The link between health spending and health outcomes for the new English primary care trusts
June 2009
Key points
- 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).
- 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.
- Although there are some differences, the results we obtained are broadly similar to those presented in our two previous studies.
This report describes a model which takes into account population need in a way that has not previously been undertaken.
The authors note that their work has a number of limitations including the use of a rather narrow outcome indicator (mortality) and the need to assume a relatively stable pattern of spending by PCTs across programmes over the recent past. Notwithstanding these limitations, the study offers clear confirmation that current expenditure by PCTs on some important programmes of care is highly cost-effective and illustrates how programme budgeting data can be used to generate information which might usefully inform PCTs' spending decisions.
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