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

Budget Tool Development Five-year Budget Planning Subcommittee April 11, 2012

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 Define the problem or opportunity 1. e.g., need to determine budget priorities in the face of budget reductions  Determine goal of AHP 2. e.g., prioritize current and proposed service modalities  Develop criteria 3. e.g., what is important and why?  Organize criteria 4. e.g., how are the criteria related to one another? (hierarchy)  Weight criteria 5. e.g., are some criteria more important than others?  Rank alternatives using criteria 6. e.g., tool is applied to prioritize service modalities  Conduct sensitivity analysis 7. e.g., which inputs had largest effects on outputs? 

Analytic Hierarchy Process (1/2) Goal Criterion Criterion Criterion 1 2 3 Alternative Alternative Alternative Alternative A B C D

Analytic H tic Hierar rarch chy P Process (2/2) 2) Prioritize Modalities Strategic Health Organizational Alignment Impact Impact Modality Modality Modality Modality A B C D

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

Sample Tool

Sample Tool (cont.)

Sample Tool (cont.)