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The UK Government have identified (1) four key stages to justifying the rational for government intervention. These are as follows;

• Identify the set of policy goals to be achieved: - This involves an assessment of the Government's strategic goals and objectives, and the way in which they are translated to individual policy areas.
• Identify why these goals may not be delivered without government activity.
  • Imperfect competition (market power). Economic theory demonstrates efficient outcomes will be delivered only where markets are actually or potentially competitive. This section deals with monopolies and monopsonies and includes predatory pricing.
  • Externalities. An example of a positive externality is the spill over effect into other areas that can occur as a result of research and development activity. A company or research institution will generally decide its level of R&D on the basis of the benefits that it can capture - ignoring benefits that might occur elsewhere. In the instance of telemonitoring it is very likely that for example a targeted program around weight management and obesity will bring spill over benefits to Heart Failure, diabetes and pulmonary disorders. An example of a negative externality is pollution of the environment.
  • Information failures. Information failures lead to sub-optimal outcomes. For example, a buyer may not have full information on the characteristics of a product or service he/she wishes to buy..
  • Public goods. True public goods and services are comparatively rare, but the provision of national defence and of law and order are typically used as illustrations. In the telemonitoring scenario, provision of privacy and information security and legal protection are examples.
• Equity, which is to do with the delivery of social or distributional objectives. Even where markets are working efficiently, they may result in a distribution of income (or other benefits/costs) that is unacceptable to society. This will often arise through a lack of incentives to improve equity, or because the necessary information is available only to government. A classic example here is the cost of telehealth solutions. If the cost issue is not addressed then an inequality will exist where more affluent persons will be able to have access to better healthcare services, thus widening further the inequality gap. This is why reimbursement policy is of such importance.
• Identify what actions are available to government in order to deliver the desired outcomes. A wide range of interventions is available to government, and it will often be appropriate to consider several options. Examples fro telehealth adoption include tax incentives, reimbursements, grants, loans, and information campaigns.
• Consider whether the costs of government intervention are justified. This is concerned with the cost analysis of the intervention both positive and negative and the cost of not intervening. It is a full cost breakdown cosnidering the various options. This is an absolute MUST for telehealth adoption .ie. government must lead a full business case analysis of the cost of doing it against the cost of not doing it.

References

• 1. http://interactive.cabinetoffice.gov.uk/strategy/survivalguide/skills/ao_rationale.htm

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