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New funding formula could be used to set practice commissioning budgets

A radical new funding formula that could be used to set GPs’ future commissioning budgets has been found to predict future health costs more accurately than previous models, according to the results of a major Government-backed study.

The report, published on today, was commissioned by the Department of Health to look at how effective the model could be in predicting future hospital care expenditure for practices or CCGs covering different population sizes, and could be used by the NHS Commissioning Board as the basis with which to set future commissioning budgets.

Pulse first revealed in March how the new system would allocate a GP commissioning budget to each practice, and by adding them together to CCGs, based on patients’ predicted future use of NHS services.

Researchers examined information for everyone registered with a GP in England, such as their illnesses as recorded in hospital, which they used to develop a series of mathematical models to predict future costs.

The study used data from 2005-6 and 2006-7 to predict costs in 2007-8. These predicted costs were then compared with each practice’s actual costs for 2007-8 to assess how the model performed. 

The best model performed well by international standards, predicting 77% of hospital costs per practice, with subsequent analysis increasing this figure to 85%.

Researchers said the study could be used by the NHS Commissioning Board to set budgets for CCGs. But they warned that the best formulae tested could only predict about 12% of next year’s hospital costs per individual, suggesting the model should be used only to guide allocations to practices, and not for use at an individual level.

The study concluded: ‘With current information, it is not possible to know what the “true” level of health needs is in each practice.’

‘However, compared with previous methods, the PBRA makes far greater use of information from individuals, relies less on area level information attributed to individuals, and is more predictive of future costs. As such, it is an improvement on current methods but is only one step further in assessing health needs of practice populations.’

‘Further steps include using information on health needs collected in general practices, which will be possible if data from GP clinical systems are made available for such analysis.’



RCGP chair Dr Clare Gerada will be answering your questions in a live webchat this afternoon. Click here to view the webchat and submit your questions from 2pm.