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

Abstract

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.

Keywords::

• health economics
• marginal analysis
• priority setting
• program budgeting

Acknowledgements

The authors would like to thank Bonnie McCoy and Madeleine Murtagh for their comments on earlier drafts of this paper.

Financial & competing interests disclosure

Stuart Peacock and Craig Mitton are Michael Smith Foundation for Health Research Scholars. Cam Donaldson holds the Health Foundation Chair in Health Economics. Research was undertaken while Stuart Peacock was a visiting health economist at Newcastle University funded by the Health Foundation and at the BC Cancer Agency funded by Canadian Institutes of Health Research Grant No. 162964. The views expressed in this paper are those of the authors, not the funding agencies. The authors have no other relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript apart from those disclosed.

No writing assistance was utilized in the production of this manuscript.