Keele Research Repository

This paper concerns the current revival of interest in techniques advocated for resource allocation by purchasers of health care during the period of the internal market in the English NHS. In particular, Programme Budgeting and Marginal Analysis (PBMA), an approach strongly advocated by some health economists, is examined.

Since the election of the ‘New Labour’ government, the NHS has undergone a series of structural re organisations. Ironically, however, the current structure is similar to the ‘internal market’ which the government formally abolished on taking office; hence the renewed interest in techniques promoted at that time. In the paper a research project is discussed, which investigated resource allocation and performance evaluation by Health Authorities during the period of transition from the internal market. It suggested limitations to the use of techniques like PBMA. However, the current situation regarding Programme Budgeting seems more promising as a more pragmatic version of the approach is now advocated, which should be more appropriate.

This issue is currently significant because Programme Budgeting is being developed by the Department of Health for the resource allocation decisions of health care commissioners.