Budget Impact Analysis (BIA) / Budget Impact Model

Budget Impact Analysis (BIA) is a crucial financial assessment tool used to predict the economic consequences of adopting new healthcare technologies or policy changes within a specific fiscal framework. This type of analysis helps determine how new healthcare policies or treatments will affect the financial resources of healthcare payers, be they national health services or local healthcare providers, over a typical timeframe of three to five years.

Unlike cost-effectiveness analysis, which gauges the value for money of interventions by comparing costs and health outcomes, BIA focuses exclusively on the financial feasibility and budgetary implications of interventions without directly assessing their outcomes. It compares two scenarios: one where the new intervention is implemented, and a counterfactual where it is not, evaluating not only the direct costs associated with the intervention but also its influence on market dynamics such as patient eligibility, uptake rates, and market share.

This approach allows decision-makers to see not just how much an intervention will cost, but how it will impact overall budget allocations, helping to manage both the allocation and reallocation of resources effectively. For example, a BIA may demonstrate that higher upfront costs for a new treatment could be offset by subsequent savings in other areas, such as reduced hospital admissions or lower treatment costs for disease complications. This makes BIA an indispensable tool in health policy and planning, ensuring that decisions are informed by a comprehensive understanding of their financial implications over time.

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