Background Hospitals account for the major share of health expenditure. Primary healthcare may improve efficiency at the hospital level by reducing avoidable admissions. We examined whether rapid expansion of primary healthcare in the context of Brazil’s Family Health Strategy (FHS) was associated with a reduction in avoidable hospitalisations.

Methods We constructed panel data for 5506 municipalities over 2000–2014. Our primary outcome was the rate of avoidable hospitalisations, defined with reference to the official list of ambulatory care sensitive conditions (ACSC). The exposure variable was FHS coverage. We used first-difference models at the municipality level, controlling for municipality characteristics and confounding trends. We ran similar models for each of the 19 diseases in the list of ACSCs.

Findings FHS coverage expanded from 14% to 64% of the population between 2000 and 2014. Over the same period, the rate of avoidable hospitalisations fell from 17 to 10 per 1000 population. Results from the econometric analysis show that the FHS at full coverage was associated with an increase of 0.6 (95% CI 0.3 to 0.9; p<0.001) in the rate of avoidable hospital admissions. Expansion of the FHS was associated with an increase of 866 (95% CI 762 to 970; p<0.001) in the rate of primary care consultations. The FHS was not significantly associated with a reduction in hospitalisations for any of the 19 conditions.

Conclusions While high-quality primary healthcare can deliver considerable health benefits to the population, it may not always be effective in addressing inefficiencies at the hospital level due to avoidable admissions.