Priority setting for decision makers: using health economics in practice

Abstract

Based on the premise of resource scarcity in health care,numerous approaches to priority setting have been proposed. However, limited comparative analysis is found in the literature, and decision makers lack knowledge of available tools. Several approaches to priority setting are critiqued here from both practical and theoretical perspectives, including needs assessment, cost-of-illness studies, core services, economic evaluation and quality-adjusted life-year league tables, and program budgeting and marginal analysis (PBMA). Most explicit priority setting approaches fail to recognize the underlying economic principles of opportunity cost and the margin, leading in part to their lack of widespread use in practice and to the perpetuation of historical allocation patterns. PBMA is based on underlying economic principles and has been widely used in practice. While there are many approaches to priority setting, even so-called "economic" techniques often fail to recognize fundamental economic principles, leaving decision makers unable to meet key objectives. Greater focus on these principles will aid in priority setting in practice.