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Derivation of a needs based capitation formula for allocation prescribing budgets

Author

Listed:
  • Nigel Rice

    (Centre for Health Economics, The University of York)

  • Paul Dixon
  • David Lloyd
  • David Roberts

Abstract

This document reports the results of a study commissioned by the NHS Executive to examine the determinants of the NHS practice level prescribing expenditures. The purpose was to develop a needs based capitation formula for allocating annually approximately £4.5 billion of NHS revenues to Health Authorities and thence Primary Care Groups in England. The work was reported to the Advisory Committee on Resource Allocation and their technical advisory sub-group, TAG. The methods and modelling were therefore subject to a great deal of scrutiny with various sensitivity tests and alternative model specifications being proposed at almost every stage. This has resulted in the development of a robust model, but also explains some of the “stop-go” nature of the analysis reported in the text. The report sets out the background to the study, describes the data on which it is based, explains the statistical methodology used, and presents the finding. The implications for revenue allocations to Primary Care Groups are not discussed in this report.

Suggested Citation

  • Nigel Rice & Paul Dixon & David Lloyd & David Roberts, 1999. "Derivation of a needs based capitation formula for allocation prescribing budgets," Working Papers 034cheop, Centre for Health Economics, University of York.
    • Handle: RePEc:chy:respap:34cheop
    as

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    File URL: http://www.york.ac.uk/media/che/documents/papers/occasionalpapers/CHE%20Occasional%20Paper%2034.pdf
    File Function: First version, 1999
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    References listed on IDEAS

    as
    1. Roy Carr-Hill & Paul Dixon & Russell Mannion & Nigel Rice & Kai Rudat & Ruth Sinclair & Peter Smith, 1997. "A model of the determinants of expenditure on children's personal social services," Working Papers 030cheop, Centre for Health Economics, University of York.
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    4. Roy Carr-Hill & Geoffrey Hardman & Stephen Martin & Stuart Peacock & Trevor Sheldon & Peter Smith, 1994. "A formula for distributing NHS revenues based on small area use of hospital beds," Working Papers 022cheop, Centre for Health Economics, University of York.
    5. Cromwell, Jerry & Mitchell, Janet B., 1986. "Physician-induced demand for surgery," Journal of Health Economics, Elsevier, vol. 5(4), pages 293-313, December.
    6. Richard Blundell & Frank Windmeijer, 1997. "Cluster effects and simultaneity in multilevel models," Health Economics, John Wiley & Sons, Ltd., vol. 6(4), pages 439-443, July.
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    Citations

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    Cited by:

    1. Hugh Gravelle & Matthew Sutton & Stephen Morris & Frank Windmeijer & Alastair Leyland & Chris Dibben & Mike Muirhead, 2003. "Modelling supply and demand influences on the use of health care: implications for deriving a needs‐based capitation formula," Health Economics, John Wiley & Sons, Ltd., vol. 12(12), pages 985-1004, December.
    2. Manuel García-Goñi & Pere Ibern & José María Inoriza, 2009. "Hybrid risk adjustment for pharmaceutical benefits," Working Papers, Research Center on Health and Economics 1139, Department of Economics and Business, Universitat Pompeu Fabra.
    3. Gugushvili, Alexi, 2007. "The advantages and disadvantages of needs-based resource allocation in integrated health systems and market systems of health care provider reimbursement," MPRA Paper 3354, University Library of Munich, Germany.
    4. Alessio Petrelli & Roberta Picariello & Giuseppe Costa, 2010. "Toward a needs based mechanism for capitation purposes in Italy: the role of socioeconomic level in explaining differences in the use of health services," International Journal of Health Economics and Management, Springer, vol. 10(1), pages 29-42, March.
    5. Manuel García-Goñi & Pere Ibern & José Inoriza, 2009. "Hybrid risk adjustment for pharmaceutical benefits," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 10(3), pages 299-308, July.
    6. Jones, A.M, 2010. "Models For Health Care," Health, Econometrics and Data Group (HEDG) Working Papers 10/01, HEDG, c/o Department of Economics, University of York.

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    Keywords

    prescribing expenditure;

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