Programme Budgeting And Marginal Analysis Research Articles

Setting priorities and allocating resources in health regions: lessons from a project evaluating program budgeting and marginal analysis (PBMA)

Background: Program budgeting and marginal analysis (PBMA) is a framework for setting priorities in health care, used internationally over the last 25 years in Britain, Australia and New Zealand. However, the framework has undergone limited evaluation, and insight into how such evaluation should even take place is not found in the literature. Methods: Seven PBMA case studies were conducted in three Canadian health regions to examine the feasibility of applying the PBMA framework. Structured follow-up surveys with the users of the framework were carried out following the priority setting exercises. Results: The PBMA framework was feasibly implemented in three regionalized contexts and was generally viewed favorably by managers and clinicians who participated in the case studies. Numerous methodological lessons were learned and it was found that successful implementation hinges on organizational context. An empirically derived model describing PBMA is outlined and put forth as an evaluation framework for future exercises. Conclusions: Comparisons to the health care management literature indicate that the derived PBMA model is a novel addition to this broader literature. Overall, managers in health organizations internationally would be well-served to consider PBMA to aid regional decision-making processes, but should do so with explicit consideration of the context in which such activity is to occur.

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

ABSTRACTCanadian 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.

Budget auditing: a process to assist planning for health promotion services

Issues addressed: Using the concepts of program budgeting and marginal analysis (PBMA), the South Eastern Sydney Health Promotion Service conducted a budget audit to inform future planning. PBMA is an economic tool that examines relationships between services, costs, outputs and outcomes for health. Method: The goals, objectives and process and intermediate outcomes of program areas were summarised. Staff time spent on different activities was estimated, and goods and services budgets calculated. Staff suggested changes to programs and operations, given a 5% and 33% increase, and 5% and 33% decrease in funding. To assist informed decision making, information on good practice, local data and other relevant material was provided. Results were collated, themes identified and discussed and recommendations for change made. Results: Program budgets accounted for 61% of total funds; the remainder was spent on specialist support, administration and operational costs. Three programs (nutrition, physical activity and capacity building) each received more than 20% of the program funding, and four (tobacco, sun, falls and schools) each received less than 10%. Projects within the health service, school and child care settings received the most resources; initiatives for Aboriginal people received the least. Conclusions: The process led to changes in program funding (increased resources to tobacco and Aboriginal health at the expense of sun protection and capacity building) and informed the new health promotion strategic plan. (author abstract)

Priority setting for decision makers: using health economics in practice

Based on the premise of resource scarcity in health care,numerous approaches to priority setting have been proposed. However, limited comparative analysis is found in the literature, and decision makers lack knowledge of available tools. Several approaches to priority setting are critiqued here from both practical and theoretical perspectives, including needs assessment, cost-of-illness studies, core services, economic evaluation and quality-adjusted life-year league tables, and program budgeting and marginal analysis (PBMA). Most explicit priority setting approaches fail to recognize the underlying economic principles of opportunity cost and the margin, leading in part to their lack of widespread use in practice and to the perpetuation of historical allocation patterns. PBMA is based on underlying economic principles and has been widely used in practice. While there are many approaches to priority setting, even so-called "economic" techniques often fail to recognize fundamental economic principles, leaving decision makers unable to meet key objectives. Greater focus on these principles will aid in priority setting in practice.

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.

Twenty-five years of programme budgeting and marginal analysis in the health sector, 1974-1999.

Programme budgeting and marginal analysis (PBMA) is a priority setting framework that has been used over the last 25 years in the health sector. To date, no formal evaluation of this framework has been conducted. The aims of this study were to categorize previous PBMA exercises systematically and determine the impact of PBMA in regional health authorities (RHAs) internationally. Thirty authors of grey literature and published papers on PBMA, and an additional six economists with research interests in PBMA, were surveyed with a mailed questionnaire. Previous exercises were categorized and details of the short- and long-term impacts of the framework were obtained. Descriptive statistics and content analysis were used. The PBMA framework was identified as having been used 78 times in 59 RHAs. For the exercises where longer-term impact was known, the approach was viewed as having had a positive impact, as defined by the setting of priorities or shifting of resources, in 59% of cases and continued to be used in at least 52% of the RHAs. The primary reasons why PBMA was discontinued included personnel changes and lack of internal 'champions'. Contrary to popular perception, there has been widespread diffusion of PBMA in RHAs internationally and, overall, the impact of this approach has been positive. Although there is general agreement on the validity of the economic principles underlying PBMA, addressing managerial issues would seem to be central to successful implementation in a given region.

Programme approach to managing informed commissioning.

