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. Craig R. Mitton Center for Health and Policy Studies, University of Calgary, 3330 Hospital Dr.N.W., Calgary, Alberta T2N4N1,Canada, e-mail: crmitton@ucalgary.ca     

Ethics and economics: does programme budgeting and marginal analysis contribute to fair priority setting?

OBJECTIVE: Limited resources mean that decision-makers must set priorities among competing opportunities. Programme budgeting and marginal analysis (PBMA) is an economic approach that focuses on optimizing benefits with available resources. Accountability for reasonableness (A4R) is an ethics approach that focuses on ensuring fair priority-setting processes. PBMA and A4R have been used separately to provide decision-makers with advice about how to set priorities within limited resources. The goals of this research were to use the A4R framework to evaluate the fairness of using PBMA for priority setting and to assess how A4R might make PBMA fairer. METHODS: Qualitative case studies to describe priority setting using PBMA in the Calgary Health Region (Alberta, Canada) evaluated using A4R as a conceptual framework. RESULTS: The use of PBMA for priority setting was fairer than previous priority setting because of its emphasis on explicit rational decision-making. However, there were opportunities to improve the process, particularly by collecting data related to the decision criteria, by developing a communication plan to engage internal and external stakeholders about priority-setting, and by providing a formal mechanism to review priority-setting decisions and resolve disputes. CONCLUSIONS: There is potential for combining A4R and PBMA in a more comprehensive approach to priority setting, which uses a fair priority-setting process to reach decisions aimed at achieving optimal benefits with available resources.     

Communitarian claims and community capabilities: furthering priority setting?

Priority setting in health care is generally not done well. This paper draws on ideas from Amartya Sen and Martha Nussbaum and adds some communitarian underpinnings to provide a way of improving on current uses of program budgeting and marginal analysis (PBMA) in priority setting. The paper suggests that shifting to a communitarian base for priority setting alters the distribution of property rights over health service decision making and increases the probability that recommendations from PBMA exercises will be implemented. The approach is built on a paradigm which departs from three tenets of welfarism as it is normally conceived: (i) individuals qua individuals seek to maximise their individual utility/well-being; (ii) individuals want to do this; and (iii) it is the values of individuals qua individuals that count. Some of the problems of PBMA, as it has been applied to date, are highlighted. It is argued that these are due largely to a lack of 'credible commitment'. Bringing in the community and communitarian values to PBMA priority setting exercises can help to overcome some of the barriers to getting PBMA recommendations implemented. The approach has the merit of reflecting Sen's concept of capabilities (but extending that to a community level). It avoids the often consequentialist base of a conventional welfarist framework, and it allows community values as opposed to individual values to come to the fore. How to elicit communitarian values is explored.     

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

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.     

Accounting for the increase in NSAID expenditure: substitution or leakage?

Priority setting of health interventions is often ad-hoc and resources are not used to an optimal extent. Underlying problem is that multiple criteria play a role and decisions are complex. Interventions may be chosen to maximize general population health, to reduce health inequalities of disadvantaged or vulnerable groups, ad/or to respond to life-threatening situations, all with respect to practical and budgetary constraints. This is the type of problem that policy makers are typically bad at solving rationally, unaided. They tend to use heuristic or intuitive approaches to simplify complexity, and in the process, important information is ignored. Next, policy makers may select interventions for only political motives. This indicates the need for rational and transparent approaches to priority setting. Over the past decades, a number of approaches have been developed, including evidence-based medicine, burden of disease analyses, cost-effectiveness analyses, and equity analyses. However, these approaches concentrate on single criteria only, whereas in reality, policy makers need to make choices taking into account multiple criteria simultaneously. Moreover, they do not cover all criteria that are relevant to policy makers. Therefore, the development of a multi-criteria approach to priority setting is necessary, and this has indeed recently been identified as one of the most important issues in health system research. In other scientific disciplines, multi-criteria decision analysis is well developed, has gained widespread acceptance and is routinely used. This paper presents the main principles of multi-criteria decision analysis. There are only a very few applications to guide resource allocation decisions in health. We call for a shift away from present priority setting tools in health – that tend to focus on single criteria – towards transparent and systematic approaches that take into account all relevant criteria simultaneously.     

