Feature / Aiming for a high score

Costing standards have helped drive an overall improvement in costing, but this year they are looking to encourage refinement in three specific areas of significant NHS spending. Steve Brown reports

Where do you start if you want to improve patient-level costing? Should the focus be on activity data, which underpins all cost information? Or should you look at cost allocation in key service areas? Or even at the treatment of overheads?

Providers could be forgiven for wondering which area to tackle first to make the biggest difference to cost data quality. But this year, they are being given a clear push in three specific areas – theatres, wards and the key medical staff grouping.

Providers can already use a materiality and quality score (MAQS) self-assessment tool to help identify where to target local improvement efforts. The tool takes account of the level of resources in various cost pools, the allocation methods used (rated gold, silver, bronze or baseline) and the ability to match spending to individual patients. It produces a score to indicate the quality of the costing process at the cost pool and overall level.

Aside from the MAQS, the standards intrinsically aim to drive improvement by reflecting best practice. The big step changes in the Acute health clinical costing standards 2014/15 relate to cost allocations on wards, in theatres and with medical staff. However, recognising that changes cannot be introduced into costing systems overnight, the standards set out options and put organisations on notice that, from next year, some of these options will be reflected in the MAQS.

Wards and nurses

Ward costs account for a significant amount of acute costs – more than 23%, according to one cost benchmarking exercise. Yet in some organisations, nursing costs – by far the biggest component of ward costs – are allocated to patients purely on the basis of length of stay, taking no account of how more complex patients consume more nursing time.

Some organisations have been moving towards allocating nurse costs differentially to patients to reflect nursing dependency or patient acuity. However, there is limited guidance on how this should be done to most accurately reflect resource consumption.

Under the current standards, any provider that takes account of patient acuity when allocating ward nursing costs by the hour would receive a gold standard rating for their approach in the MAQS assessment. This suggests that all methods that reflect acuity are equally good.

But from next year, the MAQS will start to reflect the different quality of approaches to acuity. So a trust that developed weightings for different patient types, to reflect typical levels of acuity in those patients, might only receive a silver rating. A trust recording patient-specific acuity scores and allocating costs on this basis would get gold.

The clear message is for trusts to at least think about how they can improve nurse cost allocation – or face explaining to boards and others why their MAQS score has reduced.

Guy’s and St Thomas’s NHS Foundation Trust is one of the organisations leading the way on allocating nursing costs. It has been using the Safer Nursing Care Tool (SNCT) at ward level for three years to give heads of nursing a way of monitoring that they have the right numbers of staff to meet the needs of the mix of patients on the ward that day.

It took this to another level last October, when it started to introduce a system on adult wards to enable nurses to record acuity at individual patient level. Using a system called the Integrated Patient Acuity Monitoring System (IPAMS) – jointly developed with Albatross Financial Systems – it now records individual patient acuity at least once a day.

Having identified a patient as having one

of five different acuity levels – in general, three of these are described in the SNCT as appropriate to general wards – the costing team can then allocate a share of nursing costs to patients using the associated weightings (0.99, level 0; 1.39, level 1a;  1.72, level 1b),

as well as length of stay.

Jeremy Brinley Codd, associate director of finance at the trust, says the fact that nursing staff use these weightings to inform staffing levels makes them legitimate for refining the cost allocation across individual patients. And he believes the three levels provide enough granularity for general wards, although work is being undertaken to establish if greater differentiation may be needed on elderly care wards.

Weighted allocations

The weightings can make a real difference to cost allocation. ‘Early analysis of a couple of weeks of data for one ward found that unweighted allocation would have over-costed some patients by up to 28% and under-costed others by nearly 24%,’ he says. Further analysis is being undertaken for presentation at May’s HFMA costing conference.

‘Early indications are that reflecting acuity makes a material difference to how ward costs are allocated and to the overall patient costs reported,’ Mr Brinley Codd adds. The system has been introduced across all 813 of the trust’s adult beds (not critical care and maternity).

The IPAMS system is being implemented in two other foundation trusts – South Devon Healthcare and the Robert Jones and Agnes Hunt Orthopaedic – with four other trusts also in the final stages of procurement.

Other trusts are exploring alternative approaches. Nottingham University Hospitals NHS Trust, winner of the HFMA Costing Award 2013, has looked for a correlation between various patient data already collected and acuity data from one of its regular sample collections using the SNCT.

‘One of our key aims was that we didn’t want to add to nurse workload by requiring them to score individual patients for acuity,’ says Scott Hodgson, the trust’s head of costing and HFMA costing standards lead. ‘We looked at various inputs, including length of stay, deprivation, diagnosis and procedure codes, admission method and ward churn – looking at the number of ward moves per episode.’

Having found a correlation, an algorithm has been devised to assign patients to one of the SNCT acuity bands, and nurses have approved the approach as delivering meaningful outputs.

However, there are limitations. The acuity level is assigned for a whole episode, not on a day-by-day basis. So a procedure delivered late in the stay may trigger the whole episode being treated as high dependency, ignoring more routine nursing support in the initial period.

Mr Hodgson says that nurses are in fact keen to move towards a ‘live’ acuity recording system. They suggest that they are already collecting most of the data that would feed the assessment and that the additional benefits – in improving costing but also supporting the flexing of rotas – would make it worthwhile. However, in the meantime, the trust is running with its existing algorithm.

