The Resource Allocation Formula Calculation

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The Resource Allocation Formula Calculation

• June 2011

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Formula Structure
Population
Age/Sex Cost Weights
Additional Needs
Unavoidable Excess Costs
Health Board Population
Relative need due to age/sex profile
Relative need due to MLC and other factors
Relative cost of providing services to different
geographical areas
X
X
X
Weighted Share

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Care Programmes
The Resource Allocation formula covers six care
programmes

• Acute
• Care of the Elderly
• Mental Health Learning Difficulties
• Maternity
• Community
• GP Prescribing

Hospital and Community Health Services (HCHS)
Prescribing
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Weighting of Expenditure across Care Programmes
Data Source Costs Book, year ending 31st March
2008
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GP Prescribing

• No adjustment is made for unavoidable excess
  costs
• Funds are allocated to Boards based on the
  location of GP practices within their area
• Prescribing formula only applies to the cost of
  prescriptions that are dispensed in the community
  (i.e. through a community pharmacist or GP)
• Hospital prescribing costs, although not
  separately identified within the formula, are
  included within the HCHS allocations

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Formula Structure
Population
Age/Sex Cost Weights
Additional Needs
Unavoidable Excess Costs
Health Board Population
Relative need due to age/sex profile
Relative need due to MLC and other factors
Relative cost of providing services to different
geographical areas
X
X
X
Weighted Share

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Populations HCHS (1)

• General Register Office for Scotland (GROS) mid
  year estimates population projections
• Health Board and datazone populations (rebased)
• Used for the HCHS part of the calculation

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Populations HCHS (2)

• For example, to re-base the 2006 based projection
  of 2010 populations using 2008 Mid Year Estimate
  (MYE) for the 2010/11 allocation year the
  calculation is
• (2008 MYE)
• (2006 based projection of 2008)
• (2006 based projection of 2010)
• the re-base calculations are produced at health
  board level then compared to health board MYEs to
  create an adjustment factor
• This adjustment factor is used to calculate
  population projections by datazone as GRO do not
  publish projections at this level

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Populations HCHS (3)
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Populations GP Prescribing (1)

• Community Health Index (CHI) Data
• Provides information on all patients registered
  with a GP in Scotland
• Practice population adjusted for list size
  inflation
• Rescaled to HCHS rebased population projections
• Used for the GP Prescribing part of the formula

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Source GROS June 2010 MYE compared to CHI July
2010 list sizes Total populations GROS 5.1m,
CHI, 5.5m
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Populations GP Prescribing (2)

• The re-base calculations are produced by local
  council area then compared to local council area
  mid-year estimates (GROS) to create adjustment
  factor
• Adjustment factors produced for all combinations
  of local council area of residence, age and sex
• This adjustment factor is applied to the GP
  practice population

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Population - Questions?
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Resource Allocation FormulaAge/Sex Cost Weights
Population
Age/Sex Cost Weights
Additional Needs
Unavoidable Excess Costs
Age/Sex Cost Weights
Health Board Population
Relative need due to age/sex profile
Relative need due to MLC and other factors
Relative cost of providing services to different
geographical areas
Relative need due to age/sex profile
Weighted Share
X
X
X

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Age/Sex Analysis

• The formula accounts for the effect of age
  differences on the cost of delivering different
  NHS services for each sex
• Older and very young people tend to consume
  greater resources so the costs rise steeply with
  age
• Calculations are carried out for each care
  programme

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Combining Costs Activity Data
Example for the Acute care programme - Age/sex
costs per head
Age Band 0-1 2-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85-89 90
Males 1051 282 218 204 202 211 218 252 295 328 382 491 624 868 1141 1467 1880 2383 2836 3277
Females 897 232 196 186 205 233 262 291 321 367 429 510 592 735 969 1211 1610 2111 2712 3072

