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All addiction treatment centres face the challenge of allocating resources across budget areas to obtain best value for money. This requires a clear sense of priorities that balance costs, risks and benefits, where bene ts can be any mixture of financial and non- financial value. But how can monetary costs, uncertainty about the future and multiple, con icting objectives be ‘balanced’ when they are all very different? The answer is to be found in multi-criteria decision analysis (MCDA), a theoretically sound, highly practical, and well-tested approach that uses both data and human judgement to carry out this balancing act. After a brief introduction to the principles of MCDA, Professor Larry Phillips will facilitate a small group of addiction experts in a decision conference to develop a prioritisation for allocating resources across budget areas of a hypothetical treatment centre. The session will end with a discussion of how this process could be implemented.

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  1. 1. Improving the cost-effectiveness of addiction treatment centres Professor Larry Phillips London School of Economics and Facilitations Limited iCAAD Conference 7 May 2018
  2. 2. 2 Value Probability Trade-offs SMART CHOICES
  3. 3. 3 Decision Analysis 3 “The spirit of decision analysis is divide and conquer: decompose a complex problem into simpler problems, get one’s thinking straight on these simpler problems, paste these analyses together with logical glue, and come out with a program of action for the complex problem.” Howard Raiffa 1968, Decision Analysis, p. 271
  4. 4. MCDA (Multi-Criteria Decision Analysis) • An extension of decision theory that covers decisions with multiple objectives. • A methodology for appraising options on individual, often conflicting criteria, and combining them into one overall appraisal. 4
  5. 5. A system not based on MCDA 5 MCDA converts all input evaluations of decision outcomes into the common currency of value added (extent to which objectives are met).
  6. 6. • A one-to-three-day workshop • To resolve important issues of concern • Attended by key players who represent the diversity of perspectives on the issues • Facilitated by an impartial specialist in group processes & decision analysis • Using a requisite (just-good-enough) model created on-the-spot to help provide structure to thinking Decision Conference 6
  7. 7. 7 Based on the Priority Index, PI COST RISK- ADJUSTED BENEFIT VALUE for MONEY Use MCDA to combine all benefits onto one preference value scale for each project. Risk adjust, e.g., multiply each project’s overall benefit by probability of success.
  8. 8. Commissioning health care 8 Purpose: • Provide basis for allocating an additional £1m on a recurrent basis, 2008-12 Objectives: • Increase health (less mortality, more QoL) • Reduce health inequalities • Operationally & politically feasible Isle of Wight PCT Areas Projects
  9. 9. Efficient frontier 9 All 21 projects (black point at top of each triangle) stacked in order of their triangle’s slopes. Cumulative expected benefits versus costs Green ‘football’ contains all possible portfolios (2,304 combinations of projects).
  10. 10. The affordable frontier package 10 ‘F’ project and the 7 to the left cost £985,000. They are the best value-for-money. Different portfolios can be explored with the software (Equity 3) to find a combination of projects that is acceptable to the decision makers. Airoldi, M., Morton, A., Smith, J., & Bevan, G. (2011). Healthcare prioritisation at the local level: a socio-technical approach. In G. Bevan (Ed.), Priority Setting for Population Health (pp. 1-24). London: London School of Economics & Political Science.
  11. 11. The affordable projects 11
  12. 12. Force ‘Prevention’ into the frontier 12
  13. 13. Putting the ingredients together = Smart choices! + Group judgementMulti-criteria model
  14. 14. In summary: THINK TRIANGLES 14
  15. 15. A guide to further reading Harvard University Press, 1992. Shows how to articulate values and make wise decisions. 15 Wiley, 2014, 5th Ed. MCDA in Chapter 3, prioritisation and resource allocation in Chapter 14. Department for Communities and Local Government Introduction to MCDA in Chapter 6 Download free copy at: