The effect of practice budgets on patient waiting times: allowing for selection bias

Under the UK fundholding scheme, general practices could elect to hold a budget to meet the costs of some types of elective surgery (chargeable admissions) for their patients. It was alleged that patients of fundholding practices had shorter waits for elective surgery than the patients of non‐fundholders. Comparison of waiting times between fundholding and non‐fundholding practices are potentially confounded by selection bias as fundholding was voluntary. We estimate the effect of a practice's fundholding status on the waiting times of its patients using both cross‐sectional methods (OLS, propensity score, instrumental variables, Heckman selection correction and Heckman heterogenous effects estimators) and difference in differences methodologies to correct for selection bias. The estimated effect of fundholding status was to significantly reduce the waiting times for chargeable admissions of the patients of fundholders by 4.1–6.6% (or 4–7 days) with the instrumental variables and Heckman selection correction estimators yielding the highest estimates. We also find that patients of fundholding practices had shorter waits (by 3.7% or 2 days) for non‐chargeable elective admissions, suggesting that fundholders were able to obtain shorter waits for all types of elective admissions. Copyright © 2004 John Wiley & Sons, Ltd.