Were GP fundholder prices consistent?

Five-fold variation in prices for similar fundholder procedures in one region in 1991-92.

Variation in prices unlikely to be due entirely to variation in costs.

Significant price variation still evident by 1993-94.

Reduction in price variation largely due to separate identification of day-case episodes.

Did price equal cost?

Consistent mark-up for extra-contractual referrals, with prices being greater than costs.

Generally negative mark-up for prices charged to GP fundholders.

Average prices charged for all fundholder procedures in 1993-94 were 82 per cent of average costs.

Did competition lower prices?

Only ear, nose and throat surgery ECR prices were significantly lower in high-competition areas.

Gynaecology ECR prices were also lower in areas of high competition.

Stronger competition effect on prices in lower-cost specialties.

For three out of the eight procedures studied (varicose vein stripping, myringotomy and tonsillectomy) there was an association between lower prices and high competition.

For hip replacement, higher levels of competition were associated with higher prices.

Lower prices for all fundholder procedures were associated with areas of high competition.

Did monopoly health authorities extract lower


Fundholders in districts with a high share of a provider's activity generally enjoyed lower prices.

What impact did competition have on price changes

over time?

No significant association was found between price changes and competition.

High price levels fell more than low price levels.

First-wave trusts and hospitals with a high proportion of activity emanating from HAs increased fundholder prices more steeply than other trusts.

Did competition reduce costs?

No significant evidence of reduction of costs for the period 1991-92 to 1993-94.

By 1994-95, a quarter of hospitals in the most competitive markets had reduced costs by 14 per cent, compared with reductions of around 4 per cent for a quarter of those in the least competitive markets.