Join the costing revolution

by Catherine Mitchell

25 July 2017


With the roll-out of patient-level costing (PLICS) across the NHS as part of NHS Improvement’s costing transformation programme, providers of NHS services have increasingly detailed information about the cost of caring for individual patients.  Indeed the English NHS should hold its head up high as being one of the few countries in the world with such a comprehensive approach to PLICS. 

There are a handful of examples where clinical and finance staff have recognised the richness of PLICS data, and how it can support improvements in patient care.  For example, consultant plastic surgeon Jason Neil-Dwyer at Nottingham University Hospitals NHS Trust describes how his team are working with finance to maximise the benefits of PLICS information to redesign services to improve efficiency, challenge clinical practice and remap patient pathways.   

But the reality is that PLICS is not consistently being used to support improvements in the efficiency and effectiveness of how patient care is delivered.  Why is this?

Do NHS boards think costing still means the traditional reference costs, which someone in a darkened room would generate once a year for the Department of Health? Do NHS organisations see data or business intelligence as an asset?  Is PLICS data presented in a way that is accessible and meaningful to people outside the finance department?  How can costing information really support improvements in patient care without taking account of outcomes, and without being able to measure the patient pathway across organisations?

It is likely that all these issues contribute to costing data not being used as much as it could and should be.

Really NHS boards should be demanding robust business intelligence such as that provided by PLICS data to support them in their decision-making. In the meantime, we need to articulate more clearly to these boards what PLICS is and how it can play a vital role in supporting the delivery of sustainable high quality care.  

Finance staff increasingly need to recognise it is not just what they produce, but how they present it, that is important. Financial information needs to be in a form that is meaningful to clinicians and the way that they work.

Our  Nottingham University Hospitals case study describes how the trust, in common with most other trusts, routinely produced service budget statements. These were not always understood and believed by consultants, and did not provide them with the tools they needed to make changes in clinical practice.  Finance staff have had to adapt and develop a new approach to working with their clinical colleagues.

It is all very well benchmarking the costs of care, but without understanding the outcomes it is hard to draw any strong conclusions. Our value challenge pilot demonstrates that it is possible to link costs to outcome data in a clinically meaningful way. 

A major source of frustration to the value challenge project was the inability to be able to look at costs and outcome data across the patient pathway.  This is a major stumbling block to identifying value opportunities across pathways and organisations. Delegates at last year’s international symposium were impressed at New South Wales’s portal linking data across acute, mental health and community settings.New South Wales’s portal linking data across acute, mental health and community settings.

I am hopeful that things will change here.  NHS Improvement is building the capacity to link PLICS data for one patient across multiple providers and early results are exciting. Its Model Hospital initiative is already starting to provide the English NHS with its own one-stop-shop for comparing performance and analysing variation – and there is recognition that this could be greatly enhanced with more granular patient-level cost data.

But while the tools and the central work to ensure data is comparable is important, the patient-level costing revolution needs to be driven by local organisations and local health economies.

Understanding the value of patient-level cost data is important for clinicians as well as finance staff, but it has to start with boards. This support and commitment needs to be real and visible sending out a clear message that they are serious about the delivery of better value in healthcare. That is when the real progress will be made.

Find out more about the HFMA Healthcare for Costing and Value Institute