More frequent cost collection to be given go-ahead

13 April 2022 Steve Brown

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The ambition of moving to more frequent cost collections was first highlighted in November 2020 and was picked up by NHS England chief financial officer Julian Kelly. He told the HFMA annual conference at the end of 2020 that the data would be useful for ‘local, system, regional and national organisations, commissioners and providers to see where the productivity opportunities lie’. ‘It’s about getting a balance between good costing data and timeliness,’ he said.c.walters.cost.conf.22.L

Since then, NHS England has run a scoping exercise to investigate how this ambition could be realised. NHS England and NHS Improvement director of costing and pricing Chris Walters (pictured) told this week’s annual costing conference, run by the HFMA Healthcare Costing for Value Institute, that this engagement had highlighted four themes. These included: the timeliness and usefulness of outputs; minimising the submission burden; having standards proportionate to more frequent collection; and funding.

‘On the basis of the information gathered, it is clear that the benefits of collecting costs more frequently, provided it is done right, should exceed the costs,’ he told the online conference. On the back of this, more frequent cost collection is expected to be given the green light. ‘We are likely to recommend supplementing the annual collection of PLICS in July with three quarterly collections of costs at a higher level of aggregation, say cost pools,’ he said.

He added that this would require the standards and guidance for the national cost collection to be streamlined, making them more aligned to providers’ internal PLICS processes. Roll-out is likely to be staged in the same way as the costing transformation programme, which saw acute services initially mandated to submit patient level costs, before being joined by ambulance services, mental health and (in the 2022 submission) community services. Pilots are expected to start this autumn and Mr Walters said the goal would be to publish the cost data no longer than two months after it was submitted.

NHS England and NHS Improvement deputy director of costing Helen Laing insisted there was a clear recognition of the need to minimise the burden on trusts and their costing teams. ‘We understand how much effort goes into submitting the national cost collection,’ she said. ‘Ideally what we’d like to do is, instead of people having to submit the data, we’d like to be able to extract it. We don’t know yet whether this will be a sample or just a few key trusts, who would have their data taken. But we want to ensure it is minimal burden for healthcare providers.’

However costing practitioners remain very concerned about the proposals – which was clearly demonstrated in the numerous comments and questions raised during the session. In particular, costing teams are nervous that more frequent collections will leave little, if any, time to work locally with clinicians and operational teams. ‘If more frequent cost collection is mandated, then we will be spending all our time on that and will not be able to develop costing internally,’ said one delegate. Another said that more frequent collections would leave ‘no time to provide internal management information – the original purpose of patient-level costing’.

Practitioners warned that not all costing teams had the capacity to cover increased collection. And they said that putting the focus increasingly on delivering central returns, rather than supporting local improvement, would exacerbate existing recruitment and retention challenges. Meeting demands for further returns would require more investment in costing teams, which was difficult given the significant pressures on NHS budgets.

The HFMA has consistently fed back concerns that existing national costing standards are too detailed and need to focus on providers core costs rather than costing activities that are immaterial in terms of overall spending. It has made this point for a number of years, with the proposal for more frequent collections only making the change more necessary.

Mr Walters insisted that the intention was to ensure the work done for the quarterly process would reduce the effort needed for the annual submission. ’That is absolutely our intent,’ he said. ‘We’ve reduced the amount of pages in our standards and guidance from 1,200 to 700 over the last two years and we intend to halve it again.’

He said it had needed to be so detailed initially to ‘de-risk the transition from reference costs to PLICS’. ‘But we are very mindful that it needs to be much more proportionate. All the evidence around data quality and the usefulness of patient-level cost data is such that we know patient-level costs can be collected accurately and robustly. [That means] we can afford to be much less structured at the national level in how we say this should be done and align much more with what is done at a local level.’

And he added that doing a national cost collection four times a year was not the right solution. ‘We are heading towards something that will be a national cost collection, slimmed down and more in line with what is done locally, once a year,’ he said. ‘And three quarterly collections of something that looks a bit more like reference costs, because for most uses of costing data [at the national level] – a reference cost or cost pool-type measure is pretty much fit for purpose.’

The 2020/21 national cost collection data is yet to be published, having recently been postponed. However, Mr Walters said that PLICS was going from strength to strength with data quality higher than ever across all three of the mandated collections – acute, ambulance and mental health. Just 0.01% of the total cost quantum was excluded for data quality reasons.

He said that unit costs had increased across all points of acute care delivery, with activity falling in all areas other than non-elective inpatient care. Total costs fell for elective inpatient and day case care, but by less than the fall in activity. Total costs increased in all other points of delivery.

‘The net effect of these changes was an increase in unit costs of around 12% across the board,’ he said. He also said the data provided the first insight into the cost of treating adult patients with Covid-19, with unit costs ranging from £2,700 to £4,500 per episode, depending on severity.

NHS England and NHS Improvement also used the HFMA costing conference to announce plans for the return of programme budgeting with a new name – health expenditure benchmarking. However this will no longer be run as a submitted collection. Instead, data will be extracted from existing collections, which are likely to include: PLICS data matched to clinical commissioning groups; reference costs data; NHS Shared Business Services prescribing data; and CCG annual accounts.