Costing pause must be followed up with real change

by Steve Brown

06 June 2022

Addressing costing practitioners’ concerns about overly complex national costing guidance and processes would be a major step forward. ​

On the face of it, the announcement of a pause in the move to more frequent cost collection is good news. While seeing the potential benchmarking benefit of more frequent cost data – if released back to the service quickly – costing practitioners have raised significant practical concerns about how the more frequent collections would be carried out.

So the news of the ‘pause’ – to collect more information on whether to go ahead with the proposal, and if so, how it should be done – suggests NHS England and NHS Improvement are listening to the concerns that costing practitioners have been expressing since the proposal was first put forward towards the end of 2020.

One of the big issues for providers is how much costing team time more frequent collections would consume. The annual submission for the national cost collection (NCC) can take up to 12 weeks for some organisations. Doing this on a quarterly basis, or just more frequently than annually, would leave costing teams with little time to support clinical colleagues to actually use patient-level cost data to identify opportunities for improvement. That is the point of costing – not simply producing the costing data.

The problem for many practitioners is that the way they have to report costs as part of the national submission is not how they do it locally. And while some trusts make significant use of their business-as-usual cost data, a lot say they are making very little use of the national cost collection data, at least in part because it is so out-of-date by the time it is published. (Although the 2020/21 data has recently been added to the central PLICS portal, it has yet to be published fully on the NHS England and NHS Improvement website.)

The exception is possibly model health data, which uses the national cost collection data for its underpinning costs. And while some trusts do use this comparative data, it is also undermined by outdated finance data.

What costing practitioners want is for the national costing guidance to be simplified, focus more on material costs and be better aligned with the way they currently report costs locally.

So, it really is good news to hear some of these requests being reflected in comments from the national costing team (see More frequent cost collection put on hold).

Very specifically the national team says that, now the transition from reference costs to patient-level costs is basically complete, there is more flexibility to ‘move the requirements of the NCC closer to the processes used locally for PLICS’. It claims most of the differences relate to unbundling with the national model requiring components of a care pathway – such as chemotherapy, critical care or diagnostic imaging – to be stripped out of the overall patient cost and calculated separately. It says it is now looking into what requirements, if any, it has for unbundling costs.

It is also exploring the potential for automating some of the process – with work getting underway this month with its technology partner. This may focus on a reference costs style collection, which may miss the point that these aggregate costs are now fed by trusts’ more detailed patient-level costs – so there may be minimal savings in time.

However, at a recent HFMA Healthcare Costing for Value Institute webinar the national team were making the right noises, appear to have picked up on costing practitioners’ concerns and asked for further feedback on helpful reform..

If there is a note of caution it is that it has taken so long to get here. Costing practitioners have been calling for a simplification in the national costing process for years – wanting a much greater focus on 'good enough' rather than understanding costs down to the last penny. The talk about more frequent cost collections has only made the need for change even more necessary.

The HFMA has compiled these concerns and brought them to the attention of the centre on several occasions – see its recommendations for change from 2019 and last year’s What does good look like for costing in the NHS?

There have even been reductions in the size of the guidance in response to these calls for change – but they have often been measured in a reduced number of pages rather than in substantive changes to the process. This doesn’t always mean less work.

So costing practitioners will wait to see how these hints at future simplification turn into concrete proposals.

But a change in approach would be welcome. The national costing team and costing practitioners are on the same side in recognising the importance of costing and how it could support pathway transformation and service improvement. And as the service moves towards system working and population health management, robust costing data will only become more essential.

There are still lots of big steps needed to be able to realise the full power of costing data. The service needs to settle on a currency for mental health services. Community service providers need to catch up with the rest of the NHS in implementing patient-level costs. And costing needs to move out of secondary care and start incorporating primary care into overall pathway costs.

But establishing a simplified approach to costing – striking the right balance between reporting costs nationally and using costing information locally – would be a great start.