Costs of formal care for frail older people in England: the resource implications study of the MRC cognitive function and ageing study (RIS MRC CFAS) Paul McNamee a, *, Barbara A. Gregson a , Debbie Buck a , Claire H. Bamford a , John Bond a , Ken Wright b a Centre for Health Services Research, School of Health Sciences, University of Newcastle upon Tyne, Newcastle upon Tyne, UK b Centre for Health Economics, University of York, York UK Abstract The aim of this paper is to quantify service use and costs of supporting frail older people at home in the community, using data collected in a longitudinal multicentre strati®ed randomised study for 1055 mentally frail, physically frail, and mentally and physically frail subjects. Average costs per person per week were found to total £64.45, with a small number of services accounting for a large proportion of the total costs. The level of services oered by the nonstatutory voluntary and private sectors was found to be small. To highlight issues for policy makers, the extent of cost variations between a number of dierent subgroups were calculated. These bivariate analyses revealed substantial variation in costs, especially according to household structure, type of frailty, whether admission to continuing care accommodation occurred and survival. Multiple regression analysis demonstrated that 26% of the variation in log average weekly costs could be explained by a number of socio-demographic and health status variables. A particularly close relationship was observed between costs and whether admission to continuing care accommodation occurred, highlighting a need for policy-makers to examine the nature and scale of provision of alternative community based care packages. The results demonstrate that descriptive cost data such as those presented can provide information useful to the planning process, enabling more informed choices to be made over the provision of services for particular groups of people. # 1998 Elsevier Science Ltd. All rights reserved. Keywords: Costs; Elderly; Older people; Methodology; Regression analysis; Community care 1. Introduction The rationale for considering the amount and distri- bution of resource use or costs associated with the care of frail older people is to enable more informed policy choices to be made in the allocation of resources. Consideration of resource implications is important because of the concept of opportunity cost, which arises whenever choices are made in the allocation of scarce resources. As a particular allocation implies a rejection of alternative ways of allocating resources, the opportunity cost is the value of the bene®ts lost as a result of rejecting alternative options. In a situation of competitive markets for goods and services, the opportunity cost is usually proxied by the monetary value of the chosen allocation. It is important to recognise the purposes and limi- tations of cost information, which is not sucient in itself in examining the eciency of resource allocation. For this purpose, costs must be combined with data on eectiveness to enable judgements on the eciency Social Science & Medicine 48 (1999) 331±341 0277-9536/98/$ - see front matter # 1998 Elsevier Science Ltd. All rights reserved. PII: S0277-9536(98)00351-7 PERGAMON * Corresponding author. Department of Epidemiology & Public Health, The Medical School, School of Health Sciences, University of Newcastle upon Tyne, Newcastle upon Tyne NE2 4HH, UK. Tel.: +44-191-222-7027; fax: +44-191- 222-6746; e-mail: paul.mcnamee@ncl.ac.uk.