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Overview of the Arbuthnott Formula for Scotland's Health Services Allocation

The Arbuthnott Formula, introduced in Scotland in 2001, allocates resources for Hospital and Community Health Services (HCHS) across 15 Health Boards, managing a budget of £6 billion for 2005-06. It does not determine total resource needs but distributes funds based on relative need, measured through utilization patterns. Adjustments are made for age, sex, deprivation, and remoteness, with annual updates based on population estimates. While it addresses many healthcare access issues, unmet needs in deprived areas remain a challenge, prompting further evaluation and potential adjustments.

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Overview of the Arbuthnott Formula for Scotland's Health Services Allocation

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  1. The Arbuthnott Formula NRAC 1st meeting 24 February 2005

  2. Background • Scotland-wide formula, introduced in 2001. • Allocates resources for Hospital and Community Health Services (HCHS) activity across Scotland’s 15 Health Boards • £6billion in 2005-06 • Does not determine the total amount of resources required to meet the needs of a Health Board, but distributes resources to NHS Boards according to relative need.

  3. Structure • Designed to reflect need. • Need is measured as utilisation – use is a proxy of need. • Updated annually. • Overall share for each Health Board is calculated by taking the population share and adjusting it for: • Age/Sex • Deprivation • Remoteness

  4. Population • Takes account of changes in Health Board population shares. • Based on the annually updated Mid-Year Estimates. • Three adjustments applied to the population of each NHS Board giving rise to a weighted population for each NHS Board, which differs from the raw population count.

  5. Age/Sex Characteristics • Takes account of: • the use made of different specialties by each age/sex group; • differences in the lengths of stay; and • costs of treatment and the way these costs are affected by length of stay.

  6. Deprivation • Four key indicators are combined to give a single Arbuthnott deprivation adjustment (the Arbuthnott index). • The indicators are: • standardised mortality rates of people under 65; • the unemployment rate; • proportion of elderly people who claim income support; • households with 2 or more indicators of deprivation as drawn from the 1991 Census.

  7. Remoteness • Relationship between road kilometres per 1,000 population and the relative costs of hospital services for the residents in different Health Boards. • Adjustment based on an estimate of the relationship between this indicator and the costs of hospital services using data for the previous three years. • Not considered appropriate to update the figures each year.

  8. Areas not covered • Unmet need • Those in most deprived areas of Scotland less likely to access healthcare services than those in most affluent areas. • Has implications for the way resources are allocated between NHS Boards. • Arbuthnott Committee recommended a further adjustment to the formula • Currently unmet need pilots examining how funding can be used to improve access to health services. • Family Health Services (FHS) • General Medical Services (GMS)

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