Letters

NHS funds for fundholders and non-fundholders Cost calculations are incorrect

BMJ 1994; 309 doi: https://doi.org/10.1136/bmj.309.6959.956 (Published 08 October 1994) Cite this as: BMJ 1994;309:956
  1. C Spenceley,
  2. N Craig,
  3. K Denham,
  4. T V Zwanenberg

    EDITOR, - Jennifer Dixon and colleagues' conclusion that fundholding practices have been funded more generously than health agencies may be valid in the former North West Thames region.1 There are, however, fundamental weaknesses in the authors' methods.

    The average cost per hospital day for a specialty, which is used to cost fundholding activity, is the total cost for the specialty divided by the number of days in hospital for that specialty. The average cost for a specialty is unlikely to be an accurate proxy of costs of fundholding activity as it includes the costs of emergency activity, which may be much greater than those of elective activity, to which fundholding practices are limited. Furthermore, day case activity is not captured in counts of bed days, thus the average cost per day for a specialty will be overstated.

    This affects comparisons of prices. The authors used their estimates of comparative prices to invalidate the argument that more generous funding of fundholding practices is justified by the higher prices they pay. The methods' weaknesses mean that the authors cannot be confident that fundholders did not pay higher prices. If fundholding practices receive more generous funding they cannot necessarily purchase more activity.

    Comparisons of prices are also difficult to interpret because they are based on specialities. Hospitals' different costing mechanisms mean that large variations by specialty may not correspond to large differentials overall. The average price for all the procedures purchased by fundholders needs to be assessed to establish whether fundholders are being charged more than health agencies.

    Outpatient attendances were based on regional ratios of inpatient to outpatient activity for each specialty, obtained from Korner returns for 1990-1. Ratios of inpatient to outpatient activity vary by specialty and provider and may have changed since 1990-1 owing to pressures of cost and …

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