The role of the staff MFF in distributing NHS funding: taking account of differences in local labour market conditions.

The National Health Service (NHS) in England distributes substantial funds to health-care providers in different geographical areas to pay for the health care required by the populations they serve. The formulae that determine this distribution reflect populations' health needs and local differences in the prices of inputs. Labour is the most important input and area differences in the price of labour are measured by the Staff Market Forces Factor (MFF). This Staff MFF has been the subject of much debate. Though the Staff MFF has operated for almost 30 years this is the first academic paper to evaluate and test the theory and method that underpin the MFF. The theory underpinning the Staff MFF is the General Labour Market method. The analysis reported here reveals empirical support for this theory in the case of nursing staff employed by NHS hospitals, but fails to identify similar support for its application to medical staff. The paper demonstrates the extent of spatial variation in private sector and NHS wages, considers the choice of comparators and spatial geography, incorporates vacancy modelling and illustrates the effect of spatial smoothing.

Analysis of consultants' NHS and private incomes in England in 2003/4.

OBJECTIVE: Consultants employed by the NHS in England are allowed to undertake private practice to supplement their NHS income. Until the introduction of a new contract from October 2003, those employed on full-time contracts were allowed to earn private incomes no greater than 10% of their NHS income. In this paper we investigate the magnitude and determinants of consultants' NHS and private incomes. DESIGN: Quantitative analysis of financial data. SETTING: A unique, anonymized, non-disclosive dataset derived from tax returns for a sample of 24,407 consultants (92.3% of the total) in England for the financial year 2003/4. MAIN OUTCOME METHODS: The conditional mean total, NHS and private incomes earned by age group, type of contract, specialty and region of place of work. RESULTS: The mean annual total, NHS and private incomes across all consultants in 2003/4 were pound 110,773, pound 76,628 and pound 34,144, respectively. Incomes varied by age, type of contract, specialty and region of place of work. The ratio of mean private to NHS income for consultants employed on a full-time contract was 0.26. The mean private income across specialties ranged from pound 5,144 (for paediatric neurology) to pound 142,723 (plastic surgery). There was a positive association between mean private income and NHS waiting lists across specialties. CONCLUSIONS: Consultants employed on full-time contracts on average exceeded the limits on private income stipulated by the 10% rule. Specialty is a more important determinant of income than the region in which the consultant works. Further work is required to explore the association between mean private income and waiting lists.