• Twenty age bands are used giving a total of 40
  age/sex cost weights
• All are costs per head except maternity which is
  cost per birth
• Weights are multiplied through the NHS Board
  populations at datazone level (or births) to give
  an expected cost that takes into account
  different demographics
• The age-sex index for each datazone is the ratio
  of the datazone cost per head to the Scottish
  cost per head

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Average costs by age gender
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Age/Sex Analysis - example
Total Expected Cost Total Population Cost Per Head Age Sex Index
Datazone1 168,464 842 200 1.00
Datazone2 168,464 629 268 1.34
Datazone3 125,844 814 155 0.77
Scotland 1,040,365,800 5,201,829 200 1.00
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GP Prescribing Age/Sex Analysis (1)

• Sample of 1,000 prescriptions per month over a
  year.
• Pooling samples over the most recent 3 years are
  used to produce cost per head by gender and age
  (9 age bands)
• The age-sex index for each practice is the ratio
  of the practice cost per head to the Scottish
  cost per head

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GP Prescribing - Age Sex Analysis (2)

• Average costs by age gender (GP prescribing)

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Age Sex Adjustment - Questions?
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Resource Allocation Formula Additional Needs
Population
Age/Sex Cost Weights
Additional Needs
Unavoidable Excess Costs
Health Board Population
Relative need due to age/sex profile
Relative need due to MLC and other factors
Relative cost of providing services to different
geographical areas
Weighted Share
X
X
X

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The Additional Needs - Morbidity and Life
Circumstances (MLC)

• This adjustment takes into account factors that
  predict the need for healthcare in addition to
  the needs due to age and sex
• This index directs relatively greater resources
  towards Boards with higher additional needs
• The factors that best explain the variation in
  need for each care programme were identified
  using statistical linear and log linear
  regression analysis

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The Additional Needs small area indices

• The index is constructed at the intermediate data
  zone (IDZ) level (currently there are 1235 IDZs
  and 6505 data zones)
• Each data zone within an IDZ shares the same
  index value
• It is updated every three years

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The Additional Needs Regression Indices
Regression Index Name Needs variables Topic Source Period
Acute/Care of the Elderly/GP Prescribing All cause standardised mortality rate - age 75 and under Births deaths ISD 2001-2005
Acute/Care of the Elderly/GP Prescribing Limiting long-term illness rate (age-sex standardised using 7yr age bands) Morbidity Census 2001
Mental Health Learning Disabilities Proportion claiming severe disablement allowance ( of 16 population) Claimant counts economic indicators SNS 2004
Mental Health Learning Disabilities Proportion in one person households Households Census 2001
Mental Health Learning Disabilities Proportion in social rented housing Housing SNS 2001
Maternity Mean House Price Housing SNS 1994-2005
Maternity Birth rate per female population Births deaths GRO(Births) 2005
Maternity SEURC supplementary variable Rurality SNS 2004
SNS Scottish Neighbourhood Statistics
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The Additional Needs Regression Analysis
Coefficients needs indices by diagnostic group
using the acute regression index
Coefficients needs indices by diagnostic group
using the mental health regression index
Care Group\Diagnostic Group Care Group\Diagnostic Group Constant Index Coefficient
Acute Cancer 1.003 0.038
Acute Circulatory 1.012 0.107
Acute Digestive 1.008 0.116
Acute Injuries 1.004 0.113
Acute Other Acute 1.004 0.092
Acute Acute Outpatients 1.003 0.040
Acute Respiratory 1.017 0.171
Care of the Elderly Care of the Elderly 1.029 0.089
Prescribing Cardiovascular 1.003 0.079
Prescribing Central Nervous System 0.937 0.125
Prescribing Gastro-intestinal 0.984 0.094
Prescribing Infections 0.953 0.018
Prescribing Musculoskeletal 1.019 0.133
Prescribing Other Prescribing 1.021 0.069
Care Group/Diagnostic Group Constant Index Coefficient
Mental Illness and Learning difficulties -0.223 0.139
Maternity coefficients of needs index using the
maternity regression index and supplementary
variable for Maternity
Variable Variable Value
Maternity - Constant Maternity - Constant 1.011
Maternity - Index Coefficient Maternity - Index Coefficient -0.034
Maternity - Supplementary Variable SEURC 1 0.000
Maternity - Supplementary Variable SEURC 2 0.055
Maternity - Supplementary Variable SEURC 3 0.036
Maternity - Supplementary Variable SEURC 4 0.132
Maternity - Supplementary Variable SEURC 5 0.033
Maternity - Supplementary Variable SEURC 6 0.097
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The Additional Needs (1)
Utilisation
National average
1
Needs
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The Additional Needs (2)
Utilisation
1
Needs
Repeat for each diagnostic group
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The Additional Needs (3)
Diagnostic Group
Utilisation
A
B
1
Needs
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The Additional Needs (4)
Diagnostic Group
Utilisation
A
MLC constant Coefficientneed
B
1
0.85
Needs
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The Additional Needs (5)
Diagnostic Group
Utilisation
A
MLC constant Coefficientneed
B
1
MLC 0.95
Needs
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Average across acute diagnostic groups (weighted
by costs)
IDZ Acute MLC index
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The Additional Needs Indices

