Determining the size of a total purchasing site to manage the financial risks of rare costly referrals: computer simulation model.

OBJECTIVE

To estimate the financial risks of 15 categories of rare costly referrals for total purchasing sites of different population sizes.

DESIGN

Computer simulation of 100 fund years assuming Poisson distribution of referrals.

SETTING

British general practices that have opted to become total purchasing sites. Referral rates and price estimates were supplied by South and West Devon Health Commission.

MAIN OUTCOME MEASURES

Variation in referral costs to purchasers in relation to size of risk pool (person years at risk).

RESULTS

Random variation in referral costs increased as the size of the risk pool decreased. Variation increased greatly below 30,000 person years. The mean simulated cost of the referral categories considered was 2.8% of total NHS hospital and community service costs, and the maximum simulated cost for 7000 person years was 6.8%. Simulated variation was robust to assumption about prices and referral rates for specific types of referral.

CONCLUSION

Rare costly referrals seem unlikely to bankrupt total purchasing sites. The management of risk is not in itself justification for total purchasing to be based in several general practices in order to generate large populations. There are other ways of managing risk. Sites can easily explore options by simulations using local referral rates and prices.