Beyond resource allocation formulae: analysing the role of local health authorities and providers in achieving equity in service delivery

The aim of the fellowship is to acquire the kills to develop and apply an extended framework for the analysis of resource allocation that accounts for how local organizations determine the equitable and efficient use of resources.
The allocation of national health care budgets to local organisations is key to enabling the equitable provision of health care services. "Need weighted capitation formulae" are used in England and elsewhere to allocate resources to local organizations within the National Health Sector (NHS). In the English NHS a £100 billion budget is allocated to local organizations including Clinical Commissioning Groups (CCGs) and providers, based on a formula that reflects variations in need determined by age, morbidity, deprivation, and local input prices. Local organizations are responsible for spending their budgets. They are held accountable for performance and spending control, but not for how they distribute it. For example, an organisation serving a very deprived area may get more resources, but not spend them there, as there is no requirement to do so. Thus, the extent to which the aim set by policy makers through the formulae is met varies across local organizations.
The research will study how in a NHS, local health organizations contribute to an equitable and efficient use of financial resources by delivering care to their populations according to need. In particular, I will analyse the effect of different local organizations' characteristics, including how providers are paid, regulated, owned and organised, on the extent to which the distribution of resources matches the need of populations within their catchment area. I will also simulate the distributional effect of alternative budget allocation along with changes in local organization characteristics. I will use a theoretical framework derived from political science and welfare economics, which I will apply using a range of quantitative methods drawn from econometrics, biostatistics, epidemiology and public health. I will use a unique dataset including linked patient records on the use and cost general, acute and mental health care over five years.
The study will focus on England where local organizations are acquiring more autonomy and where linkable individual level administrative data are available. It will improve the understanding of how resources are distributed across patients within CCGs, as a result of the interacting behaviour of local managers, hospitals, GP practices and patients. Results will provide insights for increasing equity and efficiency of healthcare expenditure, in England and elsewhere, through resource allocation and other arrangements, such as incentive design, improving local organizations' performance.
The framework developed and the methods learned and used can be adapted to other settings in future research, and will form the base for the development of a longer term research agenda focusing on additional health policies, in other care settings, including primary care in England, or health systems in low-income countries.

The aim of the fellowship is to acquire the kills to develop and apply an extended framework for the analysis of resource allocation that accounts for how local organizations determine the equitable and efficient use of resources.
This proposed research has four specific objectives:
1) To develop a framework to analyse prospectively the distributional consequences of policy scenarios, involving changes in allocation and/or local organizations' policies and characteristics;
2) To assess the extent to which the distribution of health care and expenditure across individuals matches the distribution of need and therefore the equity and efficiency criteria underpinning resource allocation formulae;
3) To determine which factors, including local organizations' policies and characteristics, determine the extent of this match;
4) To simulate the effect of a changes in local organizations' policies and characteristics on the distribution of health care and cost (expenditure) across individuals with different needs.
I will use the definition of need used in the resource allocation formulae in England (cost and use of care predicted assuming no variation in supply). I will make explicit the structural model underlying the reduced form equation used to need and derive the framework for the subsequent analysis. The structural model will build on the work of Fleurbaey and Schokkaert (2009) on the analysis of unfair health inequalities.
I will apply techniques, including benefit incidence analysis, multilevel regression analyses and microsimulations based on structural equations, to individual level linked administrative data covering five years.
In the simulation I will allow local budget allocations and organizations' characteristics amenable to change (how providers are paid, regulated, owned and organised) to vary. Only at the end I will consider the general equilibrium implications of relaxing the assumptions of fixed budget, individual and area level characteristics.

The results of the research will benefit policy makers involved in the decision making on resource allocation in England at national level. Results will provide insights on how to improve or complement resource formulae currently used to allocate budget to local organizations to account for differences in the way resources are allocated across individuals by local organizations.
I will reach policy makers at the national level through the collaboration with NHS Engand Insights for Finance, Allocation team. The team will support me in engaging with the relevant NHS teams and bodies. Ideas and insights will be directly relevant to allocations, they will be considered as an alternative and the corresponding scenario discussed. Through the allocation team I will also attend and present results to the Advisory Committee for Resource Allocation. While based at York I will be part of the Health Policy group and be in contact with the Fast Response Analytical Facility, funded by the Department of Health Policy Research Programme and involving researchers at the University of York and the King's Fund. It aims at providing expert advice, policy briefings and empirical and theoretical analysis directly to the Department of Health.
The results will also benefit policy makers at the local level, as they will provide insights on the local incentives and organizations' characteristics that facilitate a more equitable distribution of resources within local organizations' catchment areas. These will be directly relevant for Clinical Commissioning Groups (CCGs), that I will reach through meetings, presentations and other opportunities for engagement. Tarryn Lake, as a member of the advisory committee, will support me in identifying opportunities for engagement and dissemination, as well as relevant conferences such as the ones of NHS Commissioners and NHS Providers. Tarryn is Chief Financial Officer of Sunderland CCG, Treasurer of the Healthcare Financial Management Association northern branch and member of the Advisory Committee for Resource Allocation and has a long-standing involvement in commissioning and resource allocation issues.
The research will offer a tool to monitor equity in resource allocation within CCGs that will also allow assessing progresses against the benchmark set by the formulae. A specific indicator could be added to the CCG outcome tools and incentives attached to performance improvements.
Through colleagues at the University of Manchester I will engage with the Great Manchester Health and Social Care Partnership. The research will offer a tool to simulate and monitor the distributional impact of alternative policies, as well as insights on which organizational arrangements have proven more effective in redistributing care and resources according to need.
Results will benefit policymakers outside England as insights may apply across settings. I will present results at conferences such as the HSG symposium usually attended by a mix of researchers and policy makers also attend. I will produce a policy brief illustrating the lesson learned that are relevant to other countries and I will circulate it through colleagues, for example at EQUINET (health equity network in Sub-Saharan Africa) and WHO South-East Asia health financing team and write a blog and newsletter IHP. Results and policy briefs will also be made available on the Equipol website. Dr Jo Borghi (LHSTM), as an advisor, will also help ensuring that opportunities for cross learning across settings are maximised.
Patient involvement activities will be developed and funded through other sources.