• Acute, Care of the Elderly GP Prescribing
  using Acute Regression Index
• MLC Index constant CoefficientIndex
• Mental Health Learning Difficulties using
  Mental Health Regression Index
• MLC Index Exp (constant CoefficientIndex)
• Maternity using Maternity Regression Index
• MLC Index constant CoefficientIndex
  Maternity supplementary variable coefficients

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Community Additional Needs Index
The additional needs index for community is
calculated by combining MLC indices from the four
groups acute outpatients, care of the
elderly, mental health learning difficulties
and maternity by using community weightings as
shown below
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Additional Needs - Questions?
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Resource Allocation FormulaUnavoidable excess
costs adjustments
Population
Age/Sex Cost Weights
Additional Needs
Unavoidable Excess Costs
Health Board Population
Relative need due to age/sex profile
Relative need due to MLC and other factors
Relative cost of providing services to different
geographical areas
Weighted Share
X
X
X

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Unavoidable Excess Cost Adjustments

• Indices are calculated annually to adjust for
  the unavoidable excess costs of delivering
  services in to different geographical areas
• Separate indices are calculated for hospital and
  community activity
• For hospital activity, indices are calculated
  for each of the four care programmes (acute,
  mental health learning disabilities, care of
  the elderly and maternity)
• For community services, indices are calculated
  for clinic based and travel based services

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Hospital Unavoidable Excess Cost (1)

• Cost ratio to analyse the variation in local
  costs relative to the costs for the same service
  at national average unit costs
• Produced by urban - rural category in which the
  data zone lies
• The index provides a better reflection of all
  unavoidable excess costs of supplying health
  services rather just remoteness

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Hospital Unavoidable Excess Cost (2)

• Scottish Executive Urban Rural Categories
  (SEURC)
• Primary Cities
• Urban Settlements
• Small towns accessible
• Small towns remote
• Small towns very remote mainland
• Small towns very remote island
• Rural areas accessible
• Rural areas remote
• Rural areas very remote mainland
• Rural areas very remote island

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Hospital Unavoidable Excess Cost (3)
Percentages Health Boards resident in each
urban-rural category
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Hospital Unavoidable Excess Cost (4) Example
Acute care programme
Excess Costs index 0.98
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Community Unavoidable Excess Cost (1)

• Travel based services

• Travel Simulation Model based on
• Census output areas ( 42,604 output areas )
  data
• Data about drive time to small settlement
  (3000 people) or large settlement (10,000
  people) size
• Assumptions about contact duration, setup time,
  Island contact time, base location proportion
  of home visit
• Population weighted by age-sex

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Community Unavoidable Excess Cost (2) Travel
based services adjustment
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Community Unavoidable Excess Cost (3)Clinic
based services

