Comment / Costing vital to value judgement

03 February 2014 John Graham

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Image removed.Value is hardly a new concept in the NHS and public sector. For how long have we sought to deliver value for money or best value? But it seems to have had something of a makeover in recent years.

For many, better value was synonymous with lower cost. And cost reduction equated to service reduction. But value has always been – or at least should have been – about more than just the financial side. So any attempts to underline the definition of value in terms of both quality and cost (or quality divided by cost) have to make sense.

This has to help unite us round a common purpose and have serious conversations with clinical staff about how we drive up standards within the available resources. National bodies have paved the way. NHS England’s A call for action talks about ensuring ‘we invest in the technology and drugs that demonstrate the best value’ and extend this rigour to ‘different models of delivering health and care services’.

It is absolutely right that quality – effectiveness, safety and patient experience – is front and centre in everything we do, from cost improvement programmes to investments in new services or new models of delivery. But this must not diminish the importance of cost data. While decisions cannot be made on the basis of cost alone, costs are a core component of the value definition. Get the costs wrong and your value assumptions will be skewed. You’ll take the wrong decisions, for the wrong reasons and enter into new ways of working with eyes shut about the impact.

The best sites across the country are using a better understanding of costs as their way into patient-focused service improvement. Organisations with patient-level costs that accurately reflect the costs of the treatment of specific patients can start to really understand variation in costs and outcomes.

Some of this analysis could arguably be done without going near cost data – by looking at the links between time in theatre and outcome or the number of tests ordered across broadly similar patient types. But often looking at this variation alongside the costs strengthens the impact, helping to identify the benefits of change in freeing up resources for other activities or contributing to service sustainability.

In many cases, it is the cost data that tells clinicians and managers where to look for service improvement. And it is often only the costing system that brings all the data together.

Costing will be vital in meeting the transformation challenge. The work by the HFMA in support of the national seven-day services review – helping to understand the potential costs for providers in delivering urgent care services on a 24/7 basis – is a perfect example of the work we need to see replicated on a local level as we look at new ways of working.

The HFMA will publish further revised Clinical costing standards early in February. The work done by the HFMA’s Costing Practitioner Groups in continuing to improve these standards and develop associated support material should be applauded.

The standards aim to describe best practice in compiling costs at the patient or service user level. We are supported by Monitor in this – and clearly Monitor and NHS England have an interest in good-quality cost data to inform their tariff-setting role. But the overriding purpose of better costing is to support local decision making and ensure value judgements are well informed.

Our focus in delivering any service change has to be on quality and safety – the outcomes for patients and their experience of their care. But if we don’t look at the costs as well – and ensure those costs are robust – then judgements about value will be guesswork.