NHS England: nothing off table in patient-level costing review

The NHS has moved to the mandatory submission of patient-level cost data (PLICS) over the last seven years, with community trusts making their first required submission this year. NHS England says that all trusts are compliant in their use of prescribed methodologies to produce costs for the national cost collection (NCC), although it can involve some significant manual effort, especially when data feeds do not exist. However, many trusts use a local PLICS methodology for their internal costing, and this can be significantly different from the methodology set out in the Approved costing guidance and the NCC – or use a mix of the nationally prescribed process and local approaches.

Converting from local PLICS to NCC has been reported to take a huge effort and up to four months according to some estimates. Differences can be as basic as using a different quantum of costs in local approaches to that required in NCC.

And practitioners have suggested that the methodology is in any case too detailed and time consuming. Instead, they have called for something that focuses more on their material costs and allows them more time to use the data locally to drive improvement, rather than spending all their time on the national submission.

NHS England deputy chief financial officer Peter Ridley said during the summer that the national body had taken the message on board. The aim in future would be to ensure costing was focused primarily on meeting the needs of local providers and systems.

At the end of the summer, the national body responsible for NHS costing launched a work programme to gain a better understanding of how trusts were costing locally. This started with a survey asking trusts to identify the cost pools or groups used to collect and report costs locally, along with the data fields available to support cost allocation.

Daniel Clark (pictured above), NHS England’s cost collection manager, said this exercise had revealed a wide range of local approaches. ‘We had everything from one trust reporting just eight outputs to one that had 607,’ he said. ‘There are some real differences in how people present their data with the average being around 100 outputs or cost pools.’

This compares with the nationally prescribed methodology which asks providers to break all costs down into 17 resource types and 59 activities – producing a detailed cost matrix for each patient treatment.

However, it was also clear that different organisations had different definitions of common groups – one trust might report nursing costs within a wards cost group, for example, while another might report them separately.

In a follow-up survey (links below), NHS England is now further exploring local costing models. The survey, which runs until January, attempts to pinpoint the aspects of the current NCC process that take most time and to identify differences between local costing models and the NCC approach. For example, it asks providers if they use the national prescribed activities/resources approach, a cost pool method, a mixture of the two or some other method.

‘We are asking providers to identify what is causing the time lag and where are the big sticking points where we need to pay attention,’ said Mr Clark. There are already some known difficult areas. The approach to reporting unbundled activities – specific parts of the care pathway that are separately reported such as chemotherapy and critical care – has already been highlighted as a key difference between local models and the national methodology.

An ideal situation would enable providers to submit data produced using their local cost models and for the centre to map these to a central set of cost pools or resource/activity groups. This would massively reduce the burden on local costing teams, enabling them to focus more on using the data locally. However, some consistency is likely to be needed in the way costs are reported across trusts so that costs can be collated and compared.

The current national methodology uses a detailed bottom-up approach, mapping the general ledger to a costing ledger as a common start point. Costs are then allocated to patient-facing costs including overheads before being mapped to resources and then allocated to activities and onto the patient event. But there appears to be interest in exploring an approach that instead works backwards from a smaller number of core cost groups that trusts and the centre would need to inform decision making.

NHS England head of costing Jack Hardman said a solution was needed that was fit for purpose for both local and national purposes. ‘We need to develop the evidence base before we can create some actionable change,’ he said. ‘Nothing is off the table, but it will come back to having the evidence.’ A good response to the current survey is part of establishing that evidence base and Mr Hardman encouraged costing practitioners, finance managers, directors and anyone with an interest in costing to undertake the survey.

NHS England has previously explored the potential to move to more frequent cost collections. This programme is now on hold. However, a simpler methodology for patient-level costing that put fewer demands on practitioners to make a national submission could make more frequent cost collections more achievable in future, especially given advances in technology.

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