Costing: mental health moves centre stage

Costing of mental health services has been in the shadow of its counterpart in acute providers ever since the NHS first took an interest in understanding how it spent its funds. This can in part be explained by poorer data, particularly for non-admitted care, and the lack of a reference cost-based national tariff for mental health services.

However, the push to transform costing across all NHS services makes a big stride forward this year as NHS Improvement hopes to get close to half of all mental health providers making a submission of cost data at the patient level.

Nobody expects perfect cost data to emerge from this exercise. But, if successful, it will mark a major milestone in mental health providers’ journey to understand their cost base better and provide a foundation for exploring opportunities for improvement.

At the start of April, NHS Improvement will launch version 2 of its Healthcare costing standards: mental health and hopes that around 25 mental health providers will volunteer to use the standards to calculate patient-level costs for their services and then submit them to the oversight body later in the year.

In return, these early implementers would get access to a portal of cost data based on all the submissions, which would enable them to start benchmarking costs and pathways. Early implementing acute trusts already have access to such a portal.

This would be a major achievement. NHS Improvement’s Costing Transformation Programme (CTP) aims to get all providers in the English NHS compiling and submitting patient-level cost data by the summer of 2021 (submitting data for the 2020/21 financial year).

Acute providers will lead the way. Some 60 acute providers last year voluntarily submitted patient-level cost data, compiled according to the new standards – final versions of which were published earlier this year. And the NHS Improvement board recently agreed to make patient-level costing mandatory for acute providers from the 2018/19 return in the summer of 2019.

While no decision has yet been taken to broaden this mandatory requirement to mental health, ambulance and community services, consultations for mental health and ambulance take place later this year.

Mental health providers are in general following a trajectory just one year behind acute providers. However, they are starting from a lower base in terms of historical investment in costing systems and support.

‘There is a lot of enthusiasm among mental health trust costing practitioners to really improve the costing data their trusts can use to inform decision-making,’ says Fiona Boyle (pictured), NHS Improvement’s costing manager, responsible for the mental health and community costing standards. ‘We want to give them as much support as we can to help them realise this ambition.’

The updated standards are fundamental to this support. Ms Boyle believes they do not represent a major rewrite on last year’s initial mental health draft standards, but build on the basics and add applicable detail for the sector. However, they are likely to be the first standards used by a large group of mental health trusts.

Last year, three mental health road map partners submitted patient cost data using the first version of the standards. This year, NHS Improvement hopes to get a significant part of the sector involved.

The oversight body believes it makes sense to take part in the transformation programme as soon as possible. It is likely that the sector will be required to adopt the standards in future and experience from the acute sector suggests that improving costing is an iterative process – so the sooner trusts start, the quicker their data will improve and the more useful it will be.

The standards should not come as a surprise to anyone who has been keeping track of the development of standards for acute services (and ambulance and community, for that matter). The aim is to have a consistent methodology, regardless of setting. As a result, the standards have the same format – they even use the convention of referring to ‘patients’ in all versions, not the more frequently used ‘service user’ preferred in mental health settings.

As with all the sector-specific standard sets, the mental health standards come in sections, covering: information requirements; cost processes; cost methods; and (currently acute only) costing approaches.

The differences come in the details and examples. The information requirements for mental health, for example, rely on trusts complying with the recently mandated mental health services data set (MHSDS).

Common processes

The processes described in the standards are similarly common to all sectors. These cover the creation of a costing ledger with a predefined structure from organisations’ own general ledgers. This common starting point then allows these costs to be mapped first to resources and then to activities before finally being attached to unique patient spell, attendance or contact.

With many of the defined resources and activities common to all sectors, the mental health versions of the standards simply add in resources that are specific to the delivery of mental health services.

For example, mental health-specific resources might include a music therapist or a psychiatric nurse. Examples of unique activities would be ward care on either a psychiatric intensive care ward or in an eating disorder inpatient unit.

Standards for costing methods cover high-volume or high-value services or departments. While some of these are common to all sectors, mental health-specific standards focus on issues such as costing of group sessions, home leave, escorting and specialling.

Ms Boyle says the deliberate aim is to make the standards as similar as possible across all the sectors, while still reflecting the different activities undertaken in those sectors. ‘This is particularly important for integrated trusts,’ she says.

‘We are trying to give consistency so that costing practitioners have a single suite of information they can refer to. And they can do this through the same costing system, and from the general ledger to the same costing ledger, all the way through. The consistency also brings benefits for pathway reporting.’

Not all mental health providers currently have a patient-level information and costing system (PLICS) capable of supporting the new costing approach. But this isn’t necessarily a barrier to rapid progress. One of the acute early implementers last year implemented a new system alongside using the standards for the first time.

