Explaining trends in concentration of healthcare commissioning in the English NHS

In recent years there have been marked changes in organisational structures and budgetary arrangements in the English National Health Service, potentially altering the relationships between purchasers (primary care organisations (PCOs) and general practices) and hospitals. We show that elective admissions from PCOs and practices became significantly more concentrated across hospitals between 1997/98 and 2002/03. There was a reduction in the average number of hospitals used by PCOs (16.7-14.2), an increase in the average share of admissions accounted for by the main hospital (49-69%), and an increase in the average Herfindahl index (0.35-0.55). About half the increase in concentration arose from the increase in the number of purchasing organisations as 100 health authorities were replaced by 303 primary care trusts. Most of the remainder was probably due to hospital mergers. Fundholding general practices that held budgets for elective admissions had less concentrated admission patterns than non-fundholders whose admissions were paid for by their PCO. Around 1/10th of the increase in concentration at practice level was due to the abolition of fundholding in April 1999. Our results have implications for the effects of the recent reintroduction of fundholding and the halving of the number of PCOs.