How did they do that?

Implementing GP fundholding
Howard Glennerster et al
Open University Press, 1994, £12.99

Howard Glennerster’s book is useful for its clear explanation of the origins and implementation of fundholding. It contains no discussion of alternative GP purchasing schemes but does make comparisons with health authority purchasing. The authors argue that fundholding assumed huge political capital and had to succeed whatever the cost, and document the huge amounts of expensive management time consumed by making up rules for fundholding on the hoof. As a result even more time was spent correcting errors and keeping the whole show on the road.

And for what? The authors freely admit their book attends to the process of fundholding and not to whether any patients benefited from the scheme. ‘[The research] was, essentially, a study of administrative process and the working of health markets, not of health outcomes.’ In one extreme passage they do stray into health outcomes and suggest non-fundholders have no incentive to keep their patients healthy; fundholders have such an incentive to reduce referrals and keep the resulting savings.

In the lead up to the scheme’s launch, according to the book, ‘the Prime Minister [Margaret Thatcher] was deeply involved. The Secretary of State [Kenneth Clark] was the particular champion of the whole idea. Civil servants could not afford it to fail. Nor, if they valued their performance-related pay, could regional mangers!’

The real success of fundholding for the government, and the reason for Glennerster et al’s conversion to fundholding, is revealed on the penultimate page. In a passing reference to schemes in which GPs have co-operated with health authorities in purchasing health services, they are swept aside as accountable to no one. They ‘do not have the same shared responsibility to keep within the set budget... The great strength of GP fundholding is that it is building on a well understood legal and social unit - the [GP] partnership.’

In other words, by giving a practice a budget the GPs are responsible for keeping within the budget by limiting patient care. This is the reason why a majority of GPs refuse to take on fundholding - fundholders are the rationers of care rather than the advocate of their patients.

Another problem with fundholding is that budgets are based on what the practice did the year before - ‘historical referral’. Non-fundholders, whose budget is held by the health authorities, have their budgets set by a different process - ‘weighted capitation’. Glennerster et al clearly show how haphazard and unfair this is. Applying weighted capitation formulas to fundholders has proven impossible and so all fundholders’ budgets remain arbitrary and are taken directly from non-fundholders’ budgets.

Tens of millions of pounds were spent on an untried, untested scheme. Given the political imperative that it should not fail, this book shows how the trick was done.

Ron Singer