‘In some areas, using acuity in the allocations is moving significant amounts of money around,’ says Mr Hodgson. ‘In particular, the costs related to higher acuity are moving cost from elective to non-elective, suggesting we’ve been under-costing non-elective activity for a while.’

This would provide evidence for a long-held suspicion in the NHS that non-elective costs (and therefore prices) are too low compared with elective costs/prices.

This cost swing from elective to non-elective is also emerging from the work the trust has done on theatres – much of which is reflected in a new allocation framework for theatres set out in this year’s standards.

The current MAQS only recognises two types of cost within theatres – non-pay and nursing staff/other clinicians (excluding surgeons/consultant anaesthetists who are included in the medical staff cost pool group).

However, from 2015/16, it is proposed that specific allocation approaches should be looked at for nine different cost types. This

will involve separate consideration of the costs of theatre nurses, surgical and anaesthetic practitioners and separating out prosthetics, equipment and dressings and anaesthetic drugs into their own sections rather than as part of ‘other non-pay’. ‘We use actual minutes in theatre weighted for the type of theatre – emergency or elective – and the time of day, day of week and bank holidays,’ says Mr Hodgson.

Also the costs of any ‘downtime’ in a theatre are spread across the other patients in that session, pro rata to their time in theatre, rather than being apportioned across all theatre patients like an overhead.

With 45 theatres, the changed approach has again led to costs moving around but it has also supported some service change. The allocation of unused theatre time in urology has triggered a review of whether the duration of theatre sessions should be changed to better fit the time needed to undertake key procedures. The more detailed cost data also highlighted a practice in some theatres of leaving patients in theatre to recover instead of moving them to a dedicated recovery room. This has enabled theatre productivity to be increased.

Back at Guy’s and St Thomas’s, similar work to refine theatre cost allocation has helped inform some service change.  The trust has separated in-hours planned operating sessions from out-of-hours emergency theatre provision. There are now 17 different internal tariffs for in-hours operating tables, depending on the staff mix in the session.

Each in turn is weighted based on the time of the session – Monday to Friday, Saturday or Sunday and bank holidays. Allocation of costs to patients is then undertaken based on the length of time the patient is in theatre within each session. This can demonstrate a better theatre cost per patient in a session that is efficiently used, than one where time is booked but unused.

 The different tariffs stretch from day-case operations done under local anaesthetic to very complex interventions under general anaesthetic. The charges to clinical teams’ budget statements have helped inform changes of some practices. For example, for some short but complex gynaecology procedures, the trust now uses two anaesthetic teams to maximise the time of the surgical team in theatre.

Medical staffing

The third area being pushed by the clinical costing standards covers medical staffing. Job plans are central to the allocation of medical staff costs, with the standards setting out the minimum breakdown of activities that should be contained in the plans for costing purposes.

However, in practice many job plans do not reflect activity. North Tees and Hartlepool NHS Foundation Trust has addressed the issue by taking job planning online.

Its electronic job planning system was not introduced to improve costing, but better costing is a clear secondary benefit.  ‘If you are looking at a single doctor, it very much looks like an Outlook diary, showing where they are and what they are doing,’ says Stuart Burney, the trust’s head of costing.

‘And it goes into real detail.’ This might tell you that a surgeon runs an inpatient list on a certain morning every week, but that one week in six, this is an emergency list. ‘It really helps avoid any double counting,’ he adds.

The trust has also been taking data from junior doctors’ rotas to get an accurate picture of where junior doctors are spending their time. Neither approach is fully built into the costing model in its Healthcost costing system yet, but the trust has introduced spreadsheet modelling that tells some interesting stories.

In particular, it underlines that junior doctors’ costs should not simply be allocated as an overhead to their consultant – the split of junior doctors’ time often bears little resemblance to that of their supervisor. This point is also made in the costing standards. 

‘On general surgery alone, we moved £400,000 of junior doctors’ costs out of elective and outpatients and into non-elective,’ says Mr Burney.

In part, this reflects the fact that overtime and anti-social hours banding supplements are now being targeted at the non-elective care they generally relate to. But there are also differences between the specialties.

‘For the surgical specialties, the house officer and senior house officer equivalents spend a disproportionate amount of their time on non-elective work,’ Mr Burney says. This is simply not picked up by allocating junior doctors time pro-rata to that of their consultants.

Nottingham does not have the electronic job-planning system, but it has also started to refine its medical staff cost allocations. The work on education costing (see Healthcare Finance April 2014, page 16) has underlined that job plan descriptions do not always reflect practice. Like North Tees, Nottingham is looking at how it can split banding payments and target them at specific points of delivery.

The trust is also looking at how it can reflect patient acuity in allocating consultant costs, at least for their ward rounds. It is carrying out similar analysis to the work done on nursing acuity, although consultants have suggested that in the absence of a dedicated system, the nursing acuity bandings would be better than using no weightings. 

Elsewhere, Birmingham Children’s Hospital NHS Foundation Trust (see box previous page) has taken this a stage further by developing resource profiles for cohorts of patients, to enable consultant and other practitioner time to be allocated more accurately.

There is a significant amount of work being undertaken within costing teams to improve costing. The standards have a major role to play in supporting this improvement drive. The standards are currently non-mandatory, although Monitor has suggested it will review their status in future. However, they provide a clear indication of how all providers should be looking to improve their costing.