And Ms Boyle says some of the mental health trusts that have volunteered to take part this year are also still in the process of procuring and implementing a new system.

In any case, she says, that work does not have to wait for the introduction of a new system. ‘A lot of the work that needs to be done is preparation,’ she adds. ‘ [This involves] getting an understanding of where the organisation has the required data and where it can meet the standards, allowing for planning work where the gaps lie. They may comply with more areas than they think.’

When the standards arrive, she recommends all costing practitioners read through the two information requirement and six costing processes standards – a new standard on assurance has been added this year.

Ms Boyle accepts that some of the prescribed processes will be significantly different from existing practice. However, she says that practitioners should not worry if they don’t understand everything immediately. Help is at hand. For a start, two gap analysis tools (one for information and the other covering the standards) will give practitioners and organisations an idea of what they need to prioritise.

This year both acute and mental health practitioners will also have a new support implementation platform to help them (see page 17), delivering tutorials, providing discussion forums, setting tasks and suggesting reading materials.

Early implementers that access the gap analyses through the online platform will also be able to get help completing them, if there are areas they are struggling with.

Ms Boyle accepts that mental health trusts face a steeper curve in implementing patient-level costing than their acute colleagues. She identifies three key challenges. ‘Data quality is a key issue,’ she says. Traditionally, a lot of detail about patient interactions in the mental health sector hasn’t been recorded. A trust may run a group music therapy session, but the actual patients attending may not be formally recorded in an activity system.

‘Looking at activity systems, a trust may know that a patient was visited in the community, but not know exactly which practitioners were involved or how long the session lasted.’

Playing catch-up

The fact that the MHSDS is now mandated should help to standardise the collection of required data. However, some of the specific fields needed for costing do not have the mandated status. The reality of the situation is that the sector has not been able to switch on the new data set requirements overnight and is working towards full compliance.

For a number of trusts, this has been an area that has suffered as a result of underinvestment in systems and staff. And the current financial climate makes it even more difficult for some to catch up on that investment in the short-term.

Resources available to support costing have been another issue. While NHS Improvement has made it clear the NHS overall needs to increase the resources available to support the CTP, this is even more the case in mental trusts.

Ms Boyle says many trusts have just one costing practitioner, and this has not always been a full-time post – some mental health trusts have only funded a position to cover the specific task of submitting reference costs.

‘We are asking the senior level of organisations to consider if this is enough to do PLICS,’ she says.

There are significant benefits to be had from patient-level costing data – increased business intelligence, benchmarking and improved decision-making. But realising these benefits may need some organisations to increase the resources being used.

‘Costing practitioners are a key part of this,’ explains Ms Boyle. ‘But it is also about the information system and the staff helping to build data feeds and the support needed to ensure the data gets out into the organisation and is used.’

This leads into the third issue – ensuring boards understand the importance of good costing.

‘The message needs to come from the top so it is understood by management and clinical teams,’ says Ms Boyle. ‘Where this is the case, it has been shown to benefit the programme all the way through.’

This buy-in from the top of the organisation is a fundamental foundation for making a success of patient-level costing.

The case is arguably harder to make within the mental health sector. All providers stand to benefit from a deeper understanding of their costs – helping them to identify and understand the cost implications of different pathway options and variations in practice, for example.

However, for many acute trusts, deep dives into patient cost data have highlighted long-running coding errors. Fixing them has often improved income with an activity-based tariff system. Given mental health’s current reliance on block contracts, the same potential benefit doesn’t exist in this sector.

However, Ms Boyle says the major benefits remain in place and boards need to recognise the broader benefits of understanding their cost base accurately – as well as the potential for any future payment approaches to be based on more accurate data.

She adds that some mental health trusts are still endeavouring to undertake a service line reporting-type analysis and actual patient cost data will improve these approaches.

There is significant interest from system leaders in establishing patient-level costing across the NHS. Better costing could inform existing and future national prices for services – or better inform capitation budgets. They are seen as important to underpin national efficiency programmes such as Getting it right first time and the Model Hospital. However, the prime benefit is in improving local decision-making.

Armed with patient-level costs, trusts will be able to better understand the financial impact of pathway variation and eliminate the variation where it is unwarranted. Comparing overall costs and the make-up of those costs across all providers will enable organisations to spot opportunities for improvement
and investment decisions will be better informed.

Mental health trusts stand to gain from these benefits as much as providers. In fact, after work in recent years to understand existing service provision and develop more standard packages of care as part of moves towards contracting on the basis of mental health clusters, patient-level costs could mark a step change in management information.

The clear message from NHS Improvement to mental health trusts is to get involved and start the journey now.