Background. in the US Medicare programme, hospitals are paid directly
by activity. To provide incentives for efficiency, the US Federal Gove
rnment has sought objective measures of inpatients' need for resources
. In the UK National Health Service, resources are allocated for acute
hospital services as part of a global budget to purchasers, who then
contract with hospitals. To provide equity in resource allocation, the
Department of Health in England, has sought objective measures of pop
ulations' need for resources. Methods. Examination of policy and techn
ology that has used variations in utilization of resources to derive o
bjective measures of efficiency and equity. Results. The technology of
developing empirical measures of resources needed by patients has lac
ked information on outcomes, which is vital for measures of efficiency
. The technology of developing empirical measures of resources needed
by populations has relied on aggregate data. Analyses of specific proc
edures and conditions consistently find that these variations are expl
ained by differences in medical practice and not by need. Conclusions.
There is scope for multidisciplinary research to explain small area v
ariations for specific procedures and conditions in resources used by
populations. It seems unlikely, however, that governments will be inte
rested in findings from this research.