1. The Resource Allocation Formula Calculation June 2011

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

8. 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

9. Weighting of Expenditure across Care Programmes Data Source: Costs Book, year ending 31 st March 2008

10. 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

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

12. 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

13. 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to create an adjustment factor This adjustment factor is used to calculate population projections by datazone as GRO do not publish projections at this level

14. Populations – HCHS (3)

15. Populations – GP Prescribing (1) Community Health Index (CHI) Data P rovides 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

16. Source: GROS June 2010 MYE compared to CHI July 2010 list sizes Total populations: GROS 5.1m, CHI, 5.5m

17. 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

18. Population - Questions?

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

20. 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

21. Combining Costs & Activity Data Example for the Acute care programme - Age/sex costs per head: 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 Age Band0-12-45-9 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- 8990+ Males1051282218204202211218252295328382491624868114114671880238328363277 Females89723219618620523326229132136742951059273596912111610211127123072

22. Average costs by age & gender

23. Age/Sex Analysis - example Total Expected Cost Total Population Cost Per Head Age Sex Index Datazone1168,4648422001.00 Datazone2168,4646292681.34 Datazone3125,8448141550.77 Scotland1,040,365,8005,201,8292001.00

24. 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 Age group (years) 0-45-1415-2424-3435-4445-5455-6465-7475+ Males 31295269120184280465570 Females 37485381129209300438540

25. GP Prescribing - Age Sex Analysis (2) Average costs by age & gender (GP prescribing)

28. Age Sex Adjustment - Questions?

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

30. 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

31. 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

32. The Additional Needs Regression Indices Regression Index NameNeeds variablesTopicSourcePeriod Acute/Care of the Elderly/GP Prescribing All cause standardised mortality rate - age 75 and underBirths & deathsISD2001-2005 Limiting long-term illness rate (age-sex standardised using 7yr age bands)MorbidityCensus2001 Mental Health & Learning Disabilities Proportion claiming severe disablement allowance (% of 16+ population) Claimant counts & economic indicatorsSNS2004 Proportion in one person householdsHouseholdsCensus2001 Proportion in social rented housingHousingSNS2001 Maternity Mean House PriceHousingSNS1994-2005 Birth rate per female populationBirths & deathsGRO(Births)2005 SEURC supplementary variableRuralitySNS2004 SNS – Scottish Neighbourhood Statistics

33. The Additional Needs – Regression Analysis Coefficients needs indices by diagnostic group using the acute regression index Care Group\Diagnostic GroupConstantIndex Coefficient AcuteCancer1.0030.038 Circulatory1.0120.107 Digestive1.0080.116 Injuries1.0040.113 Other Acute1.0040.092 Acute Outpatients1.0030.040 Respiratory1.0170.171 Care of the Elderly1.0290.089 PrescribingCardiovascular1.0030.079 Central Nervous System 0.9370.125 Gastro-intestinal0.9840.094 Infections0.9530.018 Musculoskeletal1.0190.133 Other Prescribing1.0210.069 Maternity coefficients of needs index using the maternity regression index and supplementary variable for Maternity VariableValue Maternity - Constant1.011 Maternity - Index Coefficient-0.034 Maternity - Supplementary Variable*:SEURC 10.000 SEURC 20.055 SEURC 30.036 SEURC 40.132 SEURC 50.033 SEURC 60.097 Care Group/Diagnostic GroupConstantIndex Coefficient Mental Illness and Learning difficulties* -0.2230.139 Coefficients needs indices by diagnostic group using the mental health regression index

34. The Additional Needs (1) Needs Utilisation 1 National average

35. The Additional Needs (2) Needs Utilisation 1 * Repeat for each diagnostic group

36. The Additional Needs (3) Diagnostic Group A B Utilisation 1 Needs

37. The Additional Needs (4) Diagnostic Group A B Utilisation 1 IDZ 1 0.85 Needs MLC = constant + Coefficient*need

38. The Additional Needs (5) Diagnostic Group A B Utilisation 1 IDZ 1 MLC = 0.95 Needs MLC = constant + Coefficient*need

39. Average across acute diagnostic groups (weighted by costs) ……. respiratoryheartcancer other 0.950.851.11.0 0.90 IDZ Acute MLC index =

40. The Additional Needs Indices Acute, Care of the Elderly & GP Prescribing: using Acute Regression Index MLC Index = constant + Coefficient*Index Mental Health & Learning Difficulties: using Mental Health Regression Index MLC Index = Exp (constant + Coefficient*Index) Maternity: using Maternity Regression Index MLC Index = constant + Coefficient*Index + Maternity supplementary variable coefficients

41. 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:

44. Additional Needs - Questions?

45. Resource Allocation Formula Unavoidable excess costs adjustments Population Health Board Population % Age/Sex Cost Weights Relative need due to age/sex profile X Additional Needs X Relative need due to MLC and other factors X Unavoidable Excess Costs Relative cost of providing services to different geographical areas = Weighted Share %

46. 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

47. 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

48. 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

49. Hospital Unavoidable Excess Cost (3) Percentages Health Board’s resident in each urban-rural category

50. Hospital Unavoidable Excess Cost (4) – Example: Acute care programme Excess Costs index = 0.98

51. 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

52. Community Unavoidable Excess Cost (2) – Travel based services adjustment

53. 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

54. 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

55. 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

58. Unavoidable Excess costs - Questions

59. 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

60. 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)

