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Budget Allocation in the National Health Service*

  • Alan Maynard and Anne Ludbrook

Abstract

The objective of this article is to analyse the way in which budget allocation decisions have been made in the National Health Service (NHS) of Britain. Despite the criticisms of the pre-1948 health care system on the grounds of geographical inequity, it was not until nearly twenty-five years after the service's inception that explicit allocation formulae were devised and implemented in an attempt to achieve equity, defined as equal financial resources for health care for those in equal need.

The article is divided into four sections; the first analyses briefly the establishment of the NHS in 1948 and the failure of policy-makers to rectify the significant inequalities in the distribution of health care inputs between the regions. The second section is concerned with the official recognition of the policy problem of geographical inequality in resources and the first attempt to rectify it. In the third section the most recent set of resource allocation formulae for England, Scotland and Wales will be analysed and compared. The final section offers some brief conclusions.

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1 See Eckstein, H., The English Health Service, Harvard University Press, Cambridge, Massachusetts, 1964, p. 19.

2 See Lees, D. S. and Cooper, M. H., ‘Fee per Item of Service: Manchester and Salford, 1913–1928’, Medical Care, 2:3 (1964).

3 See Enquiry into the Cost of the National Health Service (Guillebaud Report), Cmd 9663, HMSO, London, 1956, p. 63.

4 A National Health Service, Ministry of Health, Cmd 6502, HMSO, London, 1944, p. 5.

5 The National Health Service Bill: A Summary of the Proposed Service, Ministry of Health, Cmd 6761, HMSO, London, 1946, p. 3.

6 See Selection of Patients for Dialysis and Transplantation’, British Medical Journal, 2 (1978), 1,449–50.

7 See Report of the Executive Committee of the Renal Association: Distribution of Nephrological Services for Adults in Great Britain’, British Medical Journal, 2 (1976), 903–6.

8 Enquiry into the Cost of the National Health Service.

9 Ibid. pp. 99–104.

10 See A Hospital Plan for England and Wales, Ministry of Health, Cmd 1604, HMSO, London, 1962.

11 See The Hospital Building Programme: A Revision of the Hospital Plan for England and Wales, Ministry of Health, Cmnd 3000, HMSO, London, 1966.

12 See Feldstein, M. S., ‘Hospital Bed Scarcity: An Analysis of the Effects of Inter-Regional Differences’, Economica, 32 (1965), 393409; and Feldstein, M. S., Economic Analysis of Health Service Efficiency, North Holland Publishing Company, Amsterdam, 1967.

13 See Cooper, M. H. and Culyer, A. J., ‘An Economic Assessment of Some Aspects of the Organisation of the National Health Service’, in British Medical Association, Health Services Financing, report of a committee chaired by I. Jones, 1970, Appendix A; Cooper, M. H. and Culyer, A. J., ‘An Economic Survey of the Nature and Intent of the British National Health Service’, Social Science and Medicine, 5 (1971), 113; and Cooper, M. H. and Culyer, A. J., ‘Equality in the National Health Service: Intentions, Performance and Problems in Evaluation’, in Hauser, M. (ed.), The Economics of Medical Care, Allen and Unwin, London, 1972.

14 See Cooper and Culyer, ‘Equality in the National Health Service’. For similar results in the psychiatric sector see Maynard, A., ‘Inequalities in Psychiatric Care in England and Wales’, Social Science and Medicine, 6 (1972), 221–7.

15 See West, P. A., ‘Allocation and Equity in the Public Sector: The Hospital Revenue Allocation Formula’, Applied Economics, 5:3 (1973), 153–66.

16 Regional Resource Allocation Formula, first interim report of the RAWP, DHSS, HMSO, London, 1975.

17 Sharing Resources for Health in England, report of the RAWP, DHSS, HMSO, London. 1976.

18 See Buxton, M. J. and Klein, R. E., ‘Distribution of Hospital Provision: Policy Themes and Resource Variations’, British Medical Journal, 1 (1975), 345–9; Rickard, J. H., ‘Per Capita Expenditure of the English AHAs’, British Medical Journal, 1 (1976), 299300; and Jones, D. R. and Masterman, S., ‘NHS Resources: Scales of Variation’, British Journal of Preventive and Social Medicine, 30 (1976), 244–50.

