News » DDA news, Research » Dispensing cross subsidy highlighted in rural GP funding critique
August 12th 2026
The role of dispensing income as a cross subsidy for rural NHS GP funding has been highlighted in a new paper by a think-tank.
Noting the funding challenges of delivering NHS GP services in rural areas, General practice funding in England published by the Health Foundation, makes five recommendations for NHS GP funding policy:
Looking at the challenges of delivering rural GP services, the report notes that smaller practices are likely to have higher per patient overheads, greater challenges with recruitment and retention and fewer opportunities for economies of scale, resulting in a smaller share of total payments available for direct patient care.
It notes that Carr-Hill capitation formula adjustments for rurality and deprivation may still not be proportionally enough to account for the additional resources required to deliver care in some areas. It concludes: “This suggests that GP contractors in rural practices may be compensating for lower incomes through dispensing activity.”
Looking specifically at GP incomes, the report notes that GP contractors in non-dispensing rural practices have the lowest mean annual income (£153,536) and income per session (£393), while rural dispensing GP contractors have the highest annual (£176,443) and per session (£447) incomes. Calculating average payments per registered patient by type of funding, 2024/25, the report states that dispensing income equates to £2.60 per patient. But it notes, after removing dispensing income from calculations, rural practices are still at a financial disadvantage due to the costs of rural service delivery.
The report goes on to discuss documented “differences in prescribing behaviour” of dispensing practices, suggesting that “this may not always align with efficient resource allocation or patients’ interests”.
The report quotes 2019 research led by physician and academic Ben Goldacre, the conclusions and methodology of which were subsequently challenged by Darrin Baines, Professor of Health Economics Bournemouth University in a subsequent paper. The Health Foundation also cites a 2026 study that concludes that dispensing practices are associated with shorter prescription lengths, increasing the number of prescriptions issued over time and the associated dispensing fee.
In response to the Goldacre et al paper, the DDA repeated its resolution that doctors should prescribe what is best for the patient first, the NHS second and the practice third.
