Differences in general practice initiated expenditures across Danish local health authorities—A multilevel analysis

Abstract

To assess differences in expenditures of general practice services across local health authorities (counties). A multilevel analysis of 2123 general practices nested within 15 counties is used to assess between county variations in general practice expenditures in year 2006. Schmidt and Sickles' fixed effect efficiency estimator is used to assess the potential for reducing expenditures (fee-for-service, prescriptions, and referrals). Expenditures associated with general practice constitute 38% of total health care expenditures. 42% of the variation in these expenditures is attributable to geographical location (county). Mean efficiency is estimated to 87% corresponding to a savings potential of 700 DKK per insured person. Referrals to specialised care are the main source of variation in GP initiated expenditures across the counties. Expenditures associated with out-patient referrals and referrals to practicing specialist are negatively correlated (p<0.01) indicating a substitution effect. Our results indicate that primary care reforms aiming at reducing GP initiated expenditures should focus on general practice access to low level specialised care rather than reforming GP remuneration systems.