The NHS has a system of budgets for general practices to cover hospital expenditure for their patients. This report models individual expenditure using diagnostic information from previous hospital spells, plus a large set of variables measuring population, general practice, and local hospital characteristics.
The authors offer a procedure for setting GP budgets which reduce limitations in the available data. They look at the distinction between need and non-need variables and examine “incentive”-related implications.
Gravelle, H. Dusheiko, M. [and] Martin, S. [et al] (2011). Modelling individual patient hospital expenditure for general practice budgets. CHE Research Paper 73. York: Centre for Health Economics, University of York, December 2011.