61. 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

62. Data Sources – Hospital Activity data Care ProgrammePatient TypeData SchemeActivity used to proportion costs AcuteDaycasesSMR01Discharges InpatientsSMR01Discharges for total cost, length of stay for variable cost Outpatients/DaypatientsSMR00New outpatient attendances Care of the ElderlyInpatientsSMR50Length of stay Mental Health & Learning Disabilities InpatientsSMR04Length of stay Outpatients/DaypatientsSMR00New outpatient attendances MaternityInpatients/DaycasesSMR02Discharges for total cost, length of stay for variable cost SMR01 (abortions) Discharges for total cost, length of stay for variable cost Outpatients/DaypatientsSMR00New outpatient attendances BirthsGRO Births

63. CostSource of Scotland level patient activity profiles by age-sex District nursing District nurse patient contacts from Practice team Information (PTI) Health visiting Health visitor patient contacts from PTI Midwifery New outpatient attendances for obstetric services Psychiatric team Patient contacts from PTI for mental health Learning difficulties team New outpatient attendances for learning difficulties services Child health Population aged 14 and under Specialist nursing Patient contacts from PTI Addiction services Drug and alcohol misuse data Family planning Female population aged 15-44 Allied health professionals (AHPs) Clinical psychologyAll staff contacts from PTI PhysiotherapyAll staff contacts from PTI Occupational therapy All staff contacts from PTI ChiropodyAll staff contacts from PTI DieteticsAll staff contacts from PTI Speech therapyAll staff contacts from PTI Other services Community dentistry Patients treated in the community dental service Home dialysisPopulation aged 50-65 Breast screeningFemale population aged 50-69 IncontinencePopulation aged ≥65 Health promotionPopulation all ages OtherTotal patient contacts from PTI Data Sources: Community activity

64. Bring all pieces together Population Age sex adjustment Additional needs adjustment Unavoidable excess costs adjustment HCHS & GP prescribing HCHS only

65. 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

66. HCHS part of the formula (2) Adjusted population is calculated by multiplying the final indices for three formula’s components by crude population

67. HCHS Target Shares – 2011/12 HCHS HBHB name Population Share 1 Age-sex share Age-sex and MLC share Overall share AAyrshire & Arran7.02%7.31%7.38%7.36% BBorders2.18%2.32%2.09%2.10% FFife7.00%7.12%6.93%6.87% GGreater Glasgow & Clyde22.93%22.23%24.40%24.15% HHighland5.99%6.34%5.94%6.36% LLanarkshire10.80%10.53%10.98%10.88% NGrampian10.54%10.49%9.67%9.65% ROrkney0.38%0.41%0.37%0.43% SLothian16.05%15.46%14.95%14.80% TTayside7.71%8.11%7.91%7.88% VForth Valley5.63%5.54%5.49%5.46% WWestern Isles0.50%0.55%0.53%0.62% YDumfries & Galloway2.84%3.15%2.97%3.00% ZShetland0.42%0.43%0.39%0.46%

68. GP Prescribing Target Shares – 2011/12 Prescribing HBHealth Board Population Share 1 Age-sex share Age-sex and MLC share Overall share AAyrshire & Arran7.03%7.50%7.63% BBorders2.15%2.38%2.03% FFife6.98%7.11%6.90% GGreater Glasgow & Clyde23.04%21.95%24.88% HHighland5.96%6.55%6.03% LLanarkshire10.71%10.46%11.38% NGrampian10.51%10.47%9.30% ROrkney0.38%0.42%0.38% SLothian16.06%15.04%14.20% TTayside7.69%8.11%7.66% VForth Valley5.72%5.68%5.62% WWestern Isles0.50%0.57%0.55% YDumfries & Galloway2.85%3.31%3.07% ZShetland0.42%0.44%0.38%

69. Unified Budget Target Shares – 2011/12 Total HBHealth Board Population Share 1 Age-sex share Age-sex and MLC share Overall share AAyrshire & Arran7.02%7.34%7.41%7.40% BBorders2.18%2.33%2.08%2.09% FFife7.00%7.12%6.92%6.87% GGreater Glasgow & Clyde22.94%22.20%24.46%24.25% HHighland5.99%6.37%5.96%6.31% LLanarkshire10.78%10.52%11.03%10.95% NGrampian10.54%10.49%9.62%9.60% ROrkney0.38%0.41%0.37%0.42% SLothian16.05%15.40%14.85%14.72% TTayside7.71%8.11%7.87%7.85% VForth Valley5.64%5.56%5.51%5.48% WWestern Isles0.50%0.55%0.53%0.61% YDumfries & Galloway2.84%3.17%2.98%3.01% ZShetland0.42%0.43%0.39%0.45%

70. Percentage change in per capita funding due to the resource allocation formula

71. Questions?

72. Further Information Queries – nss.isdNHSResources@nhs.net nss.isdNHSResources@nhs.net 0131 275 6719 / 0131 275 6117 www.nrac.scot.nhs.uk www.tagra.scot.nhs.uk