New development: The remarkable insignificance of NHS England's CCG funding formula

Abstract

This article resolves a long-standing question about the financial performance of small-area funding bodies in England's National Health Service—whether or not surpluses or deficits are due to over- or under-provision of funds relative to what is thought necessary to fund healthcare, in line with targets set by a funding formula. Multivariate regression of per capita surplus on the two variables (actual allocation and target allocation), for the first year of operation of 211 clinical commissioning groups (CCGs), revealed a decisively insignificant P-value for the target variable—once account had been taken of the distance of allocation from target. To help statisticians maintain that the target formula has no rational basis, this article conjectures that the correlation of surplus and ‘distance from target’ is a managerial artefact divorced from the costs of healthcare provision.

Keywords:

• Clinical commissioning groups (CCGs)
• distance from target
• financial performance
• managerial artefact
• PBRA3 formula

Acknowledgements

I am grateful to an NAO team for assembling the data as an Excel file (NAO, 2014b) and to my UCL colleague, Rex Galbraith, for their informative presentation in figure 3.