The proposed Funding Formula for Public Health in Local Authorities

1. The proposed Funding Formula for Public Health in Local Authorities Meic Goodyear 12 September 2012

2. Weighted Capitation since 1977-78 Health needs Deprivation Age-sex structure Disability free life expectancy Population Market Forces

3. This covers Hospital and Community Services Prescribing Primary Care Commissioning Management, including Public Health

4. Come April 2013 Public Health England (eg emergency planning) Public Health in Local Authorities PH advice and support to CCGs JSNA Sexual Health (contraception other than GPs, STIs, Sexual Health promotion, HIV prevention) Drugs treatment Public Health In NHS PCTs Commissioning Board Contraception through GPs HIV treatment & care

5. Funding Proposals 1 – Feb 2012 DH: Baseline spending estimates for the new NHS and Public Health Commissioning Architecture Ring fenced budget ~£2.2*109 Existing spend data collection 2010-11, raised for 2012-13 “We would not expect the LA public health ring-fenced grants to fall in real terms from the values in Annex A, other than in exceptional circumstances such as a gross error”

6. Funding Proposals 2 – June 2012 Advisory Committee on Resource Allocation (ACRA) proposes a new formula for relative shares of the ring-fenced budget, which ignores historical patterns of spend, effectively eliminating localism from public health Three components Drugs services commissioned through DATs Non-mandatory services Mandatory services Population Weighted by need Population Weighted by activity (76%) and need (24%) Population Weighted by need With a market forces factor (Area Cost Adjustment)

7. Needs component One single indicator for all need Standardised Mortality Ratios (SMR) age < 75 At Middle Super Output Area level To be used for determining the relative sizes of shares

8. SMR– fitness for purpose? • Indirect Standardisation – National rates applied to local population • Only valid for comparing local with national values • Cannot be validly used for comparing localities as the method has no means of controlling for differences in the local populations Possible valid alternative: Directly Standardised Rates, but absolute numbers of premature deaths are small at MSOA level, so DSRs might be unstable

9. SMR<75 – Relevance? What does is say about: - needs of the over 75 year olds? - needs for contraceptive services? - needs for STI services? - needs for HIV prevention? - anything else that does not contribute to mortality?

10. SMR <75: MSOA level These are calculated (by APHO) in 5-year averages. Even then their 95% confidence intervals are very wide.

11. Here’s what they look like for one Local Authority (Lewisham) Average width of 95% CI: 48.2

12. Reason for the wide variability Based on small number of events: Average deaths per 5 year period per MSOA is 115 National average width of 95% CI is 44 (per David Spiegelhalter)

13. What they do with SMR<75 Divide the MSOA into tenths of SMR<75 (they misuse the word decile, which does not engender confidence!) Weight each tenth (weights range from 1 to 3) and apply the weights to the MSOA population Sum the weighted populations to get a Local Authority weighted population.

14. Distribution of SMR<75 at MSOA level

15. When we overlay them on the deciles… Near the mean a small change in SMR<75 can result in an MSOA crossing a decile and attracting a different weighting. Near the tails even a very large change makes no difference to the weighting

16. Year to year roll-forward Can be thought of as repeatedly sampling from a distribution of mean = current SMR, SD = current SD for each MSOA Simulation a possibility, but not enough time.

17. Data update • The data in the ACRA paper and spreadsheet did not match the current data on the APHO website. The website was updated in March 2012, after the ACRA work had commenced. • Run the ACRA model against the updated data and compare the results (the model recalculated decile thresholds)

18. Effect of one-year roll-forward • Average size of Local Authority change = +/- 1.1% • Maximum loss = 3.5% • Maximum gain = 7.1% Number of MSOAs moving to a new weighting Lower weighting 1365 Higher weighting 1384 unchanged 4032 Grand Total 6781 All from the play of chance, and each likely to be reversed in future years

19. What the one-year roll-forward means for Public Health Funding in the South East

20. Local Health Inequalities (1) • Consider Westminster (chosen as an extreme case) • Range of SMR<75 2005-09: 34.6 to 138.9 • Range of SMR<75 2006-10: 32.2 to 142.7 • i.e. health inequalities by this measure increase between the two years

21. Local Health Inequalities (2) When we group the MSOAs by tenths we get Average tenth for year 1 = 3.6 Average tenth for year 2 = 3.4

22. Local Health Inequalities(3) • So: • Health inequalities have worsened, but • Average weighting is lower • Overall weighting is the average for the Borough.

23. Conclusions • The proposed formula statistically misuses its chosen measure • The proposal will build instability into the funding formula purely arising from the inherent uncertainty in the measure chosen • The proposed formula will make no contribution to reducing health inequalities at the local level.

24. meicgoodyear@nhs.net