Fundholders' prescribing costs: the first five years.

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.