Economics, public health and health care purchasing: the Tayside experience of programme budgeting and marginal analysis

Using a Formal Strategy of Priority Setting to Mitigate Austerity Effects Through Gains in Value: The Role of Program Budgeting and Marginal Analysis (PBMA) in the Brazilian Public Healthcare System

The fiscal regime implemented in Brazil with the constitutional amendment 95 (EC-95) of December 2016 froze primary expenditures for 20 years, including healthcare spending. Previous studies have estimated strong negative effects of this policy on the health of Brazilians. Although there has been a constant pressure to repeal EC-95, this policy is unlikely to be changed in the near future. Thus, there is also a need to take actions within its own terms in order to mitigate its harmful consequences on population health. Shedding light on the existing evidence about the impact of austerity on health, the present work discusses how decision-makers can use a formal framework of decision making in priority setting and resource allocation to tackle the amplified budgetary strain. Drawing on principles of Program Budgeting and Marginal Analysis (PBMA), efficiency can be improved by shifting spending from low-value to higher-value areas, avoiding the "across-the-board cut" caused by non-differential consideration of expenditures in a context of mismatched growth of demand and supply of healthcare. By evaluating opportunity costs of investment and disinvestment proposals on the basis of multiple criteria and marginal analysis, the Brazilian public healthcare system could obtain gains in value, achieving better performance and attenuating the relative decline in spending on health brought by an austerity scenario.

Fit for purpose? Introducing a rational priority setting approach into a community care setting

Purpose - Program budgeting and marginal analysis (PBMA) is a priority setting approach that assists decision makers with allocating resources. Previous PBMA work establishes its efficacy and indicates that contextual factors complicate priority setting, which can hamper PBMA effectiveness. The purpose of this paper is to gain qualitative insight into PBMA effectiveness. Design/methodology/approach - A Canadian case study of PBMA implementation. Data consist of decision-maker interviews pre (n=20), post year-1 (n=12) and post year-2 (n=9) of PBMA to examine perceptions of baseline priority setting practice vis-à-vis desired practice, and perceptions of PBMA usability and acceptability. Findings - Fit emerged as a key theme in determining PBMA effectiveness. Fit herein refers to being of suitable quality and form to meet the intended purposes and needs of the end-users, and includes desirability, acceptability, and usability dimensions. Results confirm decision-maker desire for rational approaches like PBMA. However, most participants indicated that the timing of the exercise and the form in which PBMA was applied were not well-suited for this case study. Participant acceptance of and buy-in to PBMA changed during the study: a leadership change, limited organizational commitment, and concerns with organizational capacity were key barriers to PBMA adoption and thereby effectiveness. Practical implications - These findings suggest that a potential way-forward includes adding a contextual readiness/capacity assessment stage to PBMA, recognizing organizational complexity, and considering incremental adoption of PBMA's approach. Originality/value - These insights help us to better understand and work with priority setting conditions to advance evidence-informed decision making.

Using clinical practice variations as a method for commissioners and clinicians to identify and prioritise opportunities for disinvestment in health care: a cross-sectional study, systematic reviews and qualitative study

Background

NHS expenditure has stagnated since the economic crisis of 2007, resulting in financial pressures. One response is for policy-makers to regulate use of existing health-care technologies and disinvest from inefficiently used health technologies. A key challenge to disinvestment is to identify existing health technologies with uncertain cost-effectiveness.

Objectives

We aimed to explore if geographical variation in procedure rates is a marker of clinical uncertainty and might be used by local commissioners to identify procedures that are potential candidates for disinvestment. We also explore obstacles and solutions to local commissioners achieving disinvestment, and patient and clinician perspectives on regulating access to procedures.

Methods

We used Hospital Episode Statistics to measure geographical variation in procedure rates from 2007/8 to 2011/12. Expected procedure numbers for each primary care trust (PCT) were calculated adjusting for proxies of need. Random effects Poisson regression quantified the residual inter-PCT procedure rate variability. We benchmarked local procedure rates in two PCTs against national rates. We conducted rapid systematic reviews of two high-use procedures selected by the PCTs [carpal tunnel release (CTR) and laser capsulotomy], searching bibliographical databases to identify systematic reviews and randomised controlled trials (RCTs). We conducted non-participant overt observations of commissioning meetings and semistructured interviews with stakeholders about disinvestment in general and with clinicians and patients about one disinvestment case study. Transcripts were analysed thematically using constant comparison methods derived from grounded theory.

