Comment / Keeping costing out of the closet

Accurate, clinician-credible costing data can play a major part in supporting service improvement and safe cost reduction.

In keeping with the current HFMA anniversary celebrations, I looked back at one of the association’s former journals in which an article posed the question ‘Is costing worthwhile?’. The 1971 article aimed to answer  a number of questions. Was the effort of producing annual costing returns worthwhile? Are the figures used for decision making? Does the current system need improving?

The questions may sound horribly familiar to some. But one thing that has changed is that costing has emerged from the financial closet. The national tariff has helped, with costing returns forming national prices. But the move to service line reporting (first promoted by Monitor some four years ago) and the decision by some organisations to underpin this with new patient level costing data was probably the key turning point.

The main audience for this new information was not finance directors, the board or even some faceless central spreadsheet overlord, but clinicians. By talking in a language that clinicians understood – the patient and what was done to or for them – here was an opportunity to engage with the frontline workforce. After all, they are the prime spenders of NHS funds and the people most qualified to understand the appropriateness of specific interventions and the validity of variation. And they are the ones who can redesign safe pathways.

The Department of Health’s data shows that 66% of acute trusts have implemented or are currently implementing a patient level information and costing system (PLICS), with a further 13% planning to do so.

Salford Royal NHS Foundation Trust has been costing down to the patient level for three years now – it is an evolutionary process and we are still refining the data. There has been a clear culture change. Patient level data – including costing data – is now discussed at all levels of the organisation. It has helped us build a business case for quality and to demonstrate that cost reductions are not achieved at the expense of clinical quality. We talk about ‘safely reducing cost’ – and patient level costing has played a part in this.

But the fact that two-thirds of acute trusts are now on board does not represent an end point. The HFMA’s adoption of the clinical costing standards is a significant step (see page 6). Discussions between and with clinicians, informed by robust patient cost data, can be hugely powerful in identifying opportunities for service improvement or safe cost reduction. But to maximise this value, the costing needs to be credible and as accurate as possible.

This is not only in the organisation’s interest, but is surely a professional matter of pride for qualified accountants. And by ensuring a common approach to patient costing, we open up huge potential for benchmarking, identifying best practice and possibly offering a better way to calculate future tariff prices. Robust costing information that engages clinicians will be vital in delivering the QIPP (quality, innovation, productivity and prevention) agenda and achieving the estimated £20bn cost improvement the NHS needs to make.

The HFMA will publish revised clinical costing standards next year and is surveying costing leads. We hope you will get involved and give us your feedback on how these guidelines could be improved.

That 1971 article concluded that costing can be worthwhile but the challenge was ‘to produce appropriate cost information doctors will recognise is of value to them in making decisions’. It may have taken three decades, but there are signs we are finally getting there.