Health Needs Assessment

Health Needs Assessment and the Capacity to Benefit

Health needs assessment rests on the economist's definition of need as the capacity to benefit from care, so a health problem counts as a need only when an effective intervention exists and resources could be put behind it. It compares what a population could gain with the services it already receives, then turns the gap into agreed priorities for commissioning and planning. The approach matters because health systems work within fixed budgets, and a list of problems ranked by size alone would spend money where little health can be gained. It also gives a method for monitoring equity, since care is often least available where need is greatest. The US hospital duty has its own page, community health needs assessment, and the joint strategic needs assessment is the statutory English form.

Need, demand and supply

Wright, Williams and Wilkinson, opening a BMJ series on the subject, separate need from demand and supply. Need is the capacity to benefit, which requires an effective intervention and resources to deliver it. Demand is what patients ask for, shaped by patients' characteristics, by general practitioners acting as gatekeepers and by media interest. Supply is the care actually provided.

The three overlap only in part. Supply can create demand, and the authors report that geographical variation in admission rates is explained more by the supply of hospital beds than by mortality, a pattern close to supplier-induced demand. Need can also exist without demand. Many people with angina or multiple sclerosis were unknown to their general practitioner or to a specialist, and homeless people and people with chronic mental illness may need care without asking for it. An assessment built only on activity data misses the people most likely to have unmet need.

The authors also separate healthcare needs, which health care can meet, from wider health needs shaped by deprivation, housing, diet, education and employment.

Capacity to benefit as the economic test

Stevens and Gillam set out what the definition implies. A population's ability to benefit is the sum of its members' ability to benefit, which for most conditions is easier to estimate from epidemiological data than from clinical records. Benefit means potential benefit that is effective on average, and it can include reassurance, supportive care and relief for carers.

Two consequences follow. First, a count of cases is not a measure of need. Williams and Wright note that neither incidence nor prevalence equates with need, although both are the usual starting point, and that there is little point in estimating the burden of ill health if nothing can be done to reduce it. Second, need is bounded by cost. Wright and colleagues report the economists' view that capacity to benefit will always exceed available resources, so needs assessment must include priority setting. Stevens and Gillam add that some marginal benefits cannot be afforded in a publicly funded system because of the treatments that would have to be given up, which is the opportunity cost of meeting them.

They also locate the health gain. It comes from reaching people who lack a beneficial intervention, partly funded by resources released from care that is ineffective or inefficient, so existing services matter as much as missing ones.

Epidemiological, comparative and corporate approaches

Stevens and Gillam describe three sources of evidence that are normally combined. The epidemiological approach, extended to cost-effectiveness, is the core. Williams and Wright trace it to a district health authority project set up by the NHS Management Executive in 1990, whose healthcare needs assessment reviews, edited by Stevens and Raftery, gave purchasers ready-made estimates of need for topics such as asthma and stroke.

Stevens and Gillam give the epidemiological approach as six steps. These are to state the population group, divide it into subgroups with different service needs, set out the incidence and prevalence of each, describe the baseline services, identify the effectiveness and cost-effectiveness of interventions, and set out a model of care with relative priorities. Establishing effectiveness is the most important step, since counting potential beneficiaries of an intervention with no benefit achieves nothing.

Williams and Wright add measurement rules. Comparisons between areas need standardised rates, and the standardised mortality ratio comes from indirect standardisation. Estimates from elsewhere can be used locally if the case definition, timeliness, study quality and breakdown by age, sex and similar factors are acceptable, which saves the cost of a new survey. For a single practice they judge it unwise to assess need for conditions with a prevalence below 1%.

In Stevens and Gillam's example of the comparative approach, comparison with European countries showed that renal dialysis and transplantation should rise from 20 per million in the 1960s to 80 per million, a figure later confirmed epidemiologically. On the corporate approach, they note that eliciting local views is not the same as being bound by them, and that where cost-effectiveness is otherwise equal, local concerns may justify a higher priority for a service.

From needs to priorities with marginal analysis

Economists such as Cohen have argued that prioritising services on the basis of total needs can lead to inefficient use of resources, and that marginal analysis, which examines the effects of changing the balance of spending between programmes, is a better option. In Mid Glamorgan, groups for most health gain areas each proposed ten programmes for investment and ten for disinvestment, and in maternal and child health 9 of the 20 proposals became policy for 1995.

Mitton and Donaldson describe the two principles behind programme budgeting and marginal analysis as opportunity cost and the margin. Health gain is maximised when no further reallocation between services would increase total benefit, in theory where the ratio of marginal costs to marginal benefits is equal across services. Their second stage, a programme budget mapping current activity and expenditure, does the same job as the baseline of services in a needs assessment. The assessment says who could benefit and what is provided, and marginal analysis, often drawing on cost-effectiveness analysis, decides which changes to fund.

Worked example ranking needs by size or by benefit per pound

The figures in this example are illustrative. A needs assessment finds three groups with unmet need, and the commissioner has GBP 600,000 a year of new money. Each programme can be scaled to any number of people at a constant cost per person.

$$K_j = n_j \times k_j, \qquad Q_j = n_j \times g_j, \qquad c_j = \frac{K_j}{Q_j}$$

where $j$ indexes the programme, $n_j$ is the number of people with unmet need, $k_j$ is the cost per person treated in GBP, $g_j$ is the QALY gain per person treated, $K_j$ is the cost of treating everyone in need, $Q_j$ is the total capacity to benefit in QALYs, and $c_j$ is the cost per QALY gained in GBP.

