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The Effect of Budgets on Doctor Behaviour: Evidence From A Natural Experiment

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  • Mark Dusheiko
  • Hugh Gravelle
  • Rowena Jacobs
  • Peter C Smith

Abstract

In many health care systems primary care physicians act as 'gatekeepers' to secondary care. We investigates the impact of the UK fundholding scheme under which general practices could elect to hold a budget to meet the costs of elective surgery for their patients. We use a differences in differences methodology on a large four year panel of English general practices before and after the abolition of fundholding. Fundholding incentives reduced fundholder elective admission rates by 3.3% and accounted for 57% of the difference between fundholder and nonfundholder elective admissions, with 43% a selection effect due to unobservable differences in practice characteristics. Fundholding had no effect on emergency admissions.

Suggested Citation

  • Mark Dusheiko & Hugh Gravelle & Rowena Jacobs & Peter C Smith, "undated". "The Effect of Budgets on Doctor Behaviour: Evidence From A Natural Experiment," Discussion Papers 03/04, Department of Economics, University of York.
    • Handle: RePEc:yor:yorken:03/04
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    References listed on IDEAS

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    1. Darrin Baines;Keith Tolley;David Whynes, 1997. "Prescribing, Budgets and Fundholding in General Practice," Series on Health 000426, Office of Health Economics.
    2. Propper, Carol & Croxson, Bronwyn & Shearer, Arran, 2002. "Waiting times for hospital admissions: the impact of GP fundholding," Journal of Health Economics, Elsevier, vol. 21(2), pages 227-252, March.
    3. Gravelle, Hugh & Dusheiko, Mark & Sutton, Matthew, 2002. "The demand for elective surgery in a public system: time and money prices in the UK National Health Service," Journal of Health Economics, Elsevier, vol. 21(3), pages 423-449, May.
    4. Hugh Gravelle & Peter C. Smith & Ana Xavier, "undated". "Waiting Times and Waiting Lists: A Model of the Market for Elective Surgery," Discussion Papers 00/27, Department of Economics, University of York.
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    6. Darrin L. Baines & David K. Whynes, 1996. "Selection bias in GP fundholding," Health Economics, John Wiley & Sons, Ltd., vol. 5(2), pages 129-140, March.
    7. Lindsay, Cotton M & Feigenbaum, Bernard, 1984. "Rationing by Waiting Lists," American Economic Review, American Economic Association, vol. 74(3), pages 404-417, June.
    8. Gosden, Toby & Torgerson, David J., 1997. "The effect of fundholding on prescribing and referral costs: a review of the evidence," Health Policy, Elsevier, vol. 40(2), pages 103-114, May.
    9. Whynes, David K. & Ennew, Christine T. & Feighan, Teresa, 1999. "Entrepreneurial attitudes of primary health care physicians in the United Kingdom," Journal of Economic Behavior & Organization, Elsevier, vol. 38(3), pages 331-347, March.
    10. Propper, Carol & Wilson, Deborah & Soderlund, Neil, 1998. "The effects of regulation and competition in the NHS internal market: the case of general practice fundholder prices," Journal of Health Economics, Elsevier, vol. 17(6), pages 645-673, December.
    11. Martin, Stephen & Smith, Peter C., 1999. "Rationing by waiting lists: an empirical investigation," Journal of Public Economics, Elsevier, vol. 71(1), pages 141-164, January.
    12. Croxson, B. & Propper, C. & Perkins, A., 2001. "Do doctors respond to financial incentives? UK family doctors and the GP fundholder scheme," Journal of Public Economics, Elsevier, vol. 79(2), pages 375-398, February.
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    Cited by:

