Fundholders' prescribing costs: the first five years

Abstract

Objectives: To determine whether the first five waves of English fundholding practices have reduced their prescribing costs relative to non-fundholding practices, and the duration of any reduction achieved. Design: Analysis of item and cost data for all general practices in England in the six years from April 1990 to March 1996. The practices of each of the first five waves were identified at the Prescription Pricing Authority. Setting: All general practices in England. Main outcome measures: Changes and rates of change in net ingredient cost per prescribing unit, and changes in number of items per prescribing unit in fundholding practices, before and after fundholding, 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 of change: a small relative reduction in the pre-fundholding year, maximum relative reduction in the first year, and a declining relative 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 years in all groups. Conclusions: The real budgets operated by fundholders were associated with a reduction in costs of about 6% relative to continuing non-fundholders, and this saving seemed to be retained during the study. The relative reduction was small compared with the absolute increase seen in all groups and disappeared after the third year of fundholding. It was brought about by lowering the average cost per item rather than by giving fewer items. 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