Results

There was large inter-PCT variability in procedure rates for many common NHS procedures. Variation in procedure rates was highest where the diffusion or discontinuance was rapidly evolving and where substitute procedures were available, suggesting that variation is a proxy for clinical uncertainty about appropriate use. In both PCTs we identified procedures where high local use might represent an opportunity for disinvestment. However, there were barriers to achieving disinvestment in both procedure case studies. RCTs comparing CTR with conservative care indicated that surgery was clinically effective and cost-effective on average but provided limited evidence on patient subgroups to inform commissioning criteria and achieve savings. We found no RCTs of laser capsulotomy. The apparently high rate of capsulotomy was probably due to the coding inaccuracy; some savings might be achieved by greater use of outpatient procedures. Commissioning meetings were dominated by new funding requests. Benchmarking did not appear to be routinely carried out because of capacity issues and concerns about data reliability. Perceived barriers to disinvestment included lack of collaboration, central support and tools for disinvestment. Clinicians felt threshold criteria had little impact on their practice and that prior approval systems would not be cost-effective. Most patients were unaware of rationing.

Conclusions

Policy-makers could use geographical variation as a starting point to identify procedures where health technology reassessment or RCTs might be needed to inform policy. Commissioners can use benchmarking to identify procedures with high local use, possibly indicating overtreatment. However, coding inconsistency and limited evidence are major barriers to achieving disinvestment through benchmarking. Increased central support for commissioners to tackle disinvestment is needed, including tools, accurate data and relevant evidence. Early engagement with patients and clinicians is essential for successful local disinvestment.

Funding

The National Institute for Health Research Health Services and Delivery Research programme.

Can the real opportunity cost stand up: displaced services, the straw man outside the room

In current literature, displaced services have been suggested to provide a basis for determining a threshold value for the effects of a new technology as part of a reimbursement process when budgets are fixed. We critically examine the conditions under which displaced services would represent an economically meaningful threshold value. We first show that if we assume that the least cost-effective services are displaced to finance a new technology, then the incremental cost-effectiveness ratio (ICER) of the displaced services (d) only coincides with that related to the opportunity cost of adopting that new technology, the ICER of the most cost-effective service in expansion (n), under highly restrictive conditions-namely, complete allocative efficiency in existing provision of health care interventions. More generally, reimbursement of new technology with a fixed budget comprises two actions; adoption and financing through displacement and the effect of reimbursement is the net effect of these two actions. In order for the reimbursement process to be a pathway to allocative efficiency within a fixed budget, the net effect of the strategy of reimbursement is compared with the most cost-effective alternative strategy for reimbursement: optimal reallocation, the health gain maximizing expansion of existing services financed by the health loss minimizing contraction. The shadow price of the health effects of a new technology, βc = (1/n + 1/d - 1/m)(-1), accounts for both imperfect displacement (the ICER of the displaced service, d < m, the ICER of the least cost-effective of the existing services in contraction) and the allocative inefficiency (n < m) characteristic of health systems.

Case studies that illustrate disinvestment and resource allocation decision-making processes in health care: a systematic review

OBJECTIVE

Technological change accounts for approximately 25 percent of health expenditure growth. To date, limited research has been published on case studies of disinvestment and resource allocation decision making in clinical practice. Our research objective is to systematically review and catalogue the application of frameworks and tools for disinvestment and resource allocation decision making in health care.

METHODS

An electronic literature search was executed for studies on disinvestment, obsolete and ineffective technologies, and priority healthcare setting, published from January 1990 until January 2012. Databases searched were MEDLINE, MEDLINE In-Process and Other Non-Indexed Citations, Embase, The Cochrane Library, PubMed, and HEED.

