1. New developments in resource allocation December 2011 © Nuffield Trust PBRA (person-based resource allocation): A resource allocation formula at general practice level based on individual level characteristics

2. The Person-based Resource Allocation (PBRA) project © Nuffield Trust Team of experts working with Nuffield Trust from 2007 Initial purpose was to develop budgets for practice-based commissioning based on individual patient data Coverage: secondary care, prescribing, community health services

3. Reviews of resource allocation in English NHS Hospital and Community Health Services, 1976 to present © Nuffield Trust Drawn from Bevan, and Bevan and Van der Ven Note:RAWP = Resource Allocation Working Party RoR = Review of RAWP AREA = Allocation of Resources to English Areas CARAN = Combining Age Related Additional Needs (9) YearNameAllocations to Approximate population size Years applied 1976RAWP14 RHAs3m77/78 – 90/91 1980RoR14 RHAs3m91/92 – 94/95 1993University of York 14 RHAs 192 DHAs 3m 250,000 95/96 – 01/02 2001AREA303 PCTs175,00002/03 – 06/07 2006CARAN152 PCTs350,00007/08 –

4. Resource allocation in the NHS, England Fair shares CARAN DHPCTPractice PCT © Nuffield Trust

5. Person-based Resource Allocation     Practice population  @ £10,000 per person per year  @ £1,000 per person per year  @ £100 per person per year General population © Nuffield Trust                                                     

6. Modelling principles

7. Linking the data sets for analysis © Nuffield Trust

8. Modelling © Nuffield Trust Hospital-based expenditure excluding maternity and mental illness Modelled hospital expenditure in year t as a function of: – Age and sex (36) – Diagnostic categories from hospital utilisation in years t-1 and t-2 (152) – Attributed GP and small area needs characteristics (135) – Attributed small area supply characteristics (63) – PCT (152) Note: did not consider variables with potentially adverse incentive effects, eg number of encounters

9. Results from testing various models predicting costs for 2007/08 using data from 2005/06 & 2006/07 © Nuffield Trust Individual Validation Sample Practice Validation Sample Individual (n=5,205,747) (Individuals n=5,445,559 Practices=797) ModelSet of variablesR² Model 1:age and gender0.0370.344 Model 2:Add 152 morbidity markers0.1220.608 Model 3:Add 152 PCT dummies0.1220.744 Model 4:Add 135 attributed needs & 63 supply 0.1230.785 Model 5:Reduce to 7 attributed needs & 3 supply 0.1230.774

10. Using the formula to allocate to practices © Nuffield Trust ‘Freeze’ supply variables at national levels For each individual, calculate predicted NHS hospital costs For each practice calculate average costs in each age/sex category Assign age/sex specific averages to all individuals in practice – to address data lags and changes in registration Share out PCT budget according to practices’ total predicted expenditure

11. Comparing observed and expected costs at practice level, by practice population size, 2007/08

12. Results applied in acute component of the Fair Shares Toolkit © Nuffield Trust www.dh.gov.uk/en/Publicationsandstatistics/Publications/PublicationsPolicyAndGuidance/DH_111057

13. Phase 3 Objectives: in progress © Nuffield Trust Refresh existing PBRA model using more recent data (for allocations 2011/12) Develop improved PBRA model (for allocations 2012/13) Model a variety of risk sharing arrangements (to inform shadow CCG and NHS Commissioning Board)

14. December 2011 © Nuffield Trust www.nuffieldtrust.org.uk/pbra Sign-up for our newsletter www.nuffieldtrust.org.uk/newsletter Follow us on Twitter (http://twitter.com/NuffieldTrust)