Costing will prioritise local decision making

There have been concerns that the national cost collection (NCC) has been too focused on meeting the needs of the centre, such as informing national tariff prices and feeding the model health system benchmarking tool. Costing practitioners, through the HFMA Healthcare Costing for Value Institute, have also complained that the prescribed costing methodology is too complex and should be more focused on providers’ material costs.

Instead, providers have called for a methodology that more closely mirrors the costing models used locally to inform decision making. This would sidestep the need for trusts to run two separate costing models – one for local reporting and one to meet national submission requirements – and create more potential for automating returns. And they have also highlighted the need for national costing data to be published more rapidly following national submissions so the comparative data can be used in a timely way. The data submitted as part of the NCC for 2020/21 has yet to be published.

Proposals to increase the frequency of national cost returns met with similar opposition, with costing teams warning that this would leave no time to support their organisations in using costing data to highlight local opportunities for improvement.

In May, NHS England announced a ‘pause’ in the move to more frequent cost collection, while it engaged further with the service and gathered more information on the costs and benefits of the proposal.

But at the HFMA summer conference last week, Mr Ridley (pictured) appeared to go further when he said that simply replicating the current cost collection more times a year was not the way forward.

‘We have a desire to put costing more at the forefront of what we do,’ he said. ‘We continue to think it is important and continue to believe that collecting costing data in the way we do and then publishing it a good 18 months after the event is probably not the most useful way of using costing data.

‘However, going hell for leather at just doing it more regularly during the year is probably not the answer here,’ he continued. ‘We haven’t got the teams or the resource to do this in many places. Indeed, just trying to do more of the same as what we are doing at the moment misses the point.’

Following engagement with providers and costing teams, Mr Ridley said NHS England had now taken a step back, adding that the national body’s proposed approach to costing had been heavily influenced by the HFMA and the institute.

‘The key test [for our approach to costing] is primarily how it gets more value at a local and system level, he said. ‘So our approach in the future needs to drive local decision making and drive the data you need locally.’

While the centre still wanted and needed costing data from the whole service, this had to be ‘secondary to actually giving you the data you need locally’.

NHS England is now undertaking some redesign work to understand changes needed to the national cost collection, the rules and requirements, and to be clear on the main purpose of costing.