1. Total capacity to benefit. Meeting every need would cost 600,000 + 400,000 + 300,000 = GBP 1,300,000 and gain 30 + 40 + 12 = 82 QALYs, more than twice the budget.
2. Ranking by numbers in need. Programme X has the most people in need and uses the whole GBP 600,000, giving 3,000 x 0.01 = 30 QALYs.
3. Ranking by benefit per pound. Programme Y costs 1,000 / 0.10 = GBP 10,000 per QALY, the lowest, so it is funded fully for GBP 400,000 and 40 QALYs. The remaining GBP 200,000 treats 200,000 / 200 = 1,000 people in programme X, gaining 10 QALYs.
4. Comparison. The second allocation gains 40 + 10 = 50 QALYs against 30, 20 QALYs more for the same money.

The largest group in need was not the best use of the first pound. Under the second allocation the last pound buys a QALY at GBP 20,000 in programme X, while programme Z would need GBP 25,000, so moving money from X to Z would lose health. If programme Z served a more deprived group, the commissioner could weight its gains, and the assessment would then state that trade-off openly.

The joint strategic needs assessment in England

Section 116 of the Local Government and Public Involvement in Health Act 2007, as amended, requires an assessment of relevant needs for the area of each responsible local authority. The local authority and its partner integrated care boards prepare it, and section 196 of the Health and Social Care Act 2012 places those functions with the health and wellbeing board. They must involve the Local Healthwatch organisation and the people who live or work in the area, and the local authority must publish the assessment and give a copy to the integrated care partnership.

A relevant need is one that the local authority's functions could meet to a significant extent and that the functions of the integrated care board or NHS England could also meet or affect, or the other way round. Section 116A then requires a joint local health and wellbeing strategy setting out how the assessed needs are to be met, prepared with regard to the integrated care strategy, the NHS mandate and guidance from the Secretary of State.

The statutory guidance from the Department of Health was published in March 2013, and a note added in August 2022 records that integrated care boards have replaced clinical commissioning groups and that the guidance will be updated. It gives the purpose as improving health and wellbeing and reducing inequalities, describes a continuous process of strategic assessment and planning, and sets no mandatory template or data set. Boards are asked to cover the whole population, give mental health equal priority with physical health, and consider wider factors such as housing, air quality and employment.

Boundaries with nearby methods

Several neighbouring methods share parts of health needs assessment. Each answers a different question.

• A burden of illness study measures the size of a problem. A needs assessment adds the effectiveness and cost of interventions, so a large burden with no effective response yields little need in this sense.
• Health technology assessment appraises one technology. Needs assessment starts from a population and asks which services it should receive.
• An individual care needs assessment concerns one person.
• Priority setting, and programme budgeting and marginal analysis, choose between options, using the evidence a needs assessment supplies.

Equity and common misreadings

Needs assessment is closely tied to health equity. Wright and colleagues note that the availability of care tends to be inversely related to need. Williams and Wright report a study in a health authority of 530,000 people where angina and heart disease mortality were more common in deprived wards but revascularisation was more common in affluent ones. Culyer and Wagstaff list distribution according to need as one of four definitions of equity in health care, argue that the four are in general incompatible, and propose equality of health as the dominant principle, so an assessment should state which equity goal it serves.

Several misreadings recur in practice.

1. Prevalence is not need. A common condition with no effective treatment adds little capacity to benefit.
2. A needs list is not a budget. Capacity to benefit exceeds the money available, so the assessment must lead to choices, including what to stop.
3. Activity data understate need. People who do not seek care do not appear in service records.
4. The report is not the outcome. Stevens and Gillam describe an iterative and sometimes messy process whose main use is consensus on priorities, and Wright and colleagues name failure to link results to planning and purchasing as one reason projects fail.

Sources

• Wright J, Williams R, Wilkinson JR. Development and importance of health needs assessment. BMJ. 1998;316(7140):1310-1313. https://doi.org/10.1136/bmj.316.7140.1310
• Williams R, Wright J. Epidemiological issues in health needs assessment. BMJ. 1998;316(7141):1379-1382. https://doi.org/10.1136/bmj.316.7141.1379
• Stevens A, Gillam S. Needs assessment: from theory to practice. BMJ. 1998;316(7142):1448-1452. https://doi.org/10.1136/bmj.316.7142.1448
• Cohen D. Marginal analysis in practice: an alternative to needs assessment for contracting health care. BMJ. 1994;309(6957):781-784. https://doi.org/10.1136/bmj.309.6957.781
• Mitton C, Donaldson C. Health care priority setting: principles, practice and challenges. Cost Effectiveness and Resource Allocation. 2004;2:3. https://doi.org/10.1186/1478-7547-2-3
• Culyer AJ, Wagstaff A. Equity and equality in health and health care. Journal of Health Economics. 1993;12(4):431-457. https://doi.org/10.1016/0167-6296(93)90004-x
• Local Government and Public Involvement in Health Act 2007, sections 116 and 116A (as amended). Accessed 14 October 2026. https://www.legislation.gov.uk/ukpga/2007/28/section/116
• Health and Social Care Act 2012, section 196 (as amended). Accessed 14 October 2026. https://www.legislation.gov.uk/ukpga/2012/7/section/196
• Department of Health. Statutory guidance on joint strategic needs assessments and joint health and wellbeing strategies. March 2013, note added 24 August 2022. https://www.gov.uk/government/publications/jsnas-and-jhws-statutory-guidance