Overcoming barriers to priority setting using interdisciplinary methods

Ten years ago, Holm's highly influential paper “Goodbye to the simple solutions: the second phase of priority setting” was published [Holm S. Goodbye to the simple solutions: the second phase of priority setting in health care. British Medical Journal 1998;317:1000–7]. Whilst attending the 2nd International Conference on Priorities in Health Care in London, Holm argued that the search for a rational set of decision-making rules was no longer adequate. Instead, the priority setting process itself was now thought to be more complex. Ten years later, the Conference returns to the UK for the first time, and it is timely to describe some new tools intended to assist both researchers and decision-makers seeking to develop both rational and fair and legitimate priority setting processes. In this paper we argue that to do so, researchers and decision-makers need to adopt an interdisciplinary and collaborative approach to priority setting. We focus on program budgeting and marginal analysis (PBMA) and bring together three hitherto separate interdisciplinary strands of the PBMA literature. Our aim is to assist researchers and decision-makers seeking to effectively develop and implement PBMA in practice. Specifically, we focus on the use of multi-criteria decision analysis, participatory action research, and accountability for reasonableness, drawn from the disciplines of decision analysis, sociology, and ethics respectively.     

A Strategy to Improve Priority Setting in Developing Countries

Because the demand for health services outstrips the available resources, priority setting is one of the most difficult issues faced by health policy makers, particularly those in developing countries. Priority setting in developing countries is fraught with uncertainty due to lack of credible information, weak priority setting institutions, and unclear priority setting processes. Efforts to improve priority setting in these contexts have focused on providing information and tools. In this paper we argue that priority setting is a value laden and political process, and although important, the available information and tools are not sufficient to address the priority setting challenges in developing countries. Additional complementary efforts are required. Hence, a strategy to improve priority setting in developing countries should also include: (i) capturing current priority setting practices, (ii) improving the legitimacy and capacity of institutions that set priorities, and (iii) developing fair priority setting processes.     

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.     

Fairness and accountability for reasonableness. Do the views of priority setting decision makers differ across health systems and levels of decision making?

Accountability for reasonableness is an ethical framework for fair priority setting process. This framework has been used to evaluate fairness in several contexts, and a few studies have evaluated its acceptability to decision makers. However, no studies have compared the acceptability of the four conditions of the framework to decision makers across health systems and levels of priority setting. This paper reports the elements of fairness described by 184 decision makers involved in priority setting at the macro-, meso- and micro-levels of priority setting in the Canadian (Ontario), Norwegian and Ugandan health care systems and compares them against the four conditions of ‘Accountability for Reasonableness’ and across levels of decision making, and health care systems.     

From the trenches: views from decision-makers on health services priority setting.

Due to resource scarcity, health organizations worldwide must decide what services to fund and, conversely, what services not to fund. One approach to priority setting, which has been widely used in Britain, Australia, New Zealand and Canada, is programme budgeting and marginal analysis (PBMA). To date, such activity has primarily been based at a micro level, within programmes of care. In order to institute and refine the PBMA framework at a macro level across major service areas within a single health authority, researchers and decision-makers in Alberta embarked on a participatory action research project together. This paper identifies key issues of importance to decision-makers in a real-world priority-setting context. Themes discussed include making comparisons across disparate patient groups, dealing with political factors, using relevant forms of evidence, recognizing innovations and involving the public. The in-depth insight gained through this qualitative analysis will enable future refinement of PBMA at a macro level in the health authority under study, and should also serve to inform priority-setting activity in regionalized contexts elsewhere. In identifying aspects of priority setting that are important to decision-makers, researchers can also be better informed with respect to real-world processes.     

Clarifying Efficiency-Equity Tradeoffs Through Explicit Criteria,With a Focus on Developing Countries

Expenditures on health in many developing countries are being disproportionately spent on health services that have a low overall health impact, and that disproportionately benefit the rich. Without explicit consideration of priority setting, this situation is likely to remain unchanged: resource allocation is too often dictated by historical patterns, and maintains vested interests. This paper explores how prioritization between different health interventions can be rationalised by the use of clearly defined criteria. A number of key efficiency and equity criteria are examined, in particular analysing how potential tradeoffs could be incorporated into the decision making process.     

