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Abstract

Background
The National Health Service uses formulae based on historic patterns of service use to distribute funding locally. These formulae are adjusted using avoidable mortality rates, to account for unmet needs and address health inequalities. We do not know whether this approach accurately reflects variation in unmet need between areas.

Methods
We define need for National Health Service resources as the expected expenditure required to provide all standard National Health Services from which a population can benefit. We clarify the two components required to measure need: the relevant characteristics of the population living in each area and the cost weights indicating the expected needed expenditure associated with each of these characteristics. Four public advisor workshops were conducted to support the plain English description of the aims and methods used in the National Health Service resource allocation process. These led to the production of an animation to support public understanding of National Health Service resource allocation procedures.

We developed four adjustments to the current National Health Service allocation formulae to better account for unmet need using electronic health records for England from 2010 and 2018 and linked primary care, hospital and mortality data from 2008 to 2020 from the Clinical Practice Research Datalink.

Findings
Our responsiveness adjustment provides a method for more accurately estimating cost weights from regression models by only using data from those geographical areas that are better at aligning resources with patient need. Our longitudinal adjustment provides a new method for improving the way the utilisation formula accounts for supply-induced variation in utilisation, by using longitudinal data on people as they move between geographical areas. The primary care diagnosis adjustment shows how using linked data on primary care diagnosis improves the prediction of secondary care utilisation. Using data on people who have died from conditions, but who were not previously diagnosed, we estimate the proportion of people with 11 chronic diseases who were undiagnosed in each geographical area in England, providing an approach for adjusting National Health Service resource allocation formulae for unmet need due to underdiagnosis. Finally using instrumental variable methods we show that healthcare expenditure has larger effects on mortality in the middle deprivation groups, and smaller impacts in the top and bottom deprivation groups. These estimates indicate that some of our adjustments for unmet need may increase health inequalities. This highlights the need to maintain a ‘health inequalities adjustment’ that allocates more resources to socioeconomic groups with poor health outcomes to ensure that the National Health Service continues to help reduce health inequalities.

Limitations
Limitations in the data available and a lack of coherence between adjustments for unmet need, derived from this research, indicate that a great deal of uncertainty remains. Further work is needed to enhance the availability of linked electronic health records and survey-based symptom and biomarker data to support the modelling of unmet needs.

Conclusions
This programme of research has developed four adjustments targeting separate facets of unmet needs that can be implemented with the National Health Service resource allocation process as well as providing a tool that can be used to model the impact on health inequalities of any adjustment.

Publication Type:	Article
Additional Information:	Copyright © 2026 Barr et al. This work was produced by Barr et al. under the terms of a commissioning contract issued by the Secretary of State for Health and Social Care. This is an Open Access publication distributed under the terms of the Creative Commons Attribution CC BY 4.0 licence, which permits unrestricted use, distribution, reproduction and adaptation in any medium and for any purpose provided that it is properly attributed. See: https://creativecommons.org/licenses/by/4.0/. For attribution the title, original author(s), the publication source – NIHR Journals Library, and the DOI of the publication must be cited.
Subjects:	R Medicine > RA Public aspects of medicine
Departments:	School of Policy & Global Affairs School of Policy & Global Affairs > Department of Economics
SWORD Depositor:	Symplectic Administrator

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