BMJ 2000;320:284-288 ( 29 January )

General practice

Derivation of a needs based capitation formula for allocating prescribing budgets to health authorities and primary care groups in England: regression analysis

Editorial by Majeed General Practice p   288

Nigel Rice, senior research fellow, ^a Paul Dixon, senior research fellow, ^a David C E F Lloyd, applied statistician, ^b David Roberts, unit manager. ^b

^a Centre for Health Economics, University of York, York Y01 5DD, ^b Prescribing Support Unit, Leeds LS2 7RJ

Correspondence to: N Rice nr5{at}york.ac.uk

Objective: To develop a weighted capitation formula for setting target allocations for prescribing expenditures for health authorities and primary care groups in England.
Design: Regression analysis relating prescribing costs to the demographic, morbidity, and mortality composition of practice lists.
Setting: 8500 general practices in England.
Subjects: Data from the 1991 census were attributed to practice lists on the basis of the place of residence of the practice population.
Main outcome measures: Variation in age, sex, and temporary resident originated prescribing units (ASTRO(97)-PUs) adjusted net ingredient cost of general practices in England for 1997-8 modelled for the impact of health and social needs after controlling for differences in supply.
Results: A needs gradient based on the four variables: permanent sickness, percentage of dependants in no carer households, percentage of students, and percentage of births on practice lists. These, together with supply characteristics, explained 41% of variation in prescribing costs per ASTRO(97)-PU adjusted capita across practices. The latter alone explained about 35% of variation in total costs per head across practices.
Conclusions: The model has good statistical specification and contains intuitively plausible needs drivers of prescribing expenditure. Together with adjustments made for differences in ASTRO(97)-PUs the model is capable of explaining 62% (35%+0.65% (41%)) of variation in prescribing expenditure at practice level. The results of the study have formed the basis for setting target budgets for 1999-2000 allocations for prescribing expenditure for health authorities and primary care groups.

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