Angela Bate

Using economics to set pragmatic and ethical priorities

Doctors and managers have to make tough decisions about what services to provide from their budgets. Economic approaches can help, but they also need to take into account the practical and ethical challenges faced by healthcare professionals

Programme budgeting and marginal analysis: bridging the divide between doctors and managers

Recent NHS reforms give doctors increased responsibility for efficient and fair use of resources. Programme budgeting and marginal analysis is one way to ensure the views of all stakeholders are properly represented Tensions between doctors and managers and the differences between medical and managerial cultures have existed since the earliest provision of organised health care.1 In a resource allocation context, doctors are caricatured as taking the role of patient advocate while managers take the corporate, strategic view. Delivery of efficient (and in the case of the NHS, equitable) health care requires doctors to take responsibility for resources and to consider the needs of populations while managers need to become more outcome and patient centred. One economic approach, called programme budgeting and marginal analysis, has the potential to align the goals of doctors and managers and create common ground between them. We describe how the approach works and why it should be more widely used. Programme budgeting and marginal analysis is an approach to commissioning and redesign of services that can accommodate both medical and managerial cultures and the widest constituency of professional, patient, and public values within a single decision making framework. It allows for the complexities of health care while adhering to the two key economic concepts of opportunity cost and the margin. When having to make choices within limited resources, certain opportunities will be taken up while others must be forgone. The benefits associated with forgone opportunities are opportunity costs. Thus, we need to know the costs and benefits of various healthcare activities, and this is best examined at the margin—that is, the benefit gained from an extra unit of resources or benefit lost from having one unit less. If the marginal benefit per pound spent from programme A is greater than that for B, resources should …

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

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.

Implementing world class commissioning competencies.

Background The world class commissioning (WCC) programme was introduced in the English NHS in 2007 to develop primary care trust (PCT) commissioning of health services. There has been limited evaluation of health commissioning initiatives over the years and in particular little is known about how commissioners interpret and implement initiatives and guidance intended to strengthen commissioning. This research explores the development and implementation of WCC and draws implications for future commissioning arrangements. Methods This research draws on interviews with key informants (n = 6) and a literature review to analyse the aims of, and stimulus for, WCC. In-depth interviews (n = 38) were conducted in three PCTs in the north of England in 2009 to analyse the interpretation and implementation of WCC. Results The aims and rationale of WCC, in particular, the specification of commissioning skills and the aspirations to improve health outcomes, were largely welcomed and supported by interviewees. However, the implementation of WCC posed a number of challenges, including: availability of resources and knowledge; lack of a supportive organizational culture and networks; and the dominance of central government control. Conclusions The findings have implications for emerging clinical commissioning groups (CCGs) in the English NHS. Specifically, the research highlights the need for a system-wide approach to improving commissioning, including appropriately aligned policy and objectives underpinned by a co-ordinated and supportive organizational culture.

Moving forward on rationing: an economic view

Twelve years ago (BMJ 1996;312:1553-4) the BMJ argued that health systems needed to be explicit about rationing and published articles describing different ways of rationing fairly. Here a clinician (doi:10.1136/bmj.a1846), two ethicists (doi:10.1136/bmj.a1850), and four health economists discuss how their ideas have developed—and been put into practice—since then

Decentralisation Strategies and Provider Incentives in Healthcare: Evidence from the English National Health Service