RESULTS

Fourteen case studies on the application of frameworks and tools for disinvestment and resource allocation decisions were included. Most studies described the application of program budgeting and marginal analysis (PBMA), and two reports used health technology assessment (HTA) methods for coverage decisions in a national fee-for-service structure. Numerous healthcare technologies and services were covered across the studies. We describe the multiple criteria considered for decision making, and the strengths and limitations of these frameworks and tools are highlighted.

CONCLUSIONS

Disinvestment and resource allocation decisions require evidence to ensure their transparency and objectivity. PBMA was used to assess resource allocation of health services and technologies in a fixed budget jurisdiction, while HTA reviews focused on specific technologies, principally in fee-for-service structures. Future research can review the data requirements and explore opportunities to increase the quantity of available evidence for disinvestment and resource allocation decisions.

Evaluating 'success' in programme budgeting and marginal analysis: a literature review

OBJECTIVES

Programme budgeting and marginal analysis (PBMA) is a priority-setting toolkit which aims to assist decision-makers in identifying the most efficient use of resources. The last systematic literature review on PBMA was published in 2001 and evaluated success in applying PBMA using the criteria of 'reallocation of resources' or the 'setting of priorities'. Our objective was to re-evaluate applications of PBMA in terms of these criteria separately, summarize different evaluation methods of PBMA and extend the above review by considering all PBMA applications since 2001.

METHODS

Systematic literature review. Information was sought from four general medical electronic databases. Descriptive statistics and content analysis were used.

RESULTS

PBMA was successful in 52% of cases when success was defined in terms of the participants gaining a better understanding of the area under interest; in 65% of cases when success was defined as 'implementation of all or some of the advisory panel's recommendations'; in 48% of the studies when success was defined in terms of disinvesting or resource reallocation; and in 22% when success was defined in terms of adopting the framework for future use.

CONCLUSIONS

The rate of success is clearly influenced by how success is defined. There is a need for a broadly accepted definition of success to be used when evaluating PBMA applications so to enable direct comparisons of studies. This evaluatory component needs to be adjacent to PBMA and not a separate procedure.

Priority setting in healthcare: towards guidelines for the program budgeting and marginal analysis framework

Economists' approaches to priority setting focus on the principles of opportunity cost, marginal analysis and choice under scarcity. These approaches are based on the premise that it is possible to design a rational priority setting system that will produce legitimate changes in resource allocation. However, beyond issuing guidance at the national level, economic approaches to priority setting have had only a moderate impact in practice. In particular, local health service organizations - such as health authorities, health maintenance organizations, hospitals and healthcare trusts - have had difficulty implementing evidence from economic appraisals. Yet, in the context of making decisions between competing claims on scarce health service resources, economic tools and thinking have much to offer. The purpose of this article is to describe and discuss ten evidence-based guidelines for the successful design and implementation of a program budgeting and marginal analysis (PBMA) priority setting exercise. PBMA is a framework that explicitly recognizes the need to balance pragmatic and ethical considerations with economic rationality when making resource allocation decisions. While the ten guidelines are drawn from the PBMA framework, they may be generalized across a range of economic approaches to priority setting.

Evaluation of the impact of program budgeting and marginal analysis in Vancouver Island Health Authority

OBJECTIVE

The objective of this research was to provide further insights into the ability of Program Budgeting and Marginal Analysis (PBMA) to help health care decision-makers in deciding where to allocate scarce resources so as to best meet their organizational objectives.

METHODS

We report on a case study of PBMA implementation. The main source of information was two sets of semi-structured evaluation interviews conducted with senior decision-makers after each of the first two years of PBMA implementation in Vancouver Island Health Authority (VIHA), Canada. These interviews were analysed thematically, with initial coding based upon themes that had been identified in the previous stage of the research.

RESULTS

Many of the initial problems with PBMA implementation resolved themselves over time as participants became more familiar with the process. However, some problems needed to be addressed explicitly through changes in procedures. Establishing procedures for handling 'must-dos' (i.e. spending priorities, that are externally mandated) did not replace the need to define explicitly the extent of the organization's discretionary spending authority.