19 See Sharing Resources for Health in England, para. 6:22.

20 See SirJones, F. A., ‘The London Hospitals Scene’, British Medical Journal, 2 (1976), 1,046–9; and Whimster, W. F., ‘Personal View’, British Medical Journal, 2 (1976), 1,318.

21 See What a RAWProar’, British Medical Journal, 2 (1976), 1,280.

22 See Cooper and Culyer, ‘An Economic Survey of the Nature and Intent of the British National Health Service’; and Hart, J. T., ‘The Inverse Care Law’, The Lancet, 1 (1971), 405–12.

23 See Barr, A. and Logan, R. F. L., ‘Policy Alternatives for Resource Allocation’, The Lancet, 1 (1977). 994–7; and Forster, D. P., ‘Mortality, Morbidity and Resource Allocation’, The Lancet, 1 (1977), 997–8.

24 See Geary, K., ‘Technical Deficiencies in RAWP’, British Medical Journal, 1 (1977), 1,367.

25 See Senn, S. J. and Shaw, H., ‘Resource Allocation: Some Problems in Applying the National Formula to Area and District Revenue Allocations’, Journal of Epidemiology and Community Medicine, 32 (1978), 22–7.

26 See Buxton, M. J. and Klein, R. E., Allocating Health Resources: A Commentary on the Report of the RAWP, Research Paper no. 3, Royal Commission on the National Health Service, HMSO, London, 1978.

27 See Lyons, H., ‘Unless the Sums are Right the Answers will be Wrong’, Pulse, 27 01 1979.

28 See Fox, P. D., ‘Managing Health Resources: English Style’, in McLachlan, G. (ed.), By Guess or By What?, Nuffield Provincial Hospitals Trust, London, 1978.

29 See Dudley, H. A. F., ‘Loosening Patient Immobility’, The Lancet, 1 (1977), 1,251–3; and Klein, R. E., ‘Resource Allocation’, Hospital and Health Service Review, 08 1977.

30 See Creese, A. L., Darby, S. C., Palmer, S. R. and Patrick, D. L., ‘NHS Priorities and RAWP’, British Medical Journal, 2 (1978), 1,446–7.

31 Priorities for Health and Personal Social Services in England, DHSS, HMSO, London, 1976.

32 See Buxton, and Klein, , Allocating Health Resources.

33 See Forbes, J. F., Capital Valuation and the Health Services: A Review of Theory and Practice, Discussion Paper no. 01:79, Health Economics Research Unit, University of Aberdeen, 1979.

34 See Jeffries, M., ‘RAWP and the Oxford Region’, British Medical Journal, 1 (1978), 426–7; 495–6; and 638–9.

35 See Yudkin, J. S., ‘Changing Patterns of Resource Allocation in a London Teaching District’, British Medical Journal, 2 (1978), 1,212–5.

36 See The Lancet, 27 05 1978.

37 See Forsyth, G. and Varley, R., Resource Allocation Subregionally: The Impact in the North Western RHA, mimeograph, 1978.

38 Scottish Health Authorities Revenue Equalisation, Report of the Working Party on Revenue Resource Allocation, Scottish Home and Health Department, HMSO, Edinburgh, 1977.

39 See Forwell, G., ‘A Community Medicine View of the SHARE Report’, Scottish Medical Journal, 23 (1978), 207.

40 See House of Commons, Hansard, 18 01 1978, 250:1.

41 Report of the Steering Committee on Resource Allocation in Wales, Welsh Office, HMSO, Cardiff, 1977.

42 The Distribution of Resources to Health Authorities in Wales: Third Report of the Steering Committee, Welsh Office, 1979.

43 Details of sources and calculations are available from the authors.

44 Report of the Steering Committee on Resource Allocation in Wales, para. 5:12.

45 As in Priorities for Health and Personal Social Services in England.

46 Report of the Royal Commission on the National Health Service, Cmnd 7615, HMSO, London, 1979.

47 Ibid. – see Recommendations 113 and 114.

* The authors would like to acknowledge the Social Science Research Council for a programme research grant in Public Sector Studies at the Department of Economics and the Institute of Social and Economic Research, University of York.

Senior lecturer in Economics, Department of Economics and Related Studies, University of York.

Research fellow, Institute of Social and Economic Research, University of York.

Budget Allocation in the National Health Service*

  • Alan Maynard and Anne Ludbrook

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