Costing: it’s too important not to…

The decision to mandate the collection of patient-level costs from mental health service providers from next year is perhaps not surprising, although it will be extremely challenging. However, forcing the pace on the establishment of comprehensive, robust and granular cost data for the NHS is the right decision.

The NHS long-term plan may not specifically mention patient-level costing as one of the key delivery tools. But cost data that people can rely on – and that can be interrogated to show where those costs are actually arising and how they compare to the costs of other providers – is essential to many aspects of the plan. It will help people meet the continuing demanding efficiency drive, make business cases for new care models and help organisations to address the unwarranted variation in practice that can add cost to services. And it will support the move to population health management across systems.

There is undeniably a huge amount on the transformation agenda. But the sooner the NHS establishes a robust database of cost information to inform local decision-making, the easier it will be to realise the plan’s vision.

Putting it off any longer will simply leave systems without the crucial information that will help them reshape care models. The real question is why it has taken this long to get to a mandatory approach to patient-costing. Before the Costing Transformation Programme was launched, the NHS spent years encouraging the wider adoption of patient-level costing. But these now seem wasted years as, without requiring trusts to follow common guidance and submit the data, progress was patchy.

However, we should also not underestimate the size of the challenge in completing the journey. This year acute providers will submit their first mandatory submission of their 2018/19 data after a few years of growing numbers submitting on a voluntary basis. Ambulance trusts were already due to join them for their 2019/20 submission and now the decision has been taken to bring mental health trusts on board at the same time.

But mental health trusts have in general been pursuing patient-level costing for a lot less time than their acute colleagues. They typically have fewer staff dedicated to the whole costing process – many have had their hands full with the (to date) required reference costs, let alone making substantial progress with the mammoth task of moving costing to the patient level.

About 10 mental health trusts did not have a suitable costing system in place when NHS Improvement undertook its impact assessment to inform the proposal to mandate collection. There are other issues, including concerns that system providers remain preoccupied with supporting their acute customers. And systems still appear to be configured for acute environments rather than recognising the different way that mental health providers work.

Some in mental health suggest that we still haven’t bottomed out what the costing unit is – are clusters here to stay? And there are those who continue to argue across all sectors that NHS Improvement’s costing approach is too complex – using a sledgehammer to crack a nut.

But the reality is that this information is simply vital to the sustainability of the NHS. Without it, how do NHS bodies understand whether they are using resources effectively? How can they understand the financial impact of a new pathway compared with current practice? And how can they make the move to value-based decision-making, weighing up quality and outcomes alongside the cost of provision?

It will not be easy. Providers should rightly point out to NHS Improvement where the obstacles arise and the challenges of doing this on a shoestring – especially with significant continued pressure on back-office costs. But in the end, patient-level costing has to be in the ‘too important not to’ pile.

The HFMA costing conference takes place in London on 10 April.
See http://hfma.to/8q for more details