CONCLUSION

Faced with claims that typically outstrip available resources, health care decision-makers need a process to guide allocation decisions. PBMA has demonstrated at VIHA an ability to handle some of the key issues associated with this challenge. Our analysis has produced lessons that should facilitate future implementation but has also shown that resource allocation criteria selection and the extent of executive discretion are likely to be ongoing challenges.

Identifying research priorities for health care priority setting: a collaborative effort between managers and researchers

Background

To date there has been relatively little published about how research priorities are set, and even less about methods by which decision-makers can be engaged in defining a relevant and appropriate research agenda. We report on a recent effort in British Columbia to have researchers and decision-makers jointly establish an agenda for future research into questions of resource allocation.

Methods

The researchers enlisted decision-maker partners from each of British Columbia's six health authorities. Three forums were held, at which researchers and decision-makers from various levels in the health authorities considered possible research areas related to three key focus areas: (1) generation and use of decision criteria and measurement of 'benefit' against such criteria; (2) identification of so-called 'disinvestment' opportunities; and (3) evaluation of the effectiveness of priority setting procedures. Detailed notes were taken from each forum and synthesized into a set of qualitative themes.

Results

Forum participants suggested that future research into healthcare priority setting would benefit from studies that were longitudinal, comparative, and/or interdisciplinary. As well, participants identified two broad theme areas in which specific research projects were deemed desirable. First, future research might usefully consider how formal priority setting and resource allocation projects are situated within a larger organizational and political context. Second, additional research efforts should be devoted to better understanding and improving the actual implementation of priority setting frameworks, particularly with respect to issues of change management and the resolution of impediments to action on recommendations for resource allocation.

Conclusion

We were able to validate the importance of initial areas posed to the group and observed emergence of additional concerns and directions of critical importance to these decision-makers at this time. It is likely that the results are broadly applicable to other healthcare contexts. The implementation of this research agenda in British Columbia will depend upon the ability of the researchers and decision-makers to develop particular projects that fit within the constraints of existing funding opportunities. The process of engagement itself had benefits in terms of connecting decision-makers with their peers and sparking increased interest in the use and refinement of priority setting frameworks.

Resource allocation in orthopaedics: economic evaluation to priority setting

In 2000 the World Health Organization launched the "Bone and Joint Decade" campaign in part to promote cost-effective treatments. This will impact the organization, delivery, and funding of health care as the population ages. However, it is well recognized that resources in health care are limited and it is essential the resources available are used to best effect. Thus, there has been greater emphasis in the orthopaedic literature on the use of economics. Still, there is little discussion of whether and how the results of these economic methods can be further used to aid resource allocation decisions. We discuss the suitability of economic methods for priority setting in orthopaedic surgery, arguing economic evaluation alone is not sufficient for addressing resource allocation decisions. We also describe an alternative approach to priority setting that has been steadily gaining prominence within health economics--program budgeting and marginal analysis--and use a working example from the United Kingdom National Health Service to illustrate its application within orthopaedic surgery.

Programme budgeting and marginal analysis: bridging the divide between doctors and managers

Recent NHS reforms give doctors increased responsibility for efficient and fair use of resources. Programme budgeting and marginal analysis is one way to ensure the views of all stakeholders are properly represented

Health care priority setting: principles, practice and challenges

BACKGROUND: Health organizations the world over are required to set priorities and allocate resources within the constraint of limited funding. However, decision makers may not be well equipped to make explicit rationing decisions and as such often rely on historical or political resource allocation processes. One economic approach to priority setting which has gained momentum in practice over the last three decades is program budgeting and marginal analysis (PBMA). METHODS: This paper presents a detailed step by step guide for carrying out a priority setting process based on the PBMA framework. This guide is based on the authors' experience in using this approach primarily in the UK and Canada, but as well draws on a growing literature of PBMA studies in various countries. RESULTS: At the core of the PBMA approach is an advisory panel charged with making recommendations for resource re-allocation. The process can be supported by a range of 'hard' and 'soft' evidence, and requires that decision making criteria are defined and weighted in an explicit manner. Evaluating the process of PBMA using an ethical framework, and noting important challenges to such activity including that of organizational behavior, are shown to be important aspects of developing a comprehensive approach to priority setting in health care. CONCLUSION: Although not without challenges, international experience with PBMA over the last three decades would indicate that this approach has the potential to make substantial improvement on commonly relied upon historical and political decision making processes. In setting out a step by step guide for PBMA, as is done in this paper, implementation by decision makers should be facilitated.

