HECON4260 – Need analyses, risk adjustments and formula funding

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Course content

The use of formula funding of public service expenditures has become widespread as a risk adjustment tool in most developed countries in recent years. Expenditures are typically distributed from a central state or a insurance company to primary care, secondary care or integrated care organizations by such formulas. The formulas are usually composed of demographic and socioeconomic factors. 

The aim of this course is to give the students a basic understanding of how demand or need analyses can be used to construct the formulas and to discuss the relevance of these methodologies for public policy and planning.

The course offers both an introduction to the theory and practice underlying the use of formulas as a basis for funding public services. The starting point is regression analyses of the use of health care services (or other services where formulas are used such as social security and education). From these analyses we identify variables that correlate with the variation in use of services across geographical areas, typically demographic and sociodemographic variables. The last step is to calculate a formula based on these variables that can be used for distributive purposes.

Learning outcome

Theoretical foundations for demand analyses, presentations of some of the econometric and statistical tools that are used in these analyses and application of these methods to real datasets through computer based exercises. The data sets are mainly from the health care services but other kind of public service production such as primary education and kindergartens will also be discussed.


You will

  • get an overview over how formula funding is used in different sectors of the society,
  • get an overview of relevant quantitative methods.


You will learn how to

  • analyze data of health care service use by regression techniques,
  • apply simple methods that handles supply side variations, and
  • from the results of the regresion analyses calculate cost weights that are used in funding formulas.

General competence

Upon completing the course, you should be able to critically consider the various choices that have to be made, as well as the consequences of these choices, when analyzing data of health care use.


Students who are admitted to study programmes at UiO must each semester register which courses and exams they wish to sign up for in Studentweb.

Students enrolled in other Master's Degree Programmes can, on application, be admitted to the course if this is cleared by their own study programme.

If you are not already enrolled as a student at UiO, please see our information about admission requirements and procedures.


Formal prerequisite knowledge

Basic courses in statistics (at least 5 ECTS), for example HMET4100 – Fundamentals of statistics


There will be three 2-hour lectures and six 2-hour sessions with computer exercises.

For the computer exercises we will use Stata.

Attendance at 80% of the lectures and computer exercises is required  to pass the exam. In the case of a resit, former teaching is valid for two years.


Home examination


The Board at the University of Oslo has decided to introduce detailed guidelines for all examinations, which take place at the University. The description of the grading should be clear and transparent. This is done to ensure alignment between learning outcomes, assignments, and grading. The Faculty of Medicine has developed a web page with information regarding exams and the grading procedures (norwegian version).

Digital home examination

The home examination is conducted in the digital examination system Inspera.You will need to familiarize yourself with the digital examination arrangements in Inspera.

 Read more about home examinations using Inspera.

Use of sources and citation

You should familiarize yourself with the rules that apply to the use of sources and citations. If you violate the rules, you may be suspected of cheating/attempted cheating.

Language of examination

The examination text is given in English.You may submit your response in Norwegian, Swedish, Danish or English.

Grading scale

Grades are awarded on a scale from A to F, where A is the best grade and F is a fail. Read more about the grading system.

Explanations and appeals

You will get an explanation of your grade in Inspera.


Resit an examination

Withdrawal from an examination

It is possible to take the exam up to 3 times. If you withdraw from the exam after the deadline or during the exam, this will be counted as an examination attempt.

Special examination arrangements

Application form, deadline and requirements for special examination arrangements.


The course is subject to continuous evaluation. At regular intervals we also ask students to participate in a more comprehensive evaluation.

Facts about this course






Every autumn

The course will not be offered in autumn 2020


Every autumn

Teaching language