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Prescribing Costs in General Practice: the Impact of Hard Budget Constraints

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  • D.K. Whynes,
  • D.L. Baines
  • K.H. Tolley,

Abstract

The development of an internal market in UK public sector health care has introduced hard budget constraints for those general practitioner purchasers who elect to hold their own budgets or 'funds'. Prescription medicines constitute an element of the fundholder's budget and a theoretical model is developed to explain how hardening constraints might be expected to impact upon prescribing decisions. The model is based on a trade-off between prescribing and budget surplus and it predicts, inter alia, that both the prescribing costs and volume of medicines prescribed by fundholders will be lower than for non-fundholders. A reduction in X-inefficiency is also predicted, manifested as a higher rate of generic prescribing and the use of computerized prescribing management. The model is found to be consistent with the observed facts in one English health authority (Lincolnshire).
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Suggested Citation

  • D.K. Whynes, & D.L. Baines & K.H. Tolley,, 1996. "Prescribing Costs in General Practice: the Impact of Hard Budget Constraints," Discussion Papers 96/10, University of Nottingham, School of Economics.
    • Handle: RePEc:not:notecp:96/10
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    Cited by:

    1. Antonio Giuffrida & Hugh Gravelle, 2001. "Measuring performance in primary care: econometric analysis and DEA," Applied Economics, Taylor & Francis Journals, vol. 33(2), pages 163-175.
    2. Granlund, David, 2008. "Does physicians' compensation affect the probability of their vetoing generic substitution?," Umeå Economic Studies 729, Umeå University, Department of Economics, revised 26 Mar 2008.
    3. Suchin Virabhak & Wook Sohn, 2009. "The impact of Medicaid's preferred drug lists on physicians' prescribing behaviour," Applied Economics, Taylor & Francis Journals, vol. 41(21), pages 2705-2725.
    4. David K. Whynes & Tara Heron & Anthony J. Avery, 1997. "Prescribing Cost Savings by GP Fundholders: Long‐Term or Short‐Term?," Health Economics, John Wiley & Sons, Ltd., vol. 6(2), pages 209-211, March.
    5. Stephen C. Earwicker & David K. Whynes, 1998. "General practitioners' referral thresholds and choices of referral destination: an experimental study," Health Economics, John Wiley & Sons, Ltd., vol. 7(8), pages 711-722, December.
    6. Andrew McKay & Oliver Morrissey & Charlotte Vaillant, 1998. "Aggregate Export and Food Crop Supply Response in Tanzania," Discussion Papers 98/4, University of Nottingham, CREDIT.
    7. Whynes, David K. & Baines, Darrin L., 2002. "Primary care physicians' attitudes to health care reform in England," Health Policy, Elsevier, vol. 60(2), pages 111-132, May.

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