The link between healthcare spending and health outcomes for the new English primary care trusts, London, The Health Foundation, 2009

Posted on July 6, 2009. Filed under: Clin Governance / Risk Mgmt / Quality, Health Economics, Primary Hlth Care | Tags: , |

The link between healthcare spending and health outcomes for the new English primary care trusts by Stephen Martin, Nigel Rice and Peter C. Smith, University of York.  London, The Health Foundation, 2009   ISBN 978-1-906461-09-6 64 p.

“This study was produced as part of the Quest for Quality and Improved Performance (QQUIP), an initiative of The Health Foundation.”


English programme budgeting data have yielded major new insights into the link between healthcare spending and health outcomes. This paper updates two recent studies that used programme budgeting data for 295 primary care trusts (PCTs) in England to examine the link between spending and outcomes for several programmes of care (Martin, Rice and Smith 2008a; 2008b). We use the same  economic model employed in the two previous studies.

The paper focuses on the dilemmas facing decision-makers who must allocate a fixed budget across programmes of care so as to maximise social welfare, given a health production function for each programme. We estimate two equations – a health outcome equation and an expenditure equation – for each programme (data permitting). The two previous studies employed expenditure data for 2004/05 and 2005/06 for 295 PCTs and found that in several care programmes – cancer, circulation problems, respiratory problems, gastro-intestinal problems, trauma burns and injury, and diabetes – expenditure had the anticipated negative effect on the mortality rate.

Each health outcome equation was used to estimate the marginal cost of a life year saved. In 2006/07 the number of PCTs in England was reduced – largely through a series of mergers – to 152. In addition, several changes were made to the methods employed to construct the programme budgeting data. This paper employs updated budgeting and mortality data for the new 152 PCTs to re-estimate health production and expenditure functions, and also presents updated estimates of the marginal cost of a life year saved in each programme. Although there are some differences the results we obtained are broadly similar to those presented in our two previous studies.”

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