DETERMINING THE SIZE OF A TOTAL PURCHASING SITE TO MANAGE THE FINANCIAL RISKS OF RARE COSTLY REFERRALS - COMPUTER-SIMULATION MODEL

Objective-To estimate the financial risks of 15 categories of rare cos tly referrals for total purchasing sites of different population sizes . Design-Computer simulation of 100 fund years assuming Poisson distri bution of referrals. Setting-British general practices that have opted to become total purchasing sites. Referral rates and price estimates were supplied by South and West Devon Health Commission. Main outcome measures-Variation in referral costs to purchasers in relation to size of risk pool (person years at risk). Results-Random variation in refe rral costs increased as the size of the risk pool decreased. Variation increased greatly below 30 000 person years. The mean simulated cost of the referral categories considered was 2.8% of total NHS hospital a nd community service costs, and the maximum simulated cost for 7000 pe rson years was 6.8%. Simulated variation was robust to assumptions abo ut prices and referral rates for specific types of referral. Conclusio n-Rare costly referrals seem unlikely to bankrupt total purchasing sit es. The management of risk is not in itself justification for total pu rchasing to be based in several general practices in order to generate large populations. There are other ways of managing risk. Sites can e asily explore options by simulations using local referral rates and pr ices.