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The link between health care spending and health outcomes for the new English Primary Care Trusts

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  • Stephen Martin

    (Department of Economics, University of York)

  • Nigel Rice

    (Centre for Health Economics, University of York)

  • Peter C Smith

    (Centre for Health Economics, University of York)

Abstract

English programme budgeting data have yielded major new insights into the link between health care spending and health outcomes. This paper updates two recent studies that have used programme budgeting data for 295 Primary Care Trusts (PCTs) in England to examine the link between spending and outcomes for several programmes of care. We use the same economic model employed in the two previous studies. It focuses on a decision maker who must allocate a fixed budget across programmes of care so as to maximize social welfare given a health production function for each programme. Two equations – a health outcome equation and an expenditure equation – are estimated for each programme (data permitting). The two previous studies employed expenditure data for 2004/05 and 2005/06 for 295 health authorities and found that in several care programmes – cancer, circulation problems, respiratory problems, gastro-intestinal problems, trauma burns and injury, and diabetes – expenditure had the anticipated negative effect on the mortality rate. Each health outcome equation was used to estimate the marginal cost of a life year saved. In 2006/07 the number of PCTs in England was reduced to 152, largely through a series of mergers. In addition, several changes were made to the methods employed to construct the programme budgeting data. This paper employs updated budgeting and mortality data for the new 152 PCTs to re-estimate health production and expenditure functions, and also presents updated estimates of the marginal cost of a life year saved in each programme. Although there are some differences, the results obtained are broadly similar to those presented in our two previous studies.

Suggested Citation

  • Stephen Martin & Nigel Rice & Peter C Smith, 2008. "The link between health care spending and health outcomes for the new English Primary Care Trusts," Working Papers 042cherp, Centre for Health Economics, University of York.
    • Handle: RePEc:chy:respap:42cherp
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    File URL: http://www.york.ac.uk/media/che/documents/papers/researchpapers/rp42_health_care_spending_and_health_outcomes_english_pcts.pdf
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    References listed on IDEAS

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    Cited by:

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    2. Rita Bastião & Nuno de Sousa Pereira, 2020. "Performance in the Delivery of Primary Health Care Services: A Longitudinal Analysis," CEF.UP Working Papers 2002, Universidade do Porto, Faculdade de Economia do Porto.
    3. Adrian Towse;Paul Barnsley;Sarah Karlsberg-Schaffer;Jon Sussex, 2013. "Critique of CHE Research Paper 81: Methods for the Estimation of the NICE Cost Effectiveness Threshold," Occasional Paper 000106, Office of Health Economics.
    4. James Lomas & Stephen Martin & Karl Claxton, 2018. "Estimating the marginal productivity of the English National Health Service from 2003/04 to 2012/13," Working Papers 158cherp, Centre for Health Economics, University of York.
    5. Karl Claxton & Mark Sculpher & Stuart Carroll, 2011. "Value-based pricing for pharmaceuticals: Its role, specification and prospects in a newly devolved NHS," Working Papers 060cherp, Centre for Health Economics, University of York.
    6. Mark Sculpher & Karl Claxton, 2012. "Real Economics Needs to Reflect Real Decisions," PharmacoEconomics, Springer, vol. 30(2), pages 133-136, February.
    7. Appleby, John & Devlin, Nancy & Parkin, David & Buxton, Martin & Chalkidou, Kalipso, 2009. "Searching for cost effectiveness thresholds in the NHS," Health Policy, Elsevier, vol. 91(3), pages 239-245, August.
    8. Laura Vallejo‐Torres & Borja García‐Lorenzo & Pedro Serrano‐Aguilar, 2018. "Estimating a cost‐effectiveness threshold for the Spanish NHS," Health Economics, John Wiley & Sons, Ltd., vol. 27(4), pages 746-761, April.
    9. Stephen Martin & Nigel Rice & Peter C. Smith, 2012. "Comparing costs and outcomes across programmes of health care," Health Economics, John Wiley & Sons, Ltd., vol. 21(3), pages 316-337, March.

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