Feature / Introduction to……resource allocation (2)

Last issue, we looked at how NHS revenue resources are allocated to English commissioners. But how is this done elsewhere in the UK?

NHS funding in the devolved nations does not come directly from Whitehall but the devolved governments’ overall funding votes received from the UK Parliament. Any changes in expenditure in England are passed on to the devolved nations using the Barnett formula, which takes into account the relative population size and spending in the administration.

The Barnett formula affects only the overall funding – if the Department of Health in England is given additional funds, the overall funding voted to the Scottish, Welsh and Northern Irish administrations will increase proportionately. It is then up to local executives to decide whether to pass on the rise to their health service or use it elsewhere.

Resource allocation across the UK is generally capitation and needs based. In Scotland, it is governed by the NHS Scotland Resource Allocation Committee (NRAC) formula, introduced in 2009/10. As with its predecessor Arbuthnott formula, it is capitation based and covers hospital and community health services (HCHS) and GP prescribing. The general medical services budget is calculated using a different, UK-based formula.

NRAC builds on Arbuthnott in several ways, including using smaller units to better predict need; more accurately accounting for the needs of the very old or young; and it includes a more rigorous evidence base for hospital cost adjustment. Health boards are being moved to their target allocations under this.

In Northern Ireland, the capitation formula allocates funds to five local commissioning groups and reflects the needs of the population based on age, gender and deprivation. There is a separate capitation formula for family health services based on GP practice lists.

The Health and Social Care Board (which allocates the funds) has developed strategies to move localities to their capitation targets.

In Wales each local health board (LHB) receives a unified allocation, which identifies separate funding for discretionary HCHS and prescribing spending, and protected and ring-fenced HCHS. The Welsh Assembly government is committed to implementing the (Townsend) direct needs formula, calculated using resident populations weighted for needs when gross funding allows.