General Practice

What is to be done about fundholding?

BMJ 1997; 315 doi: (Published 19 July 1997) Cite this as: BMJ 1997;315:170
  1. Toby Gosden, research associatea,
  2. David Torgerson, research fellowb,
  3. Alan Maynard, honorary professorc
  1. a National Primary Care Research and Development Centre, University of Manchester, Manchester M13 9PL
  2. b National Primary Care Research and Development Centre, Centre for Health Economics, University of York, Heslington YO1 5DD
  3. c National Primary Care Research and Development Centre, Department of Health Sciences, University of York
  1. Correspondence to: Mr Gosden
  • Accepted 19 May 1997

The new Labour government has pledged to review the future of fundholding. What is the evidence base for the dissolution or reform of fundholding?

The evidence surrounding fundholding has been reviewed.1 2 3 The authors of these reviews are in general agreement that although the relative scale of evaluating general practice fundholding is high, the results of fundholding are ambiguous. The evaluation has focused largely on the analysis of costs where there is some evidence that fundholding has been successful.4 5 6 7 8 9 The impact of general practice fundholding on patients' health has not been evaluated, and thus its impact on efficiency is unknown. The impact of this radical policy innovation on the quality of care, equitable provision of care, and responsiveness of care to patients' needs has been largely unresearched. Any results of evaluation, including evaluation of costs, are biased by the fact that fundholders are a self selected group differing from the generality of general practitioners. Despite this, rigorous studies with non-randomised designs can provide policy makers with useful information on the efficiency of different models of primary care.

The Audit Commission sought to determine whether fundholding was “worth” the large investment made to establish and run it.8 They concluded that so far the efficiency savings induced by this form of organisation were less than the set up and operating costs. Although the set up and administration costs of fundholding may be more than those of general practice commissioning models,10 there is no evidence about the relative benefits of these two forms of organisation. Many of the costs of fundholding are largely “sunk”—that is, it would be difficult to recoup the money spent. For example, general practitioners and practice managers have invested considerable time and effort in accumulating relevant expertise. Investment might have happened with or without fundholding, and although funds cannot be recouped they may produce considerable returns in future. Similar investments have created useful new skills in health authorities. This investment and other factors are leading to the creation of larger funds where skills are pooled, but their efficiency has yet to be evaluated.

Summary points

The evidence base on the performance of fundholding is incomplete as research on important issues such as outcomes of care is lacking; it provides no basis on which to make any hasty decisions as to the future of this policy

Careful evaluation of fundholding and all models of GP commissioning is required and is possible, ideally using trial methodology, to ensure that the scarce resources and the considerable investment that has been made in fundholding are not wasted

If all that these investments have produced are once-only savings in areas such as prescribing, the case for retaining fundholding is weak. However, if cost containment and increased efficiency can occur only in the longer term, the returns to investment in management are yet to appear; thus it is not surprising that existing studies give us little confidence in the policy. Further time, experience, and evaluation are needed to evaluate this experiment properly.

The impact of fundholding on equity is thought to be deleterious, creating “two tierism.”11 However, a distinction has to be made between principle and practice. The principle is that the NHS treats patients in equal need (capacity to benefit per unit of cost) with equal treatment. In practice there are considerable variations in the provision of care. Whether, after fundholding, this would be more inequitable than before fundholding has to be evaluated fully.

Evaluation is possible

The remarkable aspect both of the internal market reforms and the 1996 white papers on primary care12 13 is the failure of a government that espoused “value for money” to establish performance benchmarks and to monitor the performance of policies such as general practice fundholding in relation to these benchmarks. The case for the maintenance or euthanasia of fundholding does not exist because the government is reluctant to evaluate the reforms. Rigorous evaluation of such reforms using randomised trial methodology is possible (as shown by the Rand experiment and the American negative income tax experiments14), but it is rarely undertaken and usually ignored by government research and development programmes such as that recently established in Britain.

An incoming Labour government may repeat this error and waste resources on reforms such as locality purchasing which are not evidence based and not established to perform well in relation to clear policy goals. Labour, like its Conservative predecessors, will pursue efficiency (measured in terms of costs and benefits—that is, improvements in patients' health and equity). It must articulate these targets carefully and explicitly and rely on evidence rather than rhetoric to sustain its reforms. A failure to do this will waste scarce economic resources and prejudice patients' care.


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