Managing Healthcare Budgets in Times of Austerity: The Role of Program Budgeting and Marginal Analysis

Abstract

Given limited resources, priority setting or choice making will remain a reality at all levels of publicly funded healthcare across countries for many years to come. The pressures may well be even more acute as the impact of the economic crisis of 2008 continues to play out but, even as economies begin to turn around, resources within healthcare will be limited, thus some form of rationing will be required. Over the last few decades, research on healthcare priority setting has focused on methods of implementation as well as on the development of approaches related to fairness and legitimacy and on more technical aspects of decision making including the use of multi-criteria decision analysis. Recently, research has led to better understanding of evaluating priority setting activity including defining ‘success’ and articulating key elements for high performance. This body of research, however, often goes untapped by those charged with making challenging decisions and as such, in line with prevailing public sector incentives, decisions are often reliant on historical allocation patterns and/or political negotiation. These archaic and ineffective approaches not only lead to poor decisions in terms of value for money but further do not reflect basic ethical conditions that can lead to fairness in the decision-making process. The purpose of this paper is to outline a comprehensive approach to priority setting and resource allocation that has been used in different contexts across countries. This will provide decision makers with a single point of access for a basic understanding of relevant tools when faced with having to make difficult decisions about what healthcare services to fund and what not to fund. The paper also addresses several key issues related to priority setting including how health technology assessments can be used, how performance can be improved at a practical level, and what ongoing resource management practice should look like. In terms of future research, one of the most important areas of priority setting that needs further attention is how best to engage public members.

Sustainability in Health care by Allocating Resources Effectively (SHARE) 7: supporting staff in evidence-based decision-making, implementation and evaluation in a local healthcare setting

“…The barriers, enablers and needs related to achieving the objectives are mapped to the relevant components of each intervention in Additional file 1. The findings of the local needs analysis are consistent with the current literature on EBDM using research and/or data [8–12, 15, 52, 62, 65, 91, 92], disinvestment and resource allocation [56–59, 61, 64, 70, 76, 93–95], and information needs of health service decision-makers [39, 40, 43, 45, 53, 89]. More recently, systematic reviews have identified interventions that have been demonstrated to enhance uptake of research evidence and these are also included in the matrix [8, 67, 96–99].…”

Sustainability in Health care by Allocating Resources Effectively (SHARE) 6: investigating methods to identify, prioritise, implement and evaluate disinvestment projects in a local healthcare setting

“…Lack of transparency was reported in the earlier explorations of decision-making at Monash Health [39] and is also discussed in the literature in relation to disinvestment processes [7, 23, 62, 77, 83, 99, 135]. …”

“…The major limitations for all priority setting approaches include lack of standardisation in cost-accounting, lack of sufficient high quality data to inform decision-making, and lack of time and skills to undertake the process and implement the decisions [5, 9, 77, 78, 83–85]. …”

Using Economic Evidence to Set Healthcare Priorities in Low‐Income and Lower‐Middle‐Income Countries: A Systematic Review of Methodological Frameworks

“…Cost per DALY averted is the dominant measure of cost‐effectiveness, and it is often justified on the grounds that almost 90% of the global burden of disease is accounted for by LMICs (Murray and Lopez, ; Zarate, ). PBMA, which creates a management process into which results from standard economic evaluations and other evidence can be incorporated (Ruta et al, ), has been widely used in HICs including Australia, Canada, New Zealand and the UK (Mitton et al, ) but has not established a footing in LMICs. In addition to the widespread problem of a lack of credible information, the legitimacy and capacity of institutions management processes are often weak.…”