• For clinic based services the costs of providing
  services in remote general practices taken from
  the Scottish Allocation Formula (SAF)
• SAF - Scottish version of the UK General Medical
  Services Formula
• Take remote and rural need index from SAF report
• Take CHI populations extract by GP practice
  data zone

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Community Unavoidable Excess Cost (4)Clinic
based services

• Map GP practice level index to CHI file then
  average to data zone, using a weighted average of
  index weighted by population per practice
• Convert the needs index to a relative index by
  dividing through by the national average value,
  e.g. to get 1.05 etc where Scotland is 1

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GP Prescribing Unavoidable Excess Costs

• The GP prescribing excess cost index is set to
  one for all practices as prescriptions are
  reimbursed at national fixed prices

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Unavoidable Excess costs - Questions
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Overall Results

• The indices for HCHS and GP Prescribing parts of
  the formula are calculated separately
• Final index for age/sex, additional needs and
  unavoidable excess cost at data zone level/GP
  practice are produced by using care programme
  weightings from the Costs Book to combine all
  different care programme indices
• The indices are relative to the Scottish average
  value equal to 1.0

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Data Sources

• Costs data is based on the Scottish Health
  Service Costs Book
• Activity data
• - Healthcare data for individual patients is
  collected as a series of Scottish Morbidity
  Records (SMR)
• - Other data sources, including
• Practice Team Information (PTI)
• General Register Office (GRO)

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Data Sources
Costs data Hospital SFR 5.3 Inpatient total net
expenditure by specialty SFR 5.5 Daycase total
net expenditure by specialty SFR 5.6 Outpatient
Treatment total net expenditure by specialty SFR
5.7 Outpatient Consultant Clinics total net
expenditure by specialty SFR 5.7n Nurse-Led
Outpatient Clinic total net expenditure by
specialty SFR 5.9 Day Patient total net
expenditure by Specialty Community SFR 8.3
Community Health Services Expenditure by service
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Data Sources Hospital Activity data
Care Programme Patient Type Data Scheme Activity used to proportion costs
Acute Daycases SMR01 Discharges
Inpatients SMR01 Discharges for total cost, length of stay for variable cost
Outpatients/Daypatients SMR00 New outpatient attendances
Care of the Elderly Inpatients SMR50 Length of stay
Mental Health Learning Disabilities Inpatients SMR04 Length of stay
  Outpatients/Daypatients SMR00 New outpatient attendances
Maternity Inpatients/Daycases SMR02 Discharges for total cost, length of stay for variable cost
SMR01 (abortions) Discharges for total cost, length of stay for variable cost
Outpatients/Daypatients SMR00 New outpatient attendances
Births GRO Births  
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Data Sources Community activity
Cost Cost Cost Source of Scotland level patient activity profiles by age-sex
District nursing District nursing District nursing District nurse patient contacts from Practice team Information (PTI)
Health visiting Health visiting Health visiting Health visitor patient contacts from PTI
Midwifery Midwifery   New outpatient attendances for obstetric services
Psychiatric team Psychiatric team Psychiatric team Patient contacts from PTI for mental health
Learning difficulties team Learning difficulties team Learning difficulties team New outpatient attendances for learning difficulties services
Child health Child health   Population aged 14 and under
Specialist nursing Specialist nursing Specialist nursing Patient contacts from PTI
Addiction services Addiction services Addiction services Drug and alcohol misuse data
Family planning Family planning Family planning Female population aged 15-44
Allied health professionals (AHPs) Clinical psychology Clinical psychology All staff contacts from PTI
Allied health professionals (AHPs) Physiotherapy Physiotherapy All staff contacts from PTI
Allied health professionals (AHPs) Occupational therapy Occupational therapy All staff contacts from PTI
Allied health professionals (AHPs) Chiropody Chiropody All staff contacts from PTI
Allied health professionals (AHPs) Dietetics Dietetics All staff contacts from PTI
Allied health professionals (AHPs) Speech therapy Speech therapy All staff contacts from PTI
Other services Community dentistry Community dentistry Patients treated in the community dental service
Other services Home dialysis Home dialysis Population aged 50-65
Other services Breast screening Breast screening Female population aged 50-69
Other services Incontinence Incontinence Population aged 65
Other services Health promotion Health promotion Population all ages
Other services Other Other Total patient contacts from PTI
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Bring all pieces together
HCHS GP prescribing HCHS only