Priority setting in practice: what is the best way to compare costs and benefits?

Prioritizing candidates for health-care expenditure using cost per Quality-Adjusted Life Year (QALY) is a helpful but insufficient means of ranking alternative uses for scarce health-care funds at the local level. This is because QALYs do not by themselves capture all criteria decision makers need to take into account. Other criteria such as reducing inequalities, meeting national and local priorities and public acceptability also feature in the decision maker's utility function. Programme budgeting and marginal analysis (PBMA) is an established framework for systematic priority setting in which a 'weighted benefit score' for each option is calculated based on all relevant decision-making criteria. Ranking options as a ratio of cost to benefit is desirable and necessary to ensure efficiency. In this paper we review a number of approaches to scoring costs and benefits of options in a PBMA context. Several approaches rank by benefit score alone, rather than efficiency (cost per unit of benefit). Of those that do rank by efficiency, we discuss the benefits and drawbacks. The optimal approach is far from clear, with each technique having its own strengths and weaknesses. A deliberative approach using summaries of costs and benefits of options as a basis for discussion may be preferable.     

Tools of the trade: a comparative analysis of approaches to priority setting in healthcare.

In many countries, local managers and clinicians have been given responsibility to set health priorities and allocate resources accordingly. Although tools have been suggested for use in aiding this process, knowledge of these tools within health regions is lacking and comparative analysis in the literature is limited. Several approaches to priority setting are critiqued from both practical and theoretical perspectives, and a tangible way forward for such activity is provided. The approaches analysed include: needs assessment, core services, economic evaluation including quality-adjusted life year league tables, and programme budgeting and marginal analysis (PBMA). Needs assessment fails to recognize underlying economic principles of opportunity cost and the margin, while core services ignores the margin and has had limited impact in practice. Economic evaluations can consider marginal costs and benefits, but cannot always be used to inform decisions in a timely manner. PBMA is based on underlying economic principles and can pragmatically respond to objectives related to both efficiency and equity. Although PBMA is not without challenges, from an economic perspective, it does seem to "get the thinking right", and, importantly, as a process, can incorporate some of the other approaches to priority setting discussed in this paper.     

Priority setting in the provincial health services authority: survey of key decision makers

Background  

In recent years, decision makers in Canada and elsewhere have expressed a desire for more explicit, evidence-based approaches to priority setting. To achieve this aim within health care organizations, knowledge of both the organizational context and stakeholder attitudes towards priority setting are required. The current work adds to a limited yet growing body of international literature describing priority setting practices in health organizations.     

SUPPORT Tools for evidence-informed health Policymaking (STP) 3: Setting priorities for supporting evidence-informed policymaking

This article is part of a series written for people responsible for making decisions about health policies and programmes and for those who support these decision makers. Policymakers have limited resources for developing – or supporting the development of – evidence-informed policies and programmes. These required resources include staff time, staff infrastructural needs (such as access to a librarian or journal article purchasing), and ongoing professional development. They may therefore prefer instead to contract out such work to independent units with more suitably skilled staff and appropriate infrastructure. However, policymakers may only have limited financial resources to do so. Regardless of whether the support for evidence-informed policymaking is provided in-house or contracted out, or whether it is centralised or decentralised, resources always need to be used wisely in order to maximise their impact. Examples of undesirable practices in a priority-setting approach include timelines to support evidence-informed policymaking being negotiated on a case-by-case basis (instead of having clear norms about the level of support that can be provided for each timeline), implicit (rather than explicit) criteria for setting priorities, ad hoc (rather than systematic and explicit) priority-setting process, and the absence of both a communications plan and a monitoring and evaluation plan. In this article, we suggest questions that can guide those setting priorities for finding and using research evidence to support evidence-informed policymaking. These are: 1. Does the approach to prioritisation make clear the timelines that have been set for addressing high-priority issues in different ways? 2. Does the approach incorporate explicit criteria for determining priorities? 3. Does the approach incorporate an explicit process for determining priorities? 4. Does the approach incorporate a communications strategy and a monitoring and evaluation plan?