Priority Setting in a Canadian Long-Term Care Setting: A Case Study Using Program Budgeting and Marginal Analysis

Canadian health regions are required to set priorities and allocate resources within a limited funding envelope. Program budgeting and marginal analysis (PBMA) was piloted in continuing care in Claresholm, Alberta, with the aim of improving overall benefit from available resources. A marginal-analysis expert panel was used to assess options for continuing-care delivery. Inputs into the decision-making process included evidence from the literature, regional and provincial reports, program budgeting information, and local knowledge. Recommendations included implementing adult, day-and-night support programs and converting long-term beds to convalescent beds. Changes were funded through allocating provincial Broda funding and altering nursing assistant and physiotherapy activity. PBMA was demonstrated to be an effective framework in aiding decision makers with redesigning services in Claresholm. This case study is one of several which indicate PBMA to be a valuable aid to priority setting in health care service provision.

Setting priorities in Canadian regional health authorities: a survey of key decision makers

INTRODUCTION

The aims of this study were, within three Canadian health regions, to identify existing resource management techniques, to elicit ways in which the current process of setting priorities could be improved and to determine if an economic framework, used internationally, would have merit in Canada.

METHODS

Structured, face-to-face interviews were conducted with 62 of 73 key decision makers. This sample included all senior executives and medical directors involved in setting priorities. Descriptive statistics and content analysis were utilised.

RESULTS

Key decision makers reported that a clear process of setting priorities does not exist. Allocation of resources generally occurs on the basis of historical trends; only 22% of participants stated that the process works well. Respondents were critical of the lack of transparency and a lack of meaningful inclusion of physicians in the priority setting process. Overall, 92% of respondents indicated that program budgeting and marginal analysis (PBMA) would be an appropriate and useful priority setting framework.

CONCLUSIONS

Given the political and historical influence in the process of priority setting and resource allocation, an evidence-based approach, like PBMA which explicitly attempts to identify ways of maximising health benefit within a limited budget, should have merit in the new regional structure in Canada.

The costs of caring for stroke patients in a GP-led community hospital: an application of programme budgeting and marginal analysis

There has been little evaluation of the role of community hospitals in the provision of integrated health care services in a primary care-led health system. The aim of this study was to model the probable changes in the use of NHS resources from the introduction of integrated stroke care in a general pracititioner-led community hospital. A programme budgeting and marginal analysis (PBMA) exercise was conducted combining practice data for the 'before' period and data from the literature to model the 'after' period. Data were collected from all patients discharged with a primary diagnosis of stroke 1994-96 in Nairn and Ardersier Total Fundholding pilot site, Highland Health Board, Scotland. Under several assumptions, a policy of early discharge of patients to the community hospital, and/or avoiding admission at the acute trust and admitting patients to the community hospital directly (except emergencies), is likely to result in a reduction of the total annual costs of treating stroke patients, from 183,000 pounds per annum to, at most, 74,000 pounds. The analysis of routine discharge data since integrated stroke care was set up has shown that progress has been made in shifting the treatment of patients from the acute trust to the community hospital. The care of stroke patients in a GP-led community hospital is likely to reduce the use of scarce health service resources. Current evidence suggests that health outcomes are unchanged due to early discharge, but further research is required to ensure that patients' health status and quality of life are maintained before such a policy is widely adopted.

Program budgeting and marginal analysis: a priority-setting framework for Canadian Regional Health Authorities

Health regions in Canada are responsible for meeting the needs of local populations with limited resources. However, relatively little attention has been given to this within-region resource allocation problem. An economic approach to needs assessment, namely program budgeting and marginal analysis, may be of benefit. Its potential for use in Canada is examined, in particular with examples from two Alberta health regions, the Calgary Regional Health Authority and the Chinook Health Region.