Comment / New phase, old questions

11 March 2024 Steve Brown

NHS England has confirmed a shift in focus on costing. It has spent nine years getting all parts of the NHS to calculate costs at the patient level, using a prescribed methodology, and to submit those costs as part of the national cost collection (NCC).

Not that the system is running perfectly yet, as last year’s major delays with the submission showed. But NHS England has declared its costing transformation programme has concluded. Now, it insists, the focus will be on supporting NHS bodies to use the data. 

The national cost data will continue to be used for lots of central purposes, such as supporting the Model Health System and providing a start point for nationally published unit prices. But in recent years the national team has moved towards the idea that the main purpose of robust, comparable cost data is to support local improvement – using the data to identify and challenge variation and understand opportunities to make services more effective and efficient.

One of costing practitioners’ complaints in recent years – and there have been many – has been the time taken to prepare and submit data for the NCC. This has been so burdensome that it leaves too little time to actually do that local improvement work. Rather than sitting next to clinicians exploring variation and understanding pathway costs, they are simply cranking the handle to feed the national collection beast.

So practitioners will applaud the intention to put the focus on using the data. 

But there are caveats. First, while NHS England may say the development phase is over – no more major changes to the costing methodology – concerns continue about how the data produced by the costing standards is converted to the NCC. 

NHS England’s costing team has lost 40% of its staff to downsizing, so it simply doesn’t have the manpower to make further major revisions to the process. But practitioners still complain the national methodology is unnecessarily detailed and time-consuming. Crucially for many providers, the data must be submitted in a different format to the way they report costs locally – requiring some trusts to effectively run two costing models. 

And as HFMA senior policy manager Hayley Ringrose points out in a further comment on, the costing approach does not fully meet the requirements of 10 tests set by the HFMA for what costing should look like.

What makes it worse is that the potentially useful data coming back out of the NCC process – showing how trusts compare in terms of costs with peers, and whether those variations appear in theatres, wards or diagnostics, for example – is simply too old to be very useful. The NCC data publication for 2021/22 was published in April 2023. Practitioners say clinicians often dismiss such old data, some of which will be based on activities nearly two years ago.

The big hope for NHS England in all of this is technology. If the collection process could be more automated – effectively pulling in data from trusts rather than requiring data to be uploaded – NHS England feels the service can have the best of both worlds. Centrally available cost data can underpin benchmarking, while leaving costing practitioners to spend the majority of their time getting value out of both their local data and more timely national comparative data.

There are so many questions in all of this, which hopefully an NHS England review of the future of costing can grapple with. For a start, an automated system would presumably need to be able to manipulate local data into a format needed centrally, otherwise practitioners will remain stuck in the loop of creating two sets of data.

The federated data platform is being touted as part of the solution. Ed Waller, deputy chief finance officer at NHS England, recently told a costing symposium (see News, page 4) that the platform could provide an opportunity to collect cost data in ‘a more live way’. With the platform doing the ‘heavy lifting on the data processing’, the hope is that this would require less of costing practitioners, not more.

The costing programme may have moved into a new phase, but there are still some old questions that need to be answered. 

The HFMA is running a roundtable to discuss how costing data can be used to maximum effect in April. Anyone interested in getting involved, in particular chief finance officers, clinicians and transformation leads, should contact [email protected]