rural funding:

The realities of country life can be harsh, and healthcare delivery complex. While Scotland, Wales and Northern Ireland have swathes of sparsely populated countryside, 20 per cent of the population of England - 10 million people - live in rural areas. These communities tend to have a higher number of people over 65, who need the greatest level of care. Transport can often be a problem. GPs and hospitals can be miles away, while in many areas local opticians and dentists are unheard of. Despite these difficulties, rural health authorities lose out when NHS funds are allocated each year.

In Scotland, the funding formula, known as SHARE, reflects sparsity - but only at primary care level. The allowance is based on the distance patients live from their local GP. Northern Ireland's allocation formula also recognises the cost of population sparsity. There, the adjustment is based on additional transport costs and professionals' travelling time. In England, only ambulance services receive extra cash for rural populations.

Councils receive funds to cover the additional costs of providing rural services. The Department of the Environment, Transport and the Regions bases each council's funding on a measure known as the standard spending assessment. This is, in essence, how much the department believes the council needs to spend to maintain services.

SSAs are calculated on the basis of population size and adjusted for need and cost. The additional spending pressures that a sparsely located population places on services such as education, police and the fire brigade are included in these adjustments.

Despite the recognition that services in rural areas cost more, shire councils are unhappy. They argue that the SSA system is not sufficiently sensitive to reflect the additional costs and needs of their areas. According to a report for the Countryside Commission, in 1995-96 inner London boroughs were expected to spend about£1.78 per head for every£1 spent by councils in shire areas to provide the same range of services.

The report says population sparsity is given little weight, contributing just£16 to the£648 per head average shire SSA.

The commission's researchers analysed local authority spending on schools and demonstrated that where there are fewer than 100 pupils, economies of scale are lost and the cost per pupil rises substantially. Sparsely populated areas contain many more small schools, but the sparsity measure in the education SSA does not reflect this.

Discontent has grown and rural councils have banded together recently to lobby the government for change.

Proponents of change argue that the resource allocation formula is not sensitive to the needs of rural areas. While car ownership (one factor used in the formula) may be an indicator of relative affluence in urban areas, it is less so in the country, according to Dr Mandy Bretman, Lincolnshire HA's director of public health. 'In the country you have to own a car - that doesn't mean you are not deprived,' she adds.

Rita Hale, author of Fair Shares for Rural Areas, a report for the Countryside Commission, found that urban HAs in England received more funds than their country counterparts.

The Welsh resource allocation formula has been reviewed recently, and rural sparsity and urban deprivation played a large part in the deliberations. The formula was changed for the current financial year's allocations, but the countryside lost out as more weight was given to urban deprivation.

Dyfed Powys occupies 53 per cent of the land mass of Wales. Though it has a population of only 350,000, it has four district general hospitals and a large number of community units.

The HA has attempted to develop a 'hub and spoke' service, but it has made slow progress in the face of local opposition to the loss of services.

The sparse population has contributed to the HA's financial problems - it has an accumulated debt of£23m. Keeping four general hospitals open has kept costs high.

Shropshire is the largest rural county in England. Jim Clark, finance director of Shropshire HA, says it takes 'every opportunity' to lobby for change to reflect the costs associated with sparsely populated areas. 'Community services and ambulance services are more expensive to provide over rural areas. For some time we have been advocating that it ought to be reflected in the HA resource distribution formula. This is now partially reflected in the ambulance services allocations but in nothing else.'

He says it is difficult to gauge how much extra the authority spends because of rurality. 'We have attempted to quantify the additional costs of ambulance services by comparing costs with others in the West Midlands. We found that we spend about£1m more than others,' he adds.

Like Dyfed Powys, Shropshire has adopted new ways of working, such as telemedicine and reorganising hospitals into a hub and spoke model. 'While we did close a number of community and cottage hospitals a number of years ago, we have developed a hub and spoke model. We have two major population centres in the middle of the county, and around the fringes we have a ring of five community hospitals. These allow access to some services locally, but we can't provide the full range.'

But there are signs that change is on the way. The English funding formula is under review and one of the main areas being examined is rurality. Change will have to wait, however, as the government has said there will be no alterations to the funding formula until 2002.

In Scotland the SHARE formula was the subject of a review which reported in July. The Arbuthnott committee found that rural areas such as the Highland and Western Isles health boards were underfunded. It proposed a new formula to introduce a more comprehensive and sophisticated adjustment for remoteness to apply to community, GP and hospital services.1

It recommends a relatively painless way of introducing the new formula. Boards should be moved to their new funding levels over six years, it says, during which time those furthest from their target allocation would receive more than those above target. Above-target health boards would still receive growth money. A decision on the recommendations is expected early in the new year.

Northern Ireland is also likely to see change. Two reports are currently being finalised for its funding formula review. One, by accountants PricewaterhouseCoopers, looks into the additional costs of providing services in rural areas; the other addresses the question of whether there is additional need in rural areas. The reports are due to be sent out for consultation in late summer or early autumn, and the indications are that some changes will be made. The new sparsity factor is due to be adopted in time for the 2000-01 allocations.

Lincolnshire HA is trying to step up its work with other agencies that target rural people's health needs. At the heart of its plan is a rural deprivation index, which was developed in 1995.

Dr Bretman says: 'We tried to develop an index with our social services colleagues, which showed that by using an index that was more appropriate for rural communities you could identify different areas as being deprived.'

Dr Bretman hopes to use the index to help structure the HA's joint planning with other agencies. The index's findings will be used to form the local health improvement programme, for example.

Local bodies are also trying to create new sources of income. The HA has joined the rural development unit which was set up by the local authority and training and enterprise council. 'One of the ideas is to make Lincolnshire a rural action zone so we can take forward our work on deprivation with some external support,' Dr Bretman says.

Without external funds, from whatever source, rural HAs know they have little chance of developing services for the populations they serve. But a body of evidence to support their cause is being built up. A recent Social Services Inspectorate report confirmed that it is more expensive to deliver community care in rural areas. While it made no attempt to quantify how much more expensive, some of its findings may well apply to the NHS. 2

It concluded: 'Calculating area budgets on the basis of sparsity of population and additional transport costs aids the provision of services as does delegating budgets to allow for local commissioning.'

Rural HAs will hope this message does not go unheard.

Road to nowhere (top): the paucity of rural transport makes healthcare services inaccessible. Above: Dr Mandy Bretman of Lincolnshire HA.


1 The Report of the National Review of Resource Allocation for the NHS in Scotland. Scottish Office, 1999.

2 Social Services Inspectorate. Care in the Country. Department of Health, 1999.