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New NHS funding formula
22/02/2008
A new formula for allocation funding NHS boards is to be introduced from 2009/10, it was announced today.
Cabinet Secretary for Health and Wellbeing Nicola Sturgeon made it clear that the adjustments that will be made to the 14 territorial Health Boards' funding as a result of the formula will be phased in over a number of years, and that no Board will receive a cut in funding.
A new group within the Scottish Government Health Directorates will be established to lead work on the future development of the formula.
The decision comes after the NHS Scotland Resource Allocation Committee (NRAC), the independent body charged with reviewing NHS Health Board funding, submitted its final report to the Scottish Government.
The revised funding formula will start to be implemented from 2009/10, and phased in over a number of years.
Parliament's Health and Sport Committee and Health Boards were asked for their views on all of NRAC's recommendations before Ms Sturgeon reached her final decision.
Ms Sturgeon said: "Having studied the proposals from NRAC in detail, I have decided to accept all their recommended changes to the Arbuthnott Formula.
"I place high importance on the need to avoid turbulence in NHS board funding and can confirm that no Board will receive less funding than it does at present and any changes will be phased in over a number of years, as has been the practice under both the previous SHARE and Arbuthnott formulae.
"I am grateful for the valuable contribution NRAC has made in assessing resource allocation across Scotland. They have done this in a fair, objective and transparent manner, with the full engagement of stakeholders.
"I am also grateful for input and comments from the Health and Sport Committee and Health Boards. This will help shape the future development of the formula under the new review group."
The Scottish Government will consult with relevant stakeholders before deciding on the precise membership, format and remit of the group which will lead future development of the funding formula.
NRAC was established in March 2005 to "improve and refine" the Arbuthnott Formula, which has been in use since 2000 to allocate resources to the territorial NHS Boards to cover funding for Hospital and Community Health Services and GP Prescribing.
Over the summer of 2005, the Committee consulted with NHS Boards to seek their views on the current Formula and identify criteria against which a revised Formula could be measured.
Research was then commissioned to develop recommendations for improving the Formula. The Committee launched a consultation document based on the research recommendations in summer 2006. Further analytical and research work was undertaken following the consultation feedback and the final report has considered all of the research and the feedback received.
The final report includes more than 30 recommendations, including a proposed revised formula to replace the Arbuthnott Formula, as well as other recommendations on data developments, use of formulae in funding allocations, and on the future maintenance of the formula.
The NRAC report is available on the NRAC website.
The Arbuthnott Formula allocates approximately 70 per cent of the total NHS Scotland budget, which in 2007/08 saw £6.87 billion allocated out of a total budget of £10.26 billion.