I am delighted that you reported calls to scrap the NHS funding formulaon the evidence given to the health select committee by Professors Asthana, Stone and McCormick.
As co-author with Professor Stone of a 2006 paper published in the Journal of the Royal Statistical Society Series A, I have examined the current formula for allocating funds to primary care trusts. The methodology on which the formula is based might be appropriate for academic research, but it provides no justification for the claim that the formula is fair or that it reflects need for healthcare expenditure.
The per capita allocation determined by the current formula varies between PCTs. The most generously funded PCT gets more than twice as much per capita as the least. This requires careful justification.
I am most concerned that the current invitation to tender for a review of the resource allocation formula does not allow sufficient time to investigate alternative approaches.The Department of Health should fund two separate projects: one to determine what changes in the application of the current formula should be made in the short-term to avoid further disadvantaging those PCTs with excessively low per capita; and the other to develop a long-term strategy.
A long-term strategy requires good quality data on levels of different classes of morbidity and treatment costs, possibly based on a continuous sample survey, together with explicit value judgements. Flexibility to cope with new medical developments is also important.
Jane Galbraith, Department of Statistical Science, University College London