Performance budgeting in health: Outline of key issues - Ronnie Downes, OECD
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The document outlines key issues related to performance budgeting in health, emphasizing the shift from traditional financial-focused budgeting to a modern approach that incorporates performance metrics. It discusses various approaches to performance budgeting, the challenges in measurement and use of performance information, and the importance of engaging stakeholders in the budgeting process. The document also highlights examples from European countries and the U.S. that demonstrate evolving practices in performance-informed budgeting for health systems.
Performance budgeting in health: Outline of key issues - Ronnie Downes, OECD
- 1. Performance Budgeting in Health: Outline of key issues Ronnie Downes Deputy Head - Budgeting and Public Expenditures, Public Governance & Territorial Development OECD 4th Meeting of OECD Joint DELSA/GOV Network on Fiscal Sustainability of Health Systems 17 February 2015
- 2. What is “Performance Budgeting?” • “Using information about the performance and results of programmes in the processes of budgeting and resource allocation” • Performance and results – can these be measured? • Using this information – for what? • Using this information – how? • Does it work? – international examples
- 3. Performance budgeting: the theory • Traditional, “old-fashioned” approach to budgeting – Financial focus: only half of the equation of budgeting – Focus on “line items”, % increase or decrease in allocations • Modern approach – show performance and impact – What are we buying for what we are spending? Full picture – Encourages debate on evidence, rationale for allocations – Better engagement by policy stakeholders • Link to broader OECD themes – trust; inclusiveness
- 4. Budgeting within fiscal objectives OECD Recommendation on Budgetary Governance Quality, integrity & independent audit Performance, Evaluation & VFM Comprehensive budget accounting Effective budget execution Alignment with medium-term strategic plans and priorities Performance, evaluation & VFM Transparency, openness & accessibility Participative, Inclusive & Realistic Debate Fiscal Risks & Sustainability Capital budgeting framework
- 5. Some approaches to Performance Budgeting • PRESENTATIONAL APPROACH – Show outputs, performance indicators separately from the budget document – Easy – but effective? • PERFORMANCE-INFORMED BUDGETING – Include performance metrics within the budget document – Involves re-structuring of budget document – more engaging? • PERFORMANCE-BASED BUDGETING – More direct linkage between results and resources; contractual models – Involves extensive re-working of budget lines – is it worth it? • also: MANAGERIAL PERFORMANCE APPROACH – Focus on managerial impacts and changes in organisational behaviour – Less emphasis on link to budget allocation
- 6. Performance information is used for a variety of purposes 0% 20% 40% 60% Other For eliminating programmes For developing mngt reform proposals Not used To reduce spending For setting allocations for programmes For proposing new areas of spending For setting allocations for Line… For strategic planning/prioritisation To increase spending 2007 2011
- 7. When performance objectives are not met? 1 1.5 2 2.5 3 3.5 4 4.5 5 Pay cut for head of programme/organisation Programme transferred to other… Negative consequences for leaders' evaluations Programme eliminated More staff assigned to programme/organisation New leadership brought in Budget freezes Budget increases More training provided to staff assigned Budget decreases More intense monitoring in the future Poor performance made public No consequences 2007 2011 Never Occasionally Always
- 8. Some perennial problems • Quality, relevance and objectivity of performance information • What’s the proper response to Poor Performance? – More resources, or fewer? • “Gaming” of performance targets – An issue where the target corresponds weakly to the public service objective – “Outcomes” are better targets than “outputs” – but harder • Engagement – by public administration - central & line ministries – by political leaders – by citizens and parliamentarians
- 9. European “pioneers” – case of the Netherlands • Link to fixed multi-year spending ceilings • Detailed performance targets, monitoring, reporting – Key Objectives agreed as part of coalition agreement • Experience of recent years: “information overload” • Too much data • Too “industrial-scale”, “mechanistic”, “technocratic” • Not used by parliamentarians or by public • Not useful in identifying savings quickly • Now: has moved towards a more streamlined approach
- 10. Recent European reforms: improving engagement • Performance data should not be an internal, bureaucratic concern • It could – and should – excite the interest of parliamentarians and the public – Quality of debate, clearer political messages – Emphasise continuum of policy-making: resources, activities, outputs, impacts – Grounded in government-wide plans, strategies • Examples: Austria, Ireland – Convergence towards “performance-informed” model
- 11. US approach: Agency Priority Goals • GPRA Modernization Act 2010 – Inspired in part by UK experience: PSAs • Emphasis is primarily MANAGERIAL not BUDGETING – Identification of Agency Priority Goals and Goal-Leaders – Move to quarterly reporting – Government-wide Performance Improvement Council and dedicated website • Successful in creating internal ‘ownership’ and commitment to performance targets
- 13. Performance Budgeting for Health: Issues to Consider • Purpose / Primary Focus? – accountability (parliamentary, budget, managerial); public • Targets? – financial sustainability; lifespan / healthspan; waiting times; accessibility; satisfaction • Standardised International Health Indicators? for use in national performance budgeting frameworks – Selected from “constellation” of existing indicators – e.g. Health at a Glance • How to generate clearer messages for policymakers? • Link to institutional, open government reforms • Useful focus of future work?