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

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  • Craig Mitton
  • Francois Dionne
  • Cam Donaldson

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. Copyright The Author(s) 2014

Suggested Citation

  • Craig Mitton & Francois Dionne & Cam Donaldson, 2014. "Managing Healthcare Budgets in Times of Austerity: The Role of Program Budgeting and Marginal Analysis," Applied Health Economics and Health Policy, Springer, vol. 12(2), pages 95-102, April.
  • Handle: RePEc:spr:aphecp:v:12:y:2014:i:2:p:95-102
    DOI: 10.1007/s40258-013-0074-5
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    References listed on IDEAS

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    1. Tim Callan & Brian Nolan & John Walsh, 2011. "The Economic Crisis, Public Sector Pay and the Income Distribution," Research in Labor Economics, in: Who Loses in the Downturn? Economic Crisis, Employment and Income Distribution, pages 207-225, Emerald Group Publishing Limited.
    2. Daniels, Norman & Sabin, James E., 2002. "Setting Limits Fairly: Can we learn to share medical resources?," OUP Catalogue, Oxford University Press, number 9780195149364.
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    Cited by:

    1. Virginia Wiseman & Craig Mitton & Mary M. Doyle‐Waters & Tom Drake & Lesong Conteh & Anthony T. Newall & Obinna Onwujekwe & Stephen Jan, 2016. "Using Economic Evidence to Set Healthcare Priorities in Low‐Income and Lower‐Middle‐Income Countries: A Systematic Review of Methodological Frameworks," Health Economics, John Wiley & Sons, Ltd., vol. 25(S1), pages 140-161, February.
    2. Jonathan Karnon & Andrew Partington, 2015. "Cost-Value Analysis and the SAVE: A Work in Progress, But an Option for Localised Decision Making?," PharmacoEconomics, Springer, vol. 33(12), pages 1281-1288, December.
    3. Angell, Blake & Pares, Jennie & Mooney, Gavin, 2016. "Implementing priority setting frameworks: Insights from leading researchers," Health Policy, Elsevier, vol. 120(12), pages 1389-1394.
    4. Craig Mitton & Brayan V. Seixas & Stuart Peacock & Michael Burgess & Stirling Bryan, 2019. "Health Technology Assessment as Part of a Broader Process for Priority Setting and Resource Allocation," Applied Health Economics and Health Policy, Springer, vol. 17(5), pages 573-576, October.
    5. MacNeil, Maggie & Koch, Melissa & Kuspinar, Ayse & Juzwishin, Don & Lehoux, Pascale & Stolee, Paul, 2019. "Enabling health technology innovation in Canada: Barriers and facilitators in policy and regulatory processes," Health Policy, Elsevier, vol. 123(2), pages 203-214.
    6. Heenan, Maddie & Jan, Stephen & Ralph, Martyn & Sacks, Gary & Swinburn, Boyd & Shanthosh, Janani, 2023. "Priority setting for non-communicable disease prevention – Co-producing a regulatory agenda informing novel codes of practice in Australia," Social Science & Medicine, Elsevier, vol. 333(C).
    7. David Naranjo-Gil & María Jesús Sánchez-Expósito & Laura Gómez-Ruiz, 2016. "Traditional vs. Contemporary Management Control Practices for Developing Public Health Policies," IJERPH, MDPI, vol. 13(7), pages 1-13, July.
    8. Hill, Sarah R. & Vale, Luke & Hunter, David & Henderson, Emily & Oluboyede, Yemi, 2017. "Economic evaluations of alcohol prevention interventions: Is the evidence sufficient? A review of methodological challenges," Health Policy, Elsevier, vol. 121(12), pages 1249-1262.

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