Concept Architecture
Concept
Theoretically, Programme Budgeting is an economic planning and resource allocation framework that organises healthcare expenditure according to programmes of care rather than administrative units or providers. It enables expenditure to be linked to defined disease areas, population groups or service categories, providing a structured basis for analysing how resources are distributed and whether current allocations maximise health outcomes. Programme Budgeting forms the foundation of Programme Budgeting and Marginal Analysis (PBMA) by establishing the expenditure baseline from which alternative investment decisions are evaluated.
Mathematically, Programme Budgeting represents the allocation of a finite healthcare budget across multiple programmes subject to an overall resource constraint. The framework is based on budget accounting and optimisation principles, where total expenditure equals the sum of expenditures across all programmes. Although Programme Budgeting itself is descriptive rather than an optimisation method, its mathematical representation provides the basis for subsequent marginal analysis and resource reallocation.
In practice, Programme Budgeting is implemented by classifying healthcare expenditures into predefined programme categories such as cancer, cardiovascular disease, mental health or primary care. Expenditure data are obtained from accounting systems, provider records and national programme budgeting datasets, then aggregated to estimate the resources committed to each programme. These programme-level expenditure estimates are subsequently used to identify opportunities for disinvestment and reinvestment within PBMA and other priority-setting exercises.
Purpose
Used to organise healthcare expenditure into clinically or policy-relevant programmes, quantify resource allocation across services, support priority setting, provide expenditure baselines for Programme Budgeting and Marginal Analysis, and inform strategic resource allocation decisions.
Mathematical Formulae
Primary Formula
B = ?? B?
where:
- B = total healthcare budget
- B? = budget allocated to programme i
Supporting Formulae
Programme Budget Share? = B? / B
Budget Constraint:
?? B? � B
Related Mathematical Methods
- Budget allocation
- Resource constraint optimisation
- Programme Budgeting and Marginal Analysis (PBMA)
- Linear programming
- Opportunity cost analysis
Example
A regional health authority has an annual healthcare budget of �500 million allocated across five programmes.
- Cancer services: �150 million
- Cardiovascular services: �120 million
- Mental health: �90 million
- Primary care: �100 million
- Public health: �40 million
Total budget:
B = 150 + 120 + 90 + 100 + 40 = �500 million
The programme budget establishes the baseline allocation before PBMA evaluates whether reallocating funds between programmes could generate greater health gain.
Excel Implementation
| Function | Example Formula | Health Economics Application |
|---|---|---|
| SUM | =SUM(B2:B6) | Calculates the total programme budget. |
| SUMIF | =SUMIF(A:A,"Cancer",B:B) | Aggregates expenditure for a specific programme. |
| PivotTable | Programme totals by category | Summarises expenditure across healthcare programmes. |
| Percentage | =B2/$B$7 | Calculates each programme's share of the overall budget. |
VBA (Optional)
A VBA macro can automatically aggregate expenditure records into programme categories and generate updated programme budgeting reports for resource allocation reviews.
Sources
- Drummond MF, Sculpher MJ, Claxton K, Stoddart GL, Torrance GW. Methods for the Economic Evaluation of Health Care Programmes. Oxford University Press.
- Mitton C, Donaldson C. Health Care Priority Setting: Principles, Practice and Challenges. Routledge.
- Peacock S, Ruta D, Mitton C, Donaldson C, Bate A, Murtagh M. Programme Budgeting and Marginal Analysis: An approach for setting priorities in healthcare.
- NICE. Health Technology Evaluation Manual.
- ISPOR Task Force Reports on healthcare resource allocation and priority setting.
Related Concepts (3)
Frequently Asked Questions (6)
What is programme budgeting?
A budgeting approach organising health spending around specific programmes or disease areas rather than input categories, allowing cross-programme comparison.
Source: Mooney, Russell & Weir 1986
What does programme budgeting group health spending by?
Programme budgeting groups health spending by programme or disease area rather than by input categories such as staff, drugs, and buildings. Organising the budget this way shows how much is being spent on tackling a given condition or serving a given goal, which input-based budgeting obscures. This allows comparison across programmes and reveals whether money is going where it does most good, and it forms the first half of programme budgeting and marginal analysis. Arranging spending by programme rather than input is what it does. Mooney, Russell and Weir (1986) set out the method.
Source: Mooney, Russell & Weir 1986
How does programme budgeting organise spending?
Programme budgeting organises spending around specific programmes or disease areas, so that spending is shown by programme rather than by input categories such as staff, equipment, or supplies. So programme budgeting organises spending by programme, which is why it differs from input budgeting, since it groups spending by what it is for rather than what it buys, and organising spending around programmes or disease areas means programme budgeting shows how much is spent on each programme, allowing comparison across them.
Source: Mooney, Russell & Weir 1986
Why is programme budgeting used?
Programme budgeting is used to allow comparison of spending across programmes or disease areas, so the allocation of resources between them can be examined and informed, supporting priority setting. So programme budgeting is used to compare spending across programmes, which is why it organises spending by programme, since seeing spending by programme allows comparison and informed allocation, and using programme budgeting supports priority setting by showing how resources are distributed across programmes, enabling comparison to inform decisions about allocation.
Source: Mooney, Russell & Weir 1986
How does programme budgeting differ from input-based budgeting?
Programme budgeting differs from input-based budgeting in that it organises spending by programmes or disease areas, while input-based budgeting organises it by input categories such as staff, equipment, or supplies. So programme and input-based budgeting differ in how spending is grouped, which is why they are distinguished, since programme budgeting groups spending by purpose whereas input budgeting groups it by what is bought, and this difference means programme budgeting shows spending by programme for comparison, unlike input-based budgeting, which shows it by input type.
Source: Mooney, Russell & Weir 1986
How does programme budgeting relate to PBMA?
Programme budgeting relates to PBMA in that it is the programme budgeting part of PBMA: programme budgeting and marginal analysis combines organising spending by programme with marginal analysis to reallocate resources. So programme budgeting is a component of PBMA, which is why they are connected, since PBMA uses programme budgeting to show spending by programme and marginal analysis to guide reallocation, and programme budgeting provides the view of spending across programmes that PBMA analyses to reallocate resources from lower-value to higher-value activities.
Source: Mooney, Russell & Weir 1986
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British health economist
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