Will Personalised Budgets be used to fund (or part fund) goods or services that might
otherwise have been purchased out of pocket? If so, to what extent is that a problem?
To what extent can the cost of Personalised Budgets be contained, whilst maintaining or
improving health outcomes, and without dampening the ‘spirit’ of patient autonomy and
choice?
Nevertheless, the type of data needed (or at least a sufficient amount of it) to project costs could be
collected, or approximated, as part of piloting of different design options or models for personalised
budgets for people with a disability. The initial demonstration projects proposed by the Taskforce
will give an opportunity to collect appropriate data to more appropriately advise on the most suitable
model of personalised budgets for the system as a whole and to ensure a robust evaluation of these
models. Particularly, with respect to the financial sustainability of a system of personalised budgets,
with appropriate data collection and information gathering initial demonstration projects can provide
valuable information on:
The impact of service user take up on system and how this impacts costs of service delivery
The impact of changes in delivery of services to service users by providers on their capital
costs, capital investments, pay costs and non-pay costs of service provision, including
identifying the reality of unbundling, and the administrative costs and challenges of doing so
The aggregate impact on the delivery of the system of disability services
To ensure that the initial demonstration projects can appropriately inform the financial sustainability
of the ultimate proposed model and design of personalised budgets, particular data and insights on
cost of provision, cost of change and service user response to the model should be gathered and
recorded and included explicitly as a consideration in the final evaluation designed. For example,
quantitative data and qualitative insights should include, but not necessarily be limited, to the types of
measures outlined in Table 6 below.
It is important in any future analysis to consider the inter-play between the various parameters rather
than looking at them in isolation. It will also be important to collect data at the most disaggregated
level possible, and to collect at regional/local level where possible. Consideration needs to be given to
the duration of the pilot phase with a logic and rationale underpinning the monitoring and evaluation
plan. There is a longer term horizon necessary to capture key outcome measures of Personalised
Budgets, such as improved quality of life or greater flexibility. These will be important to capture and
Page 34 of 37
analyse to explore if the introduction of Personalised Budgets is cost effective, and not to consider
cost-savings in the short-term.
What we know from the evidence is that there will be initial set-up and transition costs in
introducing a model of Personalised Budgets. What we also know is that have tended to be under-
estimated in all countries that have introduced Personalised Budgets. Therefore, it would seem
prudent to assign a protected resource to implement the initial phase of Personalised Budgets in order
to ensure success of this policy objective as this is not related to demand for services and supports, but
related to putting the necessary systems and infrastructure in place to manage, monitor and measure
all aspects of Personalised Budgets, and to ensure it has every chance of success.
Education and training and capacity building will be critical to support and sustain any model/s of
personalised budgets. Therefore, it will be important to consider the infrastructure, systems or
resources that need to be put in place, the lead-in time to deliver same, and to consider how these
might change over time.
As mentioned earlier, there is little or no evidence in the literature of successful examples of
unbundling. However, this remains a significant challenge for the disability service, and in the
context of an eventual Personalised Budgets policy, it will need to be considered further as part of
planning for the pilot phase as left unchecked could result in unsustainable cost escalation.
Area
Items that might be measured
Service-User characteristics
- Number of participants
- Take-up and exit rates
- Clients by single year of age, gender
- Nature of disability
- Level of need
- Level of unmet demand
Scheme characteristics
Staffing characteristics (Staff numbers, grade, skill mix,
pay and conditions, IR-related costs, Staff-client ratios,
rostering practices)
Eligibility (in terms of any limits on participants, services
included or limits on expenditure)
Set-up and transition costs (e.g. technology)
Education, training and support costs (for clients or for
assessors)
Governance costs (e.g. costs of regulation and reporting)
Administration costs
Operational costs of delivering service
Costs associated with fraud (at assessment and/or payment
phase)
Other measures to consider - Geographical variations across all measures above
including demand, supply, unmet demand, choice, access,
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price or outcomes
- Outcome Measures such as access, waiting times, quality
and safety of services delivered, quality of life, autonomy
- Estimates of the extent of substitution of prior out of
pocket expenses
- Estimates of the extent of substitution of previous informal
care provided by family and friends
- Tracking of the implications of future demographic
growth, including considerations of ageing within the
scheme and the trajectory of disability within the scheme
- Data on price variation across providers and tracking of
the provider market (e.g. competition)
Table 6: Suggested variables to include in pilot phase to facilitate analysis of Financial Sustainability
As stressed earlier in the document, it is important not to focus on financial sustainability in its own
right without considering the trade-offs for the original policy objective (to improve the quality of life
of people with disabilities by affording them greater choice and control). To that end, it will be
important to measure policy outcomes as well as costs and to explore the consequences of choosing
one option over another during the pilot phase. We note the work underway by the NDA to develop a
suite of national outcome indicators under the banner of the Transforming Lives Programme and we
believe that this represents a real opportunity to consider outcome measures in the context of
personalised budgets. We note at the time of this paper being finalised Transforming Lives Steering
group has already signed off on the 9 Outcomes which people with disabilities agreed were important
to them. A Quality Framework is currently being finalised and will reflect these Outcomes. The work
and output of the Transforming Lives group represents a real opportunity to consider these outcomes
and build them in to future iterations of evaluations and analysis.
Finally, Personalised Budgets reflect only one means of delivering individualised funding. As part of
the broader recommendations set out in the Value for Money and Policy Review of Disability
Services in Ireland, it will be important to consider issues that might be common to personalised
budgets and wider mechanisms put in place to deliver individualised funding. Any opportunity to
capture and measure common aspects of the implementation phase should be measured as part of the
pilot phase.
To summarise, in line with the revised scope of work presented by the Research Services Unit to the
Taskforce on Personalised Budgets the section above presents proposed variables for including in a
'data' framework. Although much of the international evidence is centred on types of personalised
budget model or what services or clients may be included there is a shortage of evidence in terms of
optimal monitoring or evaluation once a model of personalised budgets has been selected. Such
limited evidence as exists is presented above and in Table 6. Moving to a space where appropriate
data collection and information gathering from initial demonstration projects will provide valuable
information on:
•The impact of service user take-up on system
•The impact of changes in delivery of services to service users by providers (on capital costs, capital
investments, pay costs and non-pay costs)
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