Case study

Allocating resources in the NHS

Research from York underpins how the healthcare budget is shared out fairly across England, reflecting the health care needs of the population.

The issue

Much of the national NHS budget available for providing health care is divided up and transferred to organisations that are responsible for arranging health care for local populations.   

In order to be fair, the amount of money given to each organisation should be based not only on the number of people in the local area, but also on their relative need for health care. 

The research

York economists played a key role in devising the methods used to allocate resources for health care in an equitable way. Using novel approaches and exploiting new datasets as they became available, they produced formulae that take into account a range of characteristics that influence the need for health care, such as age, sex, deprivation and health status. They also incorporated allowances for the cost of providing health care in different local areas and the availability and use of services.


The research included consideration of primary care provided by GPs, hospital care and mental health care. A major innovation was to look at a wealth of anonymised data on the health care use of individuals, rather than only considering overall use at the local area level.

The outcome

The Department of Health and Social Care has used the York methods to determine the distribution of a significant part of the NHS budget, for almost three decades.  Through successive reorganisations of the NHS, York research has defined and underpinned the development of the allocation methods in order to ensure a more equitable distribution is achieved, regardless of changes in the organisations tasked with responsibility for provision and purchasing of health care. 

Without the research, the allocations that are made by the government would have been calculated on a cruder basis, ignoring many of the sources of the relative difference in the health care needs of local communities.  The research therefore helps to ensure a 'fair shares' approach to allocating the NHS budget across England.

Featured researcher
Hugh Gravelle

Hugh Gravelle

Professor Gravelle came to York in 1995. Since 2010 he has worked in the Economics of Social and Health Care Research Unit. In addition to an advanced microeconomics text, he has published in a wide range of economics, epidemiology, and medical journals.

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Featured researcher
Nigel Rice

Nigel Rice

Professor Rice is Professor of Health Economics in the Cente for Health Economics and Department of Economics and Related Studies. His research interests focus on the application of quantitative techniques to the analysis of micro-datasets, particularly panel survey data.

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