Complements or substitutes? Associations between volumes of care provided in the community and hospitals

Abstract: It is suggested by policy makers that improvement and expansion of care in community settings will ease increasing pressures on hospital services. Substitution may lower overall health system costs, but complementarity because of previously unidentified needs might raise them. We exploit the availability of new national data on community and primary medical care services in England to undertake system-level analyses of whether activity in the community acts as a complement or a substitute for activity provided in hospitals. We used two-way fixed effects regression to relate monthly counts of community care contacts and primary medical care contacts to numbers of emergency department attendances, outpatient visits, planned and unplanned admissions for 242 hospital providers between November 2017 and September 2019. We then used national unit costs to estimate the effects of increasing community activity on overall system expenditure. The findings show community care contacts to be weak substitutes with all types of hospital activity and primary care contacts are weak substitutes for emergency hospital attendances and admissions. Primary care contacts and planned hospital services are complements. Increases in community services and primary care activity are both associated with increased overall system expenditure of £34 per visit for community care and £41 per appointment in general practice. Expansions of community-based services may not generate reductions in hospital activity and expenditure.