Net Budget Impact

The overall change in spending from adopting a new technology, after accounting for offsetting savings elsewhere, such as avoided hospital admissions.

Source: Sullivan et al. 2014

Two scenarios are projected over the same horizon, one in which current practice continues and one in which the new technology is adopted, and the difference between their total costs in each year is the net impact. The calculation includes the cost of the new technology, the cost of the treatments it displaces, and any change in other resource use that follows, including monitoring, administration and management of adverse effects. Results are reported year by year rather than as a single total. Reporting the two scenarios separately, rather than only their difference, allows a reader to see whether the impact arises from the technology or from an assumption about the comparator scenario.

Source: Sullivan et al. 2014

Only those falling on the same budget, arriving within the horizon, and large enough to be realised. Avoided bed days spread thinly across many wards free no resource and should not be counted as cash-releasing. Savings accruing to a different payer are real to the system and unavailable to the decision maker. Applying these three tests removes a substantial part of the offsets typically claimed in submitted analyses. Applying these tests before the analysis is submitted, rather than during negotiation, is what distinguishes a credible projection from an advocacy document.

Source: Mauskopf et al. 2007

Because avoided activity is not the same as released cash, and capacity has to be removed in whole units before anything is saved. Timing compounds the problem, since the technology is paid for immediately while the savings accrue over subsequent years. Uptake assumptions are also generally optimistic, so the volume generating the savings is lower than projected while the fixed costs of adoption are incurred regardless. Capacity constraints are the further omission, since a projected volume that the service could not deliver even if funded will not generate either the costs or the savings assumed.

Source: Sullivan et al. 2014

Cost-effectiveness asks whether the health gained justifies the resources used, expressed per patient and discounted over a long horizon. Net budget impact asks what cash a specific budget holder will need in each of the next few years, using prices actually paid and no discounting. An intervention can be clearly cost-effective and produce a net budget impact the system cannot absorb, which is why the two analyses accompany rather than substitute for one another. The two also use different prices, since budget impact uses the amounts actually paid including confidential discounts while cost-effectiveness analysis may use list prices.

Source: Sullivan et al. 2014

The population calculation traced from the general population to those treated, with the source of each proportion. The uptake assumption year by year rather than as an endpoint. The treatments displaced and their costs. Each claimed saving with a statement of whether it releases cash, falls on the same budget and arrives within the horizon. And results for each year separately, since the profile matters where the constraint applies annually. Sensitivity analysis should concentrate on uptake and on the eligible population, since those are the parameters to which the total is most sensitive and the least reliably estimated.

Source: Mauskopf et al. 2007