State Strategies for Efficiently Allocating Health Resources: Use of Area-Level Indices in Policy, Funding, and Reimbursement

The United States ranks below peer nations on many measures of health status, health care access and quality, and health outcomes while spending significantly more on health care. This combination of factors has driven an effort to better align resources with need to address health disparities and use funds more efficiently. To identify areas with high need, area-level vulnerability and resilience indices (ALVRIs) have been developed to create composite need scores based on combined underlying measures. Federal, state, and local agencies, as well as philanthropies, are using ALVRIs as data-driven strategies to better allocate resources and improve outcomes. This report describes the historical approaches to resource allocation, introduces ALVRIs, and provides considerations for decision makers in states that are using an ALVRI, such as state health officials, Medicaid directors, hospital and health system administrators, and other state agency and department directors.