IntroductionThis article examines the incentive effects of delegating operational and financial decision making from central government to local healthcare providers. It addresses the economic consequences of a contemporary policy initiative in the English National Health Service (NHS)–earned autonomy. This policy entails awarding operational autonomy to ‘front-line’ organisations that are assessed to be meeting national performance targets. In doing so, it introduces new types of incentives into the healthcare system, changes the nature of established agency relationships and represents a novel approach to performance management.MethodsTheoretical elements of a principal-agent model are used to examine the impact of decentralisation in the context of the results of an empirical study that elicited the perceptions of senior hospital managers regarding the incentive effects of earned autonomy. A multi-method approach was adopted. In order to capture the breadth of policy impact, we conducted a national postal questionnaire survey of all Chief Executives in acute-care hospital Trusts in England (n = 173). To provide added depth and richness to our understanding of the impact and incentive effects of earned autonomy at an organisational level, we interviewed senior managers in a purposeful sample of eight acute-care hospital Trusts.ResultsThis theoretical framework and our empirical work suggest that some aspects of the earned autonomy as currently implemented in the NHS serve to weaken the potential incentive effect of decentralisation. In particular, the nature of the freedoms is such that many senior managers do not view autonomy as a particularly valuable prize. This suggests that incentives associated with the policy will be insufficiently powerful to motivate providers to deliver better performance. We also found that principal commitment may be a problem in the NHS. Some hospital managers reported that they already enjoyed a large degree of autonomy, regardless of their current performance ratings. We also found evidence that the objectives of providers may differ from those of both the central government and local purchasers. There is, therefore, a risk that granting greater autonomy will allow providers to pursue their own objectives which, whilst not self-serving, may still jeopardise the achievement of strategic goals.ConclusionIt is apparent that the design and implementation features of decentralising policies such as earned autonomy require careful attention if an optimal balance is to be struck between central oversight and local autonomy in the delivery of healthcare.

Application of economic principles in healthcare priority setting

In healthcare, resources are often insufficient to meet all claims on them. In this respect, resources are considered scarce and have to be managed by prioritizing between competing claims. Economics as a discipline explicitly addresses this reality by acknowledging resource scarcity. However, the extent to which economics actually influences such prioritizing decisions in healthcare is unclear. The purpose of this paper is to review the use of economics in priority setting decision making. We outline the key principles of economics as they apply to priority setting and review the methods reported in the literature with respect to these. We find that these methods, even economic methods (e.g., those typically used in conducting economic evaluations such as cost–effectiveness analyses) do not tend to explicitly incorporate economic principles. We argue therefore that these methods, when applied to the context of priority setting, are not sufficient and that what is required is a broader framework that can incorporate the output from economic methods yet also be pragmatically applicable. We then go on to present an alternative approach – namely program budgeting and marginal analysis. Finally, we put forward our case for using program budgeting and marginal analysis in priority setting practice and set out some future research challenges.

Using economics for pragmatic and ethical priority setting: two checklists for doctors and managers

Doctors and managers have to make tough decisions about what services to provide from their budgets. Economic approaches can help, but they also need to take into account the practical and ethical challenges faced by healthcare professionals

[abstract] Overview of priority setting, priority setting methods and the use of PBMA: results from international research

cz1,2 · Csa ba Dózsa3 · Zoltán Kaló4 · Lás zló Nagy5 · Bar bara Borc sek3 · Ágnes Brandt müller6 · József Betle hem7 · An dor Sebestyén8 · Lás zló Gulác si6 1 De part ment of Health Pol i cy, Na tion al Health In sur ance Fund Ad min is tra tion (OEP), Bu dapest, Hun gary 2 In sti tute of Di ag nos tics and Man age ment, Fac ul ty of Health Sci ences, Uni ver si ty of Pécs, Pécs, Hun gary 3 Min istry of Health, Bu dapest, Hun gary 4 No var tis, Bu dapest, Hun gary 5 MSD, Bu dapest, Hun gary 6 De part ment of Pub lic Pol i cy and Man age ment, Unit of Health Eco nomics and Health Tech nol o gy As sess ment, Corv i nus Uni ver si ty Bu dapest, Hun gary 7 In sti tute of Nurs ing and Clin i cal Sci ences, Fac ul ty of Health Sci ences, Uni ver si ty of Pécs, Pécs, Hun gary 8 Coun ty Baranya Health In sur ance Fund Ad min is tra tion, Pécs, Hun gary