Marginal Analysis: a Case Study in Care of the Elderly

Abstract

In chapter 3 the approach and purpose of marginal analysis were described. It is a framework that allows identification of those parts of services which are most likely to be affected by an increase or decrease in resources. It thus allows planners to make more appropriate comparisons of costs, potential benefits and opportunity costs of alternative allocations or shifts in resources than they would make by looking at total or average costs and benefits. The underlying philosophy is that for operational plans it is only necessary to look at these marginal costs and benefits because, given limited health-care resources, only small shifts in allocation are possible before techniques, values and therefore benefits from particular resources have changed.