Clearing the fog on the Tyne: programme budgeting in Newcastle and North Tyneside Health Authority.

When the internal market was introduced, the National Health Service Management Executive envisaged purchasing as a process by which contracts would be developed from information concerning current services, modified in the light of strategic purchasing objectives, epidemiological needs assessment and indicators of comparative performance and efficiency. Our concern in this paper is with the promotion of efficiency. We distinguish between three levels and, in particular, discuss how the programme budgeting and marginal analysis framework can be used in the promotion of efficiency at 'top-level' decision making. PB/MA can be used to give a focus to needs assessment and forge explicit links between individual contracts within a well defined health strategy. The objectives of the current research and development ongoing within Newcastle and North Tyneside Health Authority are outlined. The intention is to achieve programme budgeting which is more responsive to decision makers' needs and is consistent with the contracting cycle. However, a number of constraints are expected to impede development. They include transferability of national and international information; absence of local information on epidemiology, effectiveness and cost-effectiveness; limitations on the accuracy and precision of programme budgets; and whether purchasers make strategic decisions based on macro budgets. The contribution of each of these constraints is explored.