The inadequacy of the current national formula in dealing with flows of patients across administrative boundaries is illustrated. In particular, the problems of dealing with varying admission rates for inpatients and in allocating revenues for outpatient services are discussed. We draw attention to an oversight in the recommendations concerning psychiatric services and criticise the general approach to the allocation of revenue under this heading. It is concluded that the national formula should not be applied for revenue allocation at district level in an unmodified form.
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