    1. Carol Propper, 2013. "Competition, Incentives and the English NHS," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(01), pages 16-20, April.
    2. Philippe Choné & Ching-To Albert Ma, 2011. "Optimal Health Care Contract under Physician Agency," Annals of Economics and Statistics, GENES, issue 101-102, pages 229-256.
    3. Hugh Gravelle & Matt Sutton & Ada Ma, 2007. "Doctor Behaviour Under a Pay for Performance Contract: Evidence from the Quality and Outcomes Framework," Working Papers 028cherp, Centre for Health Economics, University of York.
    4. Ian Greener & Russell Mannion, 2008. "Will Practice-Based Commissioning in the English NHS Resolve the Problems Experienced by GP Fundholding?," Public Money & Management, Taylor & Francis Journals, vol. 28(4), pages 231-238, August.
    5. David Madden & Anne Nolan & Brian Nolan, 2005. "GP reimbursement and visiting behaviour in Ireland," Health Economics, John Wiley & Sons, Ltd., vol. 14(10), pages 1047-1060, October.
    6. Francisco J. Gomes & Laurence J. Kotlikoff & Luis M. Viceira, 2012. "The Excess Burden of Government Indecision," Tax Policy and the Economy, University of Chicago Press, vol. 26(1), pages 125-164.
    7. Dusheiko, Mark & Gravelle, Hugh & Jacobs, Rowena & Smith, Peter, 2006. "The effect of financial incentives on gatekeeping doctors: Evidence from a natural experiment," Journal of Health Economics, Elsevier, vol. 25(3), pages 449-478, May.
    8. Philippe Choné & Ching-to Albert Ma, 2004. "Asymmetric Information from Physician Agency : Optimal Payment and Healthcare Quantity," Working Papers 2004-37, Center for Research in Economics and Statistics.
    9. Gravelle, Hugh & Siciliani, Luigi, 2008. "Ramsey waits: Allocating public health service resources when there is rationing by waiting," Journal of Health Economics, Elsevier, vol. 27(5), pages 1143-1154, September.
    10. Karen Bloor, 2005. "Motivation, agency and public policy: of knights and knaves, pawns and queens, by Julian Le Grand. Oxford University Press, Oxford, 2003. No. of pages: 191. ISBN 0‐19‐926699‐9," Health Economics, John Wiley & Sons, Ltd., vol. 14(1), pages 101-102, January.
    11. Hugh Gravelle & Mark Dusheiko & Steve Martin & Pete Smith & Nigel Rice & Jennifer Dixon, 2011. "Modelling Individual Patient Hospital Expenditure for General Practice Budgets," Working Papers 073cherp, Centre for Health Economics, University of York.
    12. Gorecki, Paul K. & Nolan, Anne & Brick, Aoife & Lyons, Seán, 2012. "Pharmaceuticals Delivery in Ireland. Getting a Bigger Bang for the Buck," Research Series, Economic and Social Research Institute (ESRI), number RS24.
    13. Liu, Ting & Ma, Ching-to Albert, 2013. "Health insurance, treatment plan, and delegation to altruistic physician," Journal of Economic Behavior & Organization, Elsevier, vol. 85(C), pages 79-96.
    14. Dusheiko, Mark & Gravelle, Hugh & Yu, Ning & Campbell, Stephen, 2007. "The impact of budgets for gatekeeping physicians on patient satisfaction: Evidence from fundholding," Journal of Health Economics, Elsevier, vol. 26(4), pages 742-762, July.
    15. Tor Iversen & Anastasia Mokienko, 2016. "Supplementing gatekeeping with a revenue scheme for secondary care providers," International Journal of Health Economics and Management, Springer, vol. 16(3), pages 247-267, September.
    16. Brick, Aoife & Gorecki, Paul K. & Nolan, Anne, 2013. "Ireland: Pharmaceutical Prices, Prescribing Practices and Usage of Generics in a Comparative Context," Research Series, Economic and Social Research Institute (ESRI), number RS32.
    17. Mark Dusheiko & Hugh Gravelle & Rowena Jacobs, 2004. "The effect of practice budgets on patient waiting times: allowing for selection bias," Health Economics, John Wiley & Sons, Ltd., vol. 13(10), pages 941-958, October.

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    More about this item

    Keywords

    Budgets; Health care; Fundholding; Admission rates;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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