Item of service remuneration in general practice in the UK: what can we learn from dentists?

In response to the UK Government's proposal to increase the proportion of general practitioner income accruing from capitation payments the General Medical Services Committee of the British Medical Association has called for an extension of fee for item of service provision in general practice. In this paper the allocation of resources in primary care dentistry, where fee for service provision is currently used, is analysed in order to shed light on the debate. Since dentists' fees are set in accordance with average dentist time inputs, differences in cost per treatment course reflect differences in course content. Multiple regression techniques are used to estimate a cost per treatment course function. Using cross-sectional data for family practitioner committees in England and Wales for 1982 a significant negative correlation is found between cost per course and population per dentist after allowing for patient demand and need characteristics. A 10% decrease in population per dentist is associated with a 2.5% increase in cost per course. The observation cannot be explained by dentists rationing treatment in the presence of excess demand owning to the nature of the dentist contract. These results imply that in areas of greater supplies of dentists additional course content is being induced by dentists in order to maintain workloads. Hence although fee for service provision offers a financial incentive to increase service provision it offers no incentive to allocate services efficiently, that is in accordance with greatest need. The extension of fee for service provision in general medical practice would appear to be inconsistent with an objective of allocating scarce primary care resources in accordance with patient need.