PROGRAMME BUDGETING

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PROGRAMME BUDGETING MARGINAL ANALYSIS (PBMA) Ri
chard Little Senior Research Fellow in Health
Economics Email r.little_at_hpm.keele.ac.uk Tel
01782 58 31 91
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Aim of Session

• To describe how the tool of PBMA can aid in more
  robust systematic decision making in PCT
  commissioning upon complementary and alternative
  medicine.

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Structure

• Why is PBMA useful?
• What is PBMA?
• PBMA Issues.
• Summary.

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Why is PBMA Useful? (1) A World of Choices?
Education
Health
Defence
Environment
Transport
etc.
Community care
General Practitioner Services
Hospital Services
etc.
CHD
Mental Illness
Back Pain
etc.
Drug treatment
Surgery
CAM
etc.
etc.
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Why is PBMA Useful? (2)Some Economics

• Decisions are taken upon competing demands for
  the same resources.
• The aim is to maximise the benefits from the
  available resources, doing more of option A means
  doing less of option B.
• Economists call this the opportunity cost.
• This means choices have to be made,
  prioritisation.
• Individuals, no PBMA.
• NHS, PBMA.

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Why is PBMA Useful? (3) Objectives of a Health
Care System?

• Within a system of publicly provided health care
  two main objectives predominate
• Efficiency
• maximising health benefits from the available
  resources
• Equity
• ensuring fairness in the distribution of those
  benefits

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Why is PBMA Useful? (4)

• PBMA is a tool that provides a systematic
  framework for the decision maker.
• The Marginal Analysis part of PBMA is firmly
  grounded in economic theory.

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What is PBMA? (1) Some basic steps.

• Establish perspective and define programme(s)
• Start within programmes
• Set programme objectives
• Identify current activity and spending on
  programme
• Obtain agreement on where changes could be made
• Evaluate these marginal changes
• Reallocate according to efficiency and equity
  criteria.

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What is PBMA? (2)Programme Budget (a).

• Depends upon the question?
• Identify the spend and activity by sub
  programmes.
• Whole PCT budget for different care groups,
  disease groups.
• One area of the budget e.g. the elderly, back
  pain CAM may be one of several treatment
  options.

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What is PBMA? (2)Programme Budget (b).
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What is PBMA? (2)Marginal Analysis (a)

• Costs and Benefits.
• Consider that a treatment is to be expanded into
  a fixed budget
• How much of the new treatment should be expanded?
• Which existing treatments should be reduced and
  by how much?

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What is PBMA? (2)Marginal Analysis (b)

• Marginal analysis compares the costs benefits
  that are given up, with those of the expanded
  treatment.
• Efficiency benefits gained should exceed those
  given up, resources redeployed s.t. equity.
• New (less) resources, new (withdraw) treatments.

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PBMA IssuesWhat to analyse?

• Deciding upon
• objective, programme perspective.
• Question.
• sub programmes.
• Commitment.
• Collect both costs benefits, PB is not enough,
  must complete MA.

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PBMA IssuesEstimating Costs

• What costs to measure?
• PB can be data hungry.
• Robust estimates of big cost drivers.
• Can tolerate less precise estimates for small
  cost drivers.
• Sources.
• Local estimates from budgets.
• Unit cost of Health Social Care, Personal
  Social Services Unit.
• Reference Costs, DoH.
• Drug costs, Drug Tariff, BNF.
• CAM costs?

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PBMA IssuesEstimating Benefits

• What benefits to measure?
• Health gain, maintenance.
• Process.
• Who benefits, distribution, equity.
• Sources
• Evidence Published-(HoL Report) Local
  estimates.
• Experts estimation whose values.
• Modelling uncertainty.

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Summary

• PBMA is based upon economic theory.
• Supports a systematic approach to decision
  making.
• Addresses both marginal costs and benefits.
• Would provide a framework for a PCT to determine
  how much and what types of CAMs to fit into
  existing treatments.

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References

• Mitton C and Donaldson C, (2001) Twenty five
  years of programme budgeting and marginal
  analysis in the health sector, 1974-1999, Journal
  of Health Services Research and Policy, 6 (4)
  239-248.
• Cohen D, (1994) Marginal analysis in practice
  an alternative to need assessment for contracting
  for health care, British Medical Journal, 309,
  781-785.