Primary care capitation payments in the UK. An observational study

BACKGROUND: In 2004 an allocation formula for primary care services was introduced in England and Wales so practices would receive equitable pay. Modifications were made to this formula to enable local health authorities to pay practices. Similar pay formulae were introduced in Scotland and Northern Ireland, but these are unique to the country and therefore could not be included in this study. OBJECTIVE: To examine the extent to which the Global Sum, and modifications to the original formula, determine practice funding. METHODS: The allocation formula determines basic practice income, the Global Sum. We compared practice Global Sum entitlements using the original and the modified allocation formula calculations. Practices receive an income supplement if Global Sum payments were below historic income in 2004. We examined current overall funding levels to estimate what the effect will be when the income supplements are removed. RESULTS: Virtually every Welsh and English practice (97%) received income supplements in 2004. Without the modifications to the formula only 72% of Welsh practices would have needed supplements. No appreciable change would have occurred in England. The formula modifications increased the Global Sum for 99.5% of English practices, while it reduced entitlement for every Welsh practice. In 2008 Welsh practices received approximately £6.15 (9%) less funding per patient per year than an identical English practice. This deficit will increase to 11.2% when the Minimum Practice Income Guarantee is abolished. CONCLUSIONS: Identical practices in different UK countries do not receive equitable pay. The pay method disadvantages Wales where the population is older and has higher health needs.