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Modelling supply and demand influences on the use of health care: implications for deriving a needs-based capitation formula

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Author Info
Hugh Gravelle (National Primary Care Research and Development Centre, Centre for Health Economics, University of York, UK)
Matthew Sutton (General Practice and Primary Care, Community-Based Sciences, University of Glasgow and Primary Care Information Group, ISDScotland, Edinburgh, UK)
Stephen Morris (The Business School, Imperial College London, UK)
Frank Windmeijer (Institute for Fiscal Studies, London, UK)
Alastair Leyland (MRC Social and Public Health Sciences Unit, University of Glasgow, UK)
Chris Dibben (Department of Social Policy and Social Work, University of Oxford, UK)
Mike Muirhead (Consultancy Team, ISDScotland, Edinburgh, UK)

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Abstract

Many health-care systems allocate funding according to measures of need. The utilisation approach for measuring need rests on the assumptions that use of health care is determined by demand and supply and that need is an important element of demand. By estimating utilisation models which allow for supply it is possible to isolate the socio-economic and health characteristics which affect demand. A subset of these variables can then be identified by a combination of judgement and further analysis as needs variables to inform funding allocations. We estimate utilisation models using newly assembled data on admissions to acute hospitals, measures of supply, morbidity and socio-economic characteristics for 8414 small geographical areas in England. We make a number of methodological innovations including deriving additional measures of specific morbidities at small area level from individual level survey data. We compare models with different specifications for the effect of waiting times and provider characteristics, with total, planned and unplanned hospital admissions, and estimated at small area (ward) and primary care organisation (general practice) level. After allowing for waiting times, distance, capacity and the availability of private health care, measures of mortality, self-reported morbidity, low education and low income increase the use of health care. We find evidence of horizontal inequity with respect to ethnicity and employment and suggest a method for reducing its effects when deriving a needs-based allocation formula. Copyright © 2003 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.830
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Publisher Info
Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 12 (2003)
Issue (Month): 12 ()
Pages: 985-1004
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:wly:hlthec:v:12:y:2003:i:12:p:985-1004

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Gravelle, Hugh & Dusheiko, Mark & Sutton, Matthew, 2002. "The demand for elective surgery in a public system: time and money prices in the UK National Health Service," Journal of Health Economics, Elsevier, vol. 21(3), pages 423-449, May. [Downloadable!] (restricted)
  2. Richard Blundell & Frank Windmeijer, 2000. "Identifying demand for health resources using waiting times information," IFS Working Papers W00/03, Institute for Fiscal Studies. [Downloadable!]
    Other versions:
  3. Hugh Gravelle & Peter C. Smith & Ana Xavier, . "Waiting Times and Waiting Lists: A Model of the Market for Elective Surgery," Discussion Papers 00/27, Department of Economics, University of York. [Downloadable!]
  4. Schokkaert, Erik & Van de Voorde, Carine, 2004. "Risk selection and the specification of the conventional risk adjustment formula," Journal of Health Economics, Elsevier, vol. 23(6), pages 1237-1259, November. [Downloadable!] (restricted)
  5. Derek Bond and Prof. Denis Conniffe, 2002. "Cross-Regional Equity in Health Care Funding," NIRSA Working Paper Series 3, National Institute for Regional and Spatial Analysis (NIRSA), NUI Maynooth, Ireland.. [Downloadable!]
  6. Roy Carr-Hill & Geoffrey Hardman & Stephen Martin & Stuart Peacock & Trevor Sheldon & Peter Smith, 1994. "A formula for distributing NHS revenues based on small area use of hospital beds," Working Papers 022cheop, Centre for Health Economics, University of York. [Downloadable!]
  7. Peter Zweifel & Stefan Felder & Markus Meiers, 1999. "Ageing of population and health care expenditure: a red herring?," Health Economics, John Wiley & Sons, Ltd., vol. 8(6), pages 485-496.
  8. Katharina Hauck & Rebecca Shaw & Peter C. Smith, 2002. "Reducing avoidable inequalities in health: a new criterion for setting health care capitation payments," Health Economics, John Wiley & Sons, Ltd., vol. 11(8), pages 667-677. [Downloadable!]
  9. Wagstaff, Adam & van Doorslaer, Eddy, 2000. "Chapter 34 Equity in health care finance and delivery," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 34, pages 1803-1862 Elsevier. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Erik Schokkaert & Carine Van De Voorde, 2006. "Incentives for risk selection and omitted variables in the risk adjustment formula," Annales d'Economie et de Statistique, ADRES, issue 83-84, pages 13, Juillet-D. [Downloadable!]
  2. De Luca, Giuliana & Ponzo, Michela, 2009. "Access to primary care and workers’ opportunity costs. Evidence from Italy," MPRA Paper 15479, University Library of Munich, Germany. [Downloadable!]
  3. Fredrik Carlsen & Jostein Grytten & Julie Kjelvik & Irene Skau, 2007. "Better primary physician services lead to fewer hospital admissions," The European Journal of Health Economics, Springer, vol. 8(1), pages 17-24, March. [Downloadable!] (restricted)
  4. Stephen Morris & Hugh Gravelle, 2006. "GP supply and obesity," Working Papers 013cherp, Centre for Health Economics, University of York. [Downloadable!]
    Other versions:
  5. Mónica D. Oliveira, 2004. "Modelling demand and supply influences on utilization: A flow demand model to predict hospital utilization at the small area level," Applied Economics, Taylor and Francis Journals, vol. 36(20), pages 2237-2251, November. [Downloadable!] (restricted)
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