Budget Tool Development Five-year Budget Planning Subcommittee - - PowerPoint PPT Presentation

Five-year Budget Planning Subcommittee April 11, 2012

Budget Tool Development

Setting priorities – Typical Challenges

 Our understanding of complex health / population systems is

limited

 Qualitative attributes (values, mission, ethics, and equity) are

difficult to combine with quantitative attributes (e.g., burden of disease)

 Inclusion of diverse stakeholders with competing interests / values  Goals, criteria, or alternatives to be prioritized are not always well

specified

 Timely decisions must be made, sometimes with limited evidence  Ideal analyses are not complete, timely, or feasible  Our understanding of prioritization methods may be limited  Criteria may have different measurement scales or no scale at all

Setting priorities - Informal methods

 Organizational traditions  Leadership preferences  Politics and advocacy  Categorical funding

Setting priorities - Formal methods

 Conduct a needs assessment  Define “core” services  Conduct economic evaluations (e.g., Cost-benefit Analysis,

Cost-effectiveness Analysis)

 Conduct multi-criteria decision-making (MCDM) process  Program Budgeting and Marginal Analysis (PBMA) combined

with MCDM

Proposed methods: PMBA + AHP

 Program Budgeting and Marginal Analysis

 Use program budgeting approach  Apply economic concepts: considers opportunity costs and uses

marginal analysis

 Apply criteria to prioritize programs based on marginal benefits

and costs (see AHP)

 Analytic Hierarchy Process (AHP)

 Most common MCDM method in the world  Has many uses: decision making, priority setting, resource

allocation, prediction, planning, etc.

Proposed Budget Tool Framework

• Based upon
• Analytic Hierarchy Process (AHP); and
• Program Budgeting and Marginal Analysis (PBMA)
• Analysis tool that aids provides insight into complex problems by

incorporating qualitative and quantitative decision criteria

• Information is decomposed into a hierarchy of alternatives and

criteria

• Information is then synthesized to determine relative ranking of

alternatives

• Both qualitative and quantitative information can be compared

using informed judgments to derive weights and priorities

• Seven step process

Seven-Step Process

1.

Define the problem or opportunity



e.g., need to determine budget priorities in the face of budget reductions

2.

Determine goal of AHP



e.g., prioritize current and proposed service modalities

3.

Develop criteria



e.g., what is important and why?

4.

Organize criteria



e.g., how are the criteria related to one another? (hierarchy)

5.

Weight criteria



e.g., are some criteria more important than others?

6.

Rank alternatives using criteria



e.g., tool is applied to prioritize service modalities

7.

Conduct sensitivity analysis



e.g., which inputs had largest effects on outputs?

Analytic Hierarchy Process (1/2)

Goal Criterion 1 Alternative A Criterion 2 Criterion 3 Alternative B Alternative C Alternative D

Analytic H tic Hierar rarch chy P Process (2/2) 2)

Prioritize Modalities Strategic Alignment Modality A Health Impact Organizational Impact Modality B Modality C Modality D

DecisionLens

 http://www.youtube.com/watch?v=FoAomdhOT3k&featu

re=email

Sample Tool

Sample Tool (cont.)

Sample Tool (cont.)