Topic

Budget impact analysis

Budget impact analysis estimates how adopting a new intervention would change a health system's spending over the next few years. It complements cost-effectiveness analysis: one asks about value for money, the other about affordability.

Concepts in this topic

• AffordabilityAffordability is whether a payer or household can meet the cost of health care from available resources without displacing other care or causing hardship.
• Affordability ThresholdAn affordability threshold is the budget impact level above which a payer flags a new technology for special handling, even if it is cost-effective.
• Budget ApprovalThe authorised decision to allocate or permit specified spending for a defined health purpose, budget holder and period, often with explicit conditions.
• Budget ConstraintBudget constraint is the limit that a fixed budget and given costs place on what can be bought, so funding one health programme means forgoing another.
• Budget ImpactBudget impact is the change in spending a budget holder can expect from adopting a health technology or policy, estimated by budget impact analysis.
• Budget Impact AnalysisBudget impact analysis (BIA) estimates how adopting a new health technology would change spending for a particular budget holder over the next few years.
• Budget Impact ModelA budget impact model estimates how introducing, removing, or changing use of a health technology will alter expenditure for a specified budget holder over a short- to medium-term planning horizon.
• Budget Impact ModellingThe practice of building and applying budget impact models to estimate the financial consequences of adopting a health technology.
• Health Technology Adoption CurveA health technology adoption curve shows how use of a new medicine or device grows over time, usually S-shaped: slow, then rapid, then levelling off.
• Net Budget ImpactThe overall change in spending from adopting a new technology, after accounting for offsetting savings elsewhere, such as avoided hospital admissions.