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Variations in general practice prescribing costs and implications for budget setting

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  • Andrew T. Healey
  • Brian F. Yule
  • John P. Reid

Abstract

Indicative prescribing amounts, and the equivalent prescribing element of funds in the case of fundholding practices, are now an established part of UK general practice. This paper examines the implications of variations in GP prescribing behaviour for the determination of prescribing budgets. Using regression analysis, the extent to which variations in total practice prescribing costs can be explained by factors suggested for inclusion in a weighted capitation formula is established. The results indicate that 97% of the variation in practice prescribing costs can be explained by differences in practice list size, the proportion of patients aged 65 years and over, the proportion of patients living in ‘deprived areas’ and whether or not the practice qualifies for ‘inducement payments’. The implications of the results for budget setting are discussed. A resource allocation formula based on regression analysis of expenditures can be used to promote horizontal equity in terms of equal budgets for equal need. However, its implications for vertical equity and efficiency are more ambiguous.

Suggested Citation

  • Andrew T. Healey & Brian F. Yule & John P. Reid, 1994. "Variations in general practice prescribing costs and implications for budget setting," Health Economics, John Wiley & Sons, Ltd., vol. 3(1), pages 47-56, January.
    • Handle: RePEc:wly:hlthec:v:3:y:1994:i:1:p:47-56
    DOI: 10.1002/hec.4730030107
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    References listed on IDEAS

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    1. Steele, R, 1981. "Marginal Met Need and Geographical Equity in Health Care," Scottish Journal of Political Economy, Scottish Economic Society, vol. 28(2), pages 186-195, June.
    2. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    3. Breusch, T S & Pagan, A R, 1979. "A Simple Test for Heteroscedasticity and Random Coefficient Variation," Econometrica, Econometric Society, vol. 47(5), pages 1287-1294, September.
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    Cited by:

    1. Tsiantou, Vasiliki & Moschandreas, Joanna & Bertsias, Antonis & Papadakaki, Maria & Saridaki, Aristoula & Agius, Dominic & Alper, Zuleyha & Faresjo, Tomas & Klimkova, Martina & Martinez, Luc & Samouti, 2015. "General Practitioners’ intention to prescribe and prescribing patterns in selected European settings: The OTCSOCIOMED project," Health Policy, Elsevier, vol. 119(9), pages 1265-1274.
    2. Paraponaris, A. & Verger, P. & Desquins, B. & Villani, P. & Bouvenot, G. & Rochaix, L. & Gourheux, J. C. & Moatti, J. P. AU -, 2004. "Delivering generics without regulatory incentives?: Empirical evidence from French general practitioners about willingness to prescribe international non-proprietary names," Health Policy, Elsevier, vol. 70(1), pages 23-32, October.

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