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GP fundholding - the facts

Posted on 27 September 2005

GP fundholding was abolished in 1999 amid concerns that it helped to foster a two-tier health service. This year in an apparent volte face the government reintroduced delegated budgets to individual GP practices under the banner of Practice Based Commissioning.

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While Practice Based Commissioning is likely to deliver a number of valuable benefits for patients and local health economies, there is a risk the initiative will also induce a range of negative outcomes for the NHS. This is one of the conclusions of the latest paper in the University of York's Health Policy Matters series, published in conjunction with the Dr Foster Ethics Committee. Based on a review of the latest econometric evidence on the impact of the fundholding experiment, the paper highlights a number of possible benefits and drawbacks: Likely benefits include:
  • A lowering in elective referral rates to hospitals
  • Reduced emergency related occupied hospital bed days
  • Shorter waiting times for emergency treatments
  • Improved co-ordination of primary, intermediate and community support services
  • Better engagement of GPs in the commissioning and developing care integrated pathways
  • Likely dis-benefits include:
    • Reduced patient satisfaction
    • Increased management and transaction costs
    • Inhibiting inter-organisational co-ordination and the shared accomplishment of care delivery

The author concludes "Given the need to improve primary care teams and improve control of hospital demand with practice based commissioning, the lessons from evaluation of GP fundholding indicate that incentives will have to be improved and the diversity of innovation carefully managed and evaluated to ensure that improved patient benefits and greater efficiency can be secured".

Notes to editors:

  1. Dr Russell Mannion is a Senior Research Fellow in the Centre for Health Economics, University of York. The full paper can be accessed electronically and free at
  2. About the Dr Foster Ethics Committee The Dr Foster Ethics Committee is a regulatory body independent of Dr Foster, which has been set up to provide guidance and oversee the work of Dr Foster. The Ethics Committee is entirely independent of Dr Foster. To ensure impartiality, members of the committee are not remunerated for their time, none of the participants have any financial links with Dr Foster and they have no involvement in Dr Foster's commercial partnerships. Their interest is purely in ensuring better public access to health information. To find out more about Dr Foster visit:
  3. Health Policy Matters Department of Health Sciences Area 2, Seebohm Rowntree Building University of York, Heslington York YO10 5DQ Editor: Professor Alan Maynard Tel: (01904) 321333

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