• Population
• Age sex adjustment
• Additional needs adjustment
• Unavoidable excess costs adjustment

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HCHS part of the formula (1)
For each formula component the final index is
calculated using the individual care programme
indices and weights
All indices shown within the flowchart are
comparable to a Scotland index of 1.00
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HCHS part of the formula (2)
Adjusted population is calculated by multiplying
the final indices for three formulas components
by crude population
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HCHS Target Shares 2011/12
HCHS          
HB HB name Population Share1 Age-sex share Age-sex and MLC share Overall share
A Ayrshire Arran 7.02 7.31 7.38 7.36
B Borders 2.18 2.32 2.09 2.10
F Fife 7.00 7.12 6.93 6.87
G Greater Glasgow Clyde 22.93 22.23 24.40 24.15
H Highland 5.99 6.34 5.94 6.36
L Lanarkshire 10.80 10.53 10.98 10.88
N Grampian 10.54 10.49 9.67 9.65
R Orkney 0.38 0.41 0.37 0.43
S Lothian 16.05 15.46 14.95 14.80
T Tayside 7.71 8.11 7.91 7.88
V Forth Valley 5.63 5.54 5.49 5.46
W Western Isles 0.50 0.55 0.53 0.62
Y Dumfries Galloway 2.84 3.15 2.97 3.00
Z Shetland 0.42 0.43 0.39 0.46
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GP Prescribing Target Shares 2011/12
Prescribing Prescribing Prescribing      
HB Health Board Population Share1 Age-sex share Age-sex and MLC share Overall share
A Ayrshire Arran 7.03 7.50 7.63 7.63
B Borders 2.15 2.38 2.03 2.03
F Fife 6.98 7.11 6.90 6.90
G Greater Glasgow Clyde 23.04 21.95 24.88 24.88
H Highland 5.96 6.55 6.03 6.03
L Lanarkshire 10.71 10.46 11.38 11.38
N Grampian 10.51 10.47 9.30 9.30
R Orkney 0.38 0.42 0.38 0.38
S Lothian 16.06 15.04 14.20 14.20
T Tayside 7.69 8.11 7.66 7.66
V Forth Valley 5.72 5.68 5.62 5.62
W Western Isles 0.50 0.57 0.55 0.55
Y Dumfries Galloway 2.85 3.31 3.07 3.07
Z Shetland 0.42 0.44 0.38 0.38
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Unified Budget Target Shares 2011/12
Total          
HB Health Board Population Share1 Age-sex share Age-sex and MLC share Overall share
A Ayrshire Arran 7.02 7.34 7.41 7.40
B Borders 2.18 2.33 2.08 2.09
F Fife 7.00 7.12 6.92 6.87
G Greater Glasgow Clyde 22.94 22.20 24.46 24.25
H Highland 5.99 6.37 5.96 6.31
L Lanarkshire 10.78 10.52 11.03 10.95
N Grampian 10.54 10.49 9.62 9.60
R Orkney 0.38 0.41 0.37 0.42
S Lothian 16.05 15.40 14.85 14.72
T Tayside 7.71 8.11 7.87 7.85
V Forth Valley 5.64 5.56 5.51 5.48
W Western Isles 0.50 0.55 0.53 0.61
Y Dumfries Galloway 2.84 3.17 2.98 3.01
Z Shetland 0.42 0.43 0.39 0.45
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Percentage change in per capita funding due to
the resource allocation formula
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Questions?
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Further Information

• Queries nss.isdNHSResources_at_nhs.net
• 0131 275 6719 / 0131 275 6117
• www.nrac.scot.nhs.uk
• www.tagra.scot.nhs.uk