Do funding mechanisms in the NHS take sufficient account of the costs of providing services in rural areas where population, and facilities are spread out, and public transport is often poor? Financial allocations for the NHS are published each year by the NHS Executive in the snappily titled Health Authority Revenue Cash Limit Exposition Book.
It has details of adjustments made to HA allocations - which aim to compensate for unavoidable differences in costs of providing services - based on market forces factors, and factors based on differences in 'need'.1
The key market forces factors are pay, land, buildings and equipment costs. The 'need' adjustments include a range of factors such as age, standardised mortality ratios and number of rough sleepers. In the 1998- 99 allocations, a small adjustment was made to take account of the cost differences for emergency services found between rural and urban areas.2
Proposals to close community hospitals in rural areas have led to considerable interest in how resources are allocated. To date, there has been no significant adjustment to take into account any differential costs of providing services to small and dispersed communities. It has been argued that providing services in rural areas has not been proved to cost more.
There is relatively little robust quantitative information on rurality and health costs, although analyses of other public services have shown that there are greater costs for rural areas. As a result rurality is now considered when allocations are made, for example, for education, police and district council services. Length of coastline is also taken into account by fire services.
The Welsh Office has a weighting system for rurality which is used when community health resources are allocated, and is based on length of roads per 1,000 population. This is intended to compensate for staff travelling time, travel costs and subsistence.
A comparison with other countries is difficult as few have a system sufficiently similar to the UK. Finland, like the UK, has a significant proportion of funding from central government. Two of the four factors for resource allocation are based on rurality. One is the 'archipelago factor' - a weighting given to islands which do not have a fixed road connection to the mainland - and the other looks at population density. Clearly, in the UK an archipelago factor would predominantly affect Scotland, but it would be relevant to islands such as the Isles of Scilly and Isle of Wight.
The measure selected for the adjustment on emergency services in the HA allocations was geometric mean density, a measure of rurality.3
This measures how population settlements and their size are distributed within a given area and is a better measure of rurality than the average population for an area. The latter would give no information about how pockets of population are dispersed, so relatively unpopulated areas in some parts of the UK would give a distorted view of rurality.
Geometric mean density is itself not a perfect measure of rurality as it does not take into account key factors such as transport and proximity to key services.
Does rurality affect service quality?
We set out to determine whether or not there is a correlation between rurality and quality of services - including community bed numbers, hospital numbers and GP numbers - using geometric mean density as a measure of rurality.
Analysis of community bed numbers, in areas identified either as rural or mixed urban and rural by the Office for National Statistics,4 indicates that as population density increases the number of community bed numbers decreases (see figure 1). This should not be a surprise because rural areas tend to have widely dispersed towns which often have their own small cottage hospital.
Analysis of the numbers of hospitals shows that rural areas tend to have more hospitals than areas of higher population density (see figure 2).
It is possible that the figures significantly understate the number of hospitals used in some rural areas where patients may use those outside their district as a matter of course - the data is that for the 79 HAs whose geometric mean population density is 30 or below.
Figure 3 shows that rural areas also tend to have more GPs. But there is a wide range of GP numbers relative to rurality, so this is clearly only one of the important factors.
It is clear from our analyses to date that there are structural differences in healthcare across England and that rurality is a key issue.
The results show a positive correlation between population density, community bed numbers and numbers of GPs. It is also clear that rural areas have more and smaller hospitals than urban areas.
Such a distribution of beds and hospitals is inevitable when the functions of these beds are analysed. Community hospital beds are predominantly used for elderly patients.
Public transport in rural areas is generally poor and can be an expensive option, but it is often the only means of transport for elderly people and their carers. For community hospital services to be accessible, they need to be within a reasonable distance.
The costs of maintaining a significant number of additional beds and the diseconomies resulting from having smaller, relatively isolated hospitals need to be taken into account when allocating resources to rural areas. Without adjustments to the allocation formulae, rural areas will continue to receive a raw deal, in financial terms, compared with urban areas. REFERENCES
1 NHS Executive. HCHS Revenue Resource Allocation to Health Authorities. Section 5. 1998/99.
2 Study of Costs of Providing Health Services in Rural Areas. MHA and Operational Research in Health Ltd, 1997.
3 NHS Executive. HCHS Revenue Resource Allocation to Health Authorities. Appendix 6, 1998.
4 Wallace M, Charlton J, Denham C. The New OPCS Area Classifications. OPCS. Article no 79, 1995.
Christopher White is director of personnel and support services and Peter Halton is senior analyst at Cornwall Healthcare trust. Robin Flowerdew is director, north-west regional research laboratory, department of geography, Lancaster University.
Funding mechanisms in the NHS need to take more account of rurality in allocating funds.
Rurality is considered in allocating funds to other public services such as the police, education and district council services.
Country areas have more, and smaller, hospitals than cities, and this involves extra costs.