The objective of this paper is to examine possible organizational reasons for why UK NHS commissioners have not adopted programme budgeting and marginal analysis (PBMA). This is despite increasing evidence of discontent with current commissioning and priority-setting processes, increasing research evidence demonstrating the potential of PBMA and support for the principles of PBMA. Two separate semistructured surveys of the views of commissioning decision-makers on the use of PBMA were carried out at Grampian Health Board and Newcastle & North Tyneside Health Authority. Twenty-nine decision-makers were interviewed. Both surveys found common barriers to implementation of PBMA, described by respondents as 'institutional inertia'. These were the reactive rather than proactive environment; the fear of 'unnecessary' explicitness; an aversion to unilateral innovation in the current NHS environment; and the demand for concrete evaluation evidence. It is concluded that these qualitative surveys have small samples and cannot claim to be representative. It may be significant that many issues were common to both surveys carried out separately in organizations. It is unlikely that NHS commissioning will independently adopt techniques such as PBMA, given the current commissioning environment and organizational structures. Implementation strategies and future research on such commissioning innovations may need to focus on institutions as well as the interventions.

Programme approach to managing informed commissioning

The objective of this paper is to examine possible organizational reasons for why UK NHS commissioners have not adopted programme budgeting and marginal analysis (PBMA). This is despite increasing evidence of discontent with current commissioning and priority-setting processes, increasing research evidence demonstrating the potential of PBMA and support for the principles of PBMA. Two separate semistructured surveys of the views of commissioning decision-makers on the use of PBMA were carried out at Grampian Health Board and Newcastle & North Tyneside Health Authority. Twenty-nine decision-makers were interviewed. Both surveys found common barriers to implementation of PBMA, described by respondents as 'institutional inertia'. These were the reactive rather than proactive environment; the fear of 'unnecessary' explicitness; an aversion to unilateral innovation in the current NHS environment; and the demand for concrete evaluation evidence. It is concluded that these qualitative surveys have small samples and cannot claim to be representative. It may be significant that many issues were common to both surveys carried out separately in organizations. It is unlikely that NHS commissioning will independently adopt techniques such as PBMA, given the current commissioning environment and organizational structures. Implementation strategies and future research on such commissioning innovations may need to focus on institutions as well as the interventions.

Using programme budgeting and marginal analysis to assist population based strategic planning for coronary heart disease

Objectives: the objective of this project was to use programme budgeting and marginal analysis (PBMA), to inform the planning process of the South Western Sydney Area Health Service (SWSAHS) in respect of coronary heart disease (CHD). Methods: a working party was established to carry out the project. The group set the parameters of the project and identified the programme, and associated the activity and resource use. Three sub-groups were established to undertake the marginal analysis. Results: each sub-group (representing prevention, treatment, and rehabilitation for CHD) developed a list of potential strategies and provided estimates of resource use and consequences. These were prioritised and presented as recommendations to the SWSAHS. Some recommendations required enhancement funding for the SWSAHS. Conclusions: while the use of PBMA presented some challenges, there were also some important outcomes. A comprehensive and detailed picture of resource use enabled the participants to form a view on how additional or reduced resources for CHD should be dealt with at the area level. The ultimate recommendations represent involvement by key stakeholders in the SWSAHS planning process, not just in identifying the ‘vision’ of CHD services, but also, how service delivery would be organised to achieve the overall objectives of reducing CHD morbidity and mortality.

Maximising health gain within available resources in the New Zealand public health system

Objective: to obtain intervention-condition-specific investment and disinvestment recommendations which optimise the potential for health gain from existing respiratory diseases resource expenditure; and to trial a health economics technique for this purpose, assessing its usefulness as a means of prioritising health services resource allocation. Design: a programme budgeting and marginal analysis (PBMA) exercise drawing upon the expertise of an advisory group of clinicians, managers and consumer advocates, supported by health authority staff. Setting: the Southern and Midland health regions in New Zealand which have populations of one million and seven hundred thousand respectively. Health system context: publicly funded secondary care sector in which regional health authority (RHA) purchasers contract for services with health care providers. Methods: available evidence on the marginal costs and benefits of services for respiratory diseases was examined by an advisory group who produced investment and disinvestment recommendations by consensus using agreed prioritisation criteria. Results: A list of specific investment and disinvestment proposals. Implementation plans for a number of investments formed part of the business plans for both RHAs in 1997/1998. No disinvestments were planned. Conclusions: prioritisation methods like PBMA, which are explicit and rational, can produce defensible evidence-based recommendations with the additional benefit of the credibility and support of an expert advisory group. The process encourages co-operative working and may itself have enduring benefits. However, preparation and conduct of such exercises is resource intensive and requires careful planning. This exercise has provided valuable lessons for the conduct of future prioritisation work.

A practical approach to planning health services: using PBMA.

Planning health services is a difficult and often complex task. There are many approaches to planning, including the use of tools such as needs assessment, goals and targets, as well as economics-based tools such as cost of illness or economic evaluation. It is not always clear which planning tool is the most appropriate. In this paper we compare an economics approach to planning using program budgeting and marginal analysis (PBMA) with other approaches. We provide an overview of the methods of PBMA, report on experience with its use, and draw conclusions about its likely usefulness to health services planners.

Evaluating innovation in general practice: a pragmatic framework using programme budgeting and marginal analysis.

