General practitioner fundholding and prescribing expenditure control - Evidence from a rural English health authority

In April 1991, the fundholding and indicative prescribing schemes introduced budgets for expenditure on prescribed drugs into UK general practice. Although both schemes were designed to be equally effective at containing prescribing-cost inflation, several studies suggest that expenditure growth has been lower in fundholding practices, compared with nonfundholding practices. This study attempts to ascertain how fundholding practices control their expenditure by examining data from a rural English health authority for the financial year 1993 to 1994. The fundholding practices sampled were found to control their expenditure through: (i) reduced overprescribing; (ii) using fewer drugs that have limited clinical value; (iii) substituting similar, but less expensive, drugs; (iv) more generic prescribing; and (v) appropriate use of expensive preparations. However, whether the cost differential between fundholding and nonfundholding practices is sustained in future years will depend upon: (i) the ability of fundholding practices to generate further savings; (ii) the characteristics of the practices that enter the fundholding scheme in subsequent waves; (iii) the way in which the scheme is organised; and (iv) the level at which budgets are set.