Costing's difficult year

by Steve Brown

11 June 2020


Covid-19 has had a wide-ranging impact on the NHS. It has taken a devastating toll in terms of lives lost and has stressed the service’s capacity and emergency preparedness to an unprecedented extent. But the timing of the outbreak also has repercussions for the national programme to introduce patient-level costing across all NHS providers in England.

This was set to be a big year for the Costing Transformation Programme. While the detailed methodology adopted by NHS England and NHS Improvement continues to attract criticism from some quarters, the 2020 collection of 2019/20 costs marks the second year in which acute providers have been mandated to submit patient level costs for all their admitted and non-admitted patient care, adult critical care and supplementary information such as high cost drugs. And the 2019/20 collection will also see ambulance services and mental health services required to submit costs at the patient level for at least part of their cost quantum.Calculator

The arrival of Covid-19 threatened to throw a spanner in the works. First of all, for the last month of the year, as the virus started to demand the almost complete attention of NHS services, NHS staff were being widely redeployed to support the frontline response. All of a sudden, the usual sources of information that help costing practitioners to allocate costs to patients became unusable – a job plan suggesting how an orthopaedic consultant’s time is split between theatre, ward and other work is pretty meaningless if that consultant is now redeployed and spending large proportions of their time in critical care or on a Covid ward.

Second, clinical and operational leads have their attention elsewhere and simply wouldn’t have the time to support practitioners in completing submissions to the usual timetable. And third, many costing and informatics staff have themselves been redeployed to support other functions – working in incident command centres or supporting the procurement of personal protective equipment for example – and so usual costing activities have taken a backseat.

The solution has been to delay the National Cost Collection – to the autumn for acute and community sectors and to January next year for ambulance and mental health services. This undeniably buys the service and its costing practitioners some time, but there will still be challenges.

Perhaps the over-arching question in some practitioners’ minds has been why the service is undertaking the cost collection at all. One finance manager, at a webinar in May, at which the new deadlines were announced, put it like this. ‘With real concerns over quality, assurance, engagement, completeness, and comparability of this data – what is the cost collection data actually going to be used for and why?’

His point was that the onset of Covid-19 would distort the cost data produced making it unusable for comparative purposes and with the service moving away from using payment by results, would refreshed cost data even be needed to inform tariff prices?

The first point – distorted cost data – is debateable. Some practitioners have acknowledged that, for 2019/20, Covid-19 is likely to have affected just one-month’s worth of activity. There will be distortions in some regions, but meaningful data should be rescuable. However, 2020/21 is likely to be a completely different story.

And this may explain NHS England and NHS Improvement’s clear determination to not cancel the 2019/20 collection. Hopefully by this time next year, the service will be operating in something that more closely resembles business as usual – even if a level of Covid care has become part of that business as usual. Costing practitioners should be back behind their costing desks.

But it is much less clear what useful costing data could be produced from such a unique year. For a start, it is hard to imagine that the costing data could identify the patient costs related to Covid-19 itself. If the approach proposed for 2019/20 is followed – stripping out exceptional Covid-related costs from the costing exercise upfront – then you end up with under-costed Covid-19 patients.

There will need to be a lot of informed guess work to allocate costs – for example redeployed medical and other staff. Decisions will need to be taken about the costs of new capacity created but not utilised. And, with normal activity falling substantially, costs may be spread over a smaller volume of activity – raising the costs of that activity, unless a further adjustment is made for services with reduced activity.

How valuable would data like this be for trusts exploring variation? Or for the Model Hospital programme?

The Costing Transformation Programme has had some success in raising costing up the agenda – getting boards and clinicians more aware of the potential for robust patient-level costs to support the delivery of better value. Having built up some momentum on what has inevitably been a long journey – nearly six years since the Costing Transformation Prorgamme was launched – the central bodies would not want to see the programme stall now.

So, it is perhaps possible that NHS England and NHS Improvement would want to ensure the 2019/20 collection goes ahead on the basis that, of the two years, this is more likely to produce useable data.

Costing practitioners may have had their reservations about the 2019/20 collection, but they are now turning their attention to what needs to be done to comply with the costing standards and meet the revised deadlines.

NHS England and NHS Improvement have made a number of recommendations for the implementation of costing standards in 2019/20 as a result of the impact of Covid-19. In addition to excluding exceptional Covid costs – those that have been claimed back as part of the top-up process to enhance block payments – these recommendations include the use of locally agreed allocation methods to allocate clearly identifiable Covid-19 costs.

Where costs are uncertain – for example there is no information about how many consultants were redeployed to support Covid wards, or for how long – trusts can use the change in activity levels in the department as a proxy for the transferred costs.

The HFMA Healthcare Costing for Value Institute has worked closely with practitioners and has been raising concerns with the central bodies over the last year chiefly around the complexity of the existing standards and the level of detail required.

It has identified five criteria that it believes the standards should be measured by. Are they proportionate and achievable? Do they deliver high quality comparable data? Are they easy to understand? And do they provide useful information for local and national use?

Institute members have been clear that the current standards fall short of these requirements. The threshold for materiality is set too low, they argue, and they remain beyond many trusts’ ability to comply with. And many practitioners say that the activity/resource matrix is simply, and unnecessarily, too big.

Perhaps of most concern is the fact that the level of requirements on costing practitioners, whose numbers have not expanded to deliver the new standards, means that they do not actually have any time left to support clinical teams to use the data being produced.

Practitioners will now have to focus on meeting the new submission deadlines for 2019/20 data, with mental health costing teams perhaps facing the biggest challenge in making their first mandatory submissions while concerns over data feeds remains high.

Costing practitioners hope that the next two years can also be used to address their continuing concerns. While support for patient-level costing remains high, they are keen to see a set of standards that more closely match their identified criteria. Once the Covid-19 pandemic eases, revised and simplified standards will give their organisations the best chance of refocusing on the challenge of delivering value in their services.