Innovation in primary care in the UK, in terms of new service developments, is occurring at a fast pace. However, little information is available on the costs and benefits of these changes. We aimed to illustrate the use of programme budgeting and marginal analysis (PBMA) as a framework for evaluating innovation in primary care, using an example of practice-based diabetes care. The aim was to examine changes in the use of practice resources and the changes in benefits to patients, following the introduction of a diabetes clinic. PBMA is a form of pragmatic economic evaluation combining practice data for the 'before' period and data from the literature to model the 'after' period. In 1995/6, the total amount of resources devoted to diabetes care in the two practices was 145813 pound sterling (634 pound sterling per patient). Of this sum, 62% was allocated to out-patient visits, 28% to prescribing, 5% to hospital admissions, 2% to GP consultations and 2% to tests. The literature suggests that a nurse-run diabetes clinic would result in similar health outcomes and better access for patients. The introduction of such a clinic could potentially save each practice between 2000 pound sterling and 16000 pound sterling per year. This result takes into account a wide range of assumptions about changes in resource use, but does depend on the findings of previous studies. The results of this study show that PBMA is a useful framework for helping practices be accountable and make 'evidence-based' decisions about service innovations in primary care.

Program budgeting and marginal analysis in NSW

In a previous issue of the NSW Public Health Bulletin, we reported the establishment of pilot projects in the use of program budgeting and marginal analysis (PBMA) to assist resource allocation and priority setting in NSW Area health services. This paper reports the results of these pilot projects.

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

In this paper it is shown how the economics framework of programme budgeting and marginal analysis (PBMA) can be used to help formulate a purchasing strategy in health care; in this case, for child health services. The basic premise of PBMA is that to have more of some services it is necessary to have less of others. Therefore, it is important to know how resources are currently spent, what changes can be made, and what are the possible costs and benefits of such changes. Despite a lack of evidence on the effectiveness of services, PBMA provides a pragmatic purchasing framework. This framework permits consideration of national policy, local epidemiology, current spending, and the views both of parents and professionals as to how such spending can be changed.

Programme budgeting and marginal analysis: a case study of maternity services.

This paper reports on a study which applied the framework of programme budgeting and marginal analysis (PBMA) to assist in developing a strategy for purchasing maternity services within the Grampian region of Scotland. PBMA as a process involves assessing how health care resources are currently distributed within services or programmes and making recommendations, in a resource neutral environment, about possible future changes. Data on activity and the extent of service provision within maternity care were used alongside information from national policy documents to decide on the main proposals for change in service delivery. Candidates for more resources were compared with each other and with candidates for service reduction to determine whether and what changes should go ahead. This involved 'marginal analysis' of the costs and benefits of the proposed changes. The results demonstrate that modest changes in maternity services in line with government policy are achievable. Estimates of the cost of larger changes in line with policy appear to be feasible 'on paper'. However, it may not be possible to achieve the resource shifts required. This paper introduces the theoretical concept of PBMA and, in describing the study of maternity services, illustrates not only its usefulness but also practical problems in its implementation.

Programme budgeting and marginal analysis: application within programmes to assist purchasing in Greater Glasgow Health Board

Recent NHS policy statements advocate the use of ‘knowledge-based’ purchasing. This paper describes an attempt to use an economic method to inform the purchasing process. The approach of programme budgeting and marginal analysis (PBMA) offers information on current service provision and provides a framework in which changes in a service can be evaluated and agreed within the context of a fixed budget. This has been applied to gynaecology services in Greater Glasgow Health Board and, following positive reaction to the results of this exercise, is now being extended into other areas. The process of carrying out the exercise is described. Additionally, limitations of the approach and the advantages of using PBMA in achieving knowledge-based purchasing are discussed.

Economics, public health and health care purchasing: reinventing the wheel?

In this paper, a framework for using economics in health care priority setting is outlined. This framework is known as programme budgeting and marginal analysis (PBMA). Programme budgeting involves an assessment of how health care resources are currently distributed amongst programmes and within programmes. Such data can be used along with other information on local needs to decide on the main areas of change in service delivery. As resources are fixed, areas of change requiring more resources will be funded from service reductions within the same programme or within another programme. Candidates for more resources should be compared with each other and with candidates for service reduction to determine whether and what changes should go ahead. This involves ‘marginal analysis’ of costs and benefits of the candidates. In the paper, the problems with implementing this approach are outlined and the contribution of the other papers in the volume described.

Public health and economics in tandem: programme budgeting, marginal analysis and priority setting in practice

In the wake of the reforms of the UK National Health Service there has been increased interest in ‘getting it right’ with respect to priority setting in health care. This article examines the way in which programme budgeting and marginal analysis (PBMA) were introduced into North Mersey. It provides a very practical introduction to the topic and indicates the actual processes that were gone through. It is suggested that, in terms of getting participants in the PBMA exercise to think through what programmes comprise, what they cost, what they are trying to achieve and to focus on relevant possible changes, there was considerable merit in the approach. However there are problems, particularly at the level of determining the costs of different programmes.

Program budgeting and marginal analysis: A guide to resource allocation

In this paper we explain how program budgeting and marginal analysis (PBMA) can be used to assist decisions about resource allocation at a local level, leading to improvements in the health of the population. We review overseas experience with PBMA, and outline a proposed application of PBMA in NSW.