Economics, public health and health care purchasing: the Tayside experience of programme budgeting and marginal analysis

In this paper it is shown how the economics framework of programme budgeting and marginal analysis (PBMA) can be used to help formulate a purchasing strategy in health care; in this case, for child health services. The basic premise of PBMA is that to have more of some services it is necessary to have less of others. Therefore, it is important to know how resources are currently spent, what changes can be made, and what are the possible costs and benefits of such changes. Despite a lack of evidence on the effectiveness of services, PBMA provides a pragmatic purchasing framework. This framework permits consideration of national policy, local epidemiology, current spending, and the views both of parents and professionals as to how such spending can be changed.