Fundholders' prescribing costs: the first five years

BMJ 1996;313:1531-1534 (14 December)

General practice

Fundholders' prescribing costs: the first five years

Conrad M Harris, director,^a Glen Scrivener, social geographer ^a

^a Prescribing Research Unit, University of Leeds Research School of Medicine, Leeds LS2 9NZ

Correspondence to: Professor C M Harris, Academic Unit of General Practice, Leeds LS2 9LN.

Abstract

Objectives: To determine whether the first five waves of Englishfundholding practices have reduced their prescribing costs relativeto non-fundholding practices, and the duration of any reductionachieved.
Design: Analysis of item and cost data for all general practicesin England in the six years from April 1990 to March 1996. Thepractices of each of the first five waves were identified atthe Prescription Pricing Authority.
Setting: All general practices in England.
Main outcome measures: Changes and rates of change in net ingredientcost per prescribing unit, and changes in number of items perprescribing unit in fundholding practices, before and afterfundholding, relative to continuing non-fundholders.
Results: Absolute prescribing costs increased over the six years,by 66% in the continuing non-fundholders and by 56-59% for fundholders.Successive waves of fundholders showed a similar pattern ofchange: a small relative reduction in the pre-fundholding year,maximum relative reduction in the first year, and a decliningrelative reduction in the second and third years. After this,their increases in costs were largely similar to those of non-fundholders.The number of items dispensed remained stable over the six yearsin all groups.
Conclusions: The real budgets operated by fundholders were associatedwith a reduction in costs of about 6% relative to continuingnon-fundholders, and this saving seemed to be retained duringthe study. The relative reduction was small compared with theabsolute increase seen in all groups and disappeared after thethird year of fundholding. It was brought about by loweringthe average cost per item rather than by giving fewer items.

Key messages

We analysed national data for all general practices in England over the six years from April 1990: the absolute cost per prescribing unit increased greatly in all practices, though to a slightly lesser degree in fundholders
The relative reduction in costs of fundholders, compared with non- fundholders, began in the pre-fundholding year, reached about 6% altogether in the first three years of fundholding, and then ceased though the saving remained
Reduction in costs was achieved by reduction in the average cost per item rather than by decrease in the number of items dispensed
In financial terms fundholding has therefore had some success

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