Review of Needs Formula 2006/7

Review of Needs Formula 2006/7


Morris, S., Vallejo-Torres, L., (Brunel University) Carr-Hill, R., Dixon, P., Rice, N. (University of York) Sutton, M. and Olajide, D. (HERU).


Appraise the development of the current formula used to distribute resources to PCTs. Develop new formulae for hospital and community health services and prescribing. Investigate the application of these formulae to practices and to review the needs element of the NHS resource allocation formula for HCHS and prescribing in three stages.

In stage 1 potential improvements were identified to the current formulae in terms of methodology and data availability, the relationship between current target allocations and need was analysed, the current formula was compared with relevant international approaches and improvements to the current utilisation-based approach was delineated.

In stage 2 all relevant datasets were included and the following was investigated: full or partial use of an epidemiological approach; inclusion of outpatient activity data; methods for costing activity data; the feasibility of modelling community health services activity; use of individual level data; accounting for age-related and additional needs using different procedures; modelling activity at different levels of aggregation across sub-programmes; methods of identifying and controlling for unmet need; and the treatment of rurality. In stage 3 target shares for practices were computed. Bootstrapping techniques were used to generate confidence intervals around PCT and practice needs indices and around the random variation facing planning organisations due to uncertainty in utilisation.


D Olajide




Vallejo-Torres, L., Morris, S., Carr-Hill, R.A., Dixon, P., Law, M.R., Rice, N. and Sutton, M. Can regional resource shares be based only on prevalence data? An empirical investigation of the proportionality assumption. Social Science and Medicine, 2009; 69(11): 1634-1642.

Morris, S., Carr-hill, R., Dixon, P., Law, M., Rice, N., Sutton, M. and Vallejo-Torres, L. Combining the age related and additional need. 2007 review of the needs formula for hospital services and prescribing activity in England. Report submitted to the Department of Health. November 2007.


Morris, S., Dixon, P., Sutton, M., Rice, N. and Carr-Hill, R. DH Needs Formula Review 2006/7. The Technical Advisory Group, Department of Health. London, August 2007.