NHS England promises ‘single version of truth’ in costing reforms

NHS England chief financial officer Julian Kelly (pictured) first talked about moving to a system based on cost information that was ‘good enough’ and standardised to enable automation back in 2021. Since then the national body has been exploring ways to align its national cost collection (NCC) with trusts’ local patient-level cost or PLICS data.

A paper shared recently via the Future NHS platform – Understanding local PLICS phase 2 recommendations – said that NHS England’s ambition was ‘to make cost collection primarily a performance and service tool rather than a driver of prices’ and achieving this would require the current NCC to change and evolve. ‘Feedback that it is too complex, and takes too long to produce and then return to trusts, means the data is not being utilised by trusts, who rely on their own internal cost information,’ the paper said.

Work by NHS England has highlighted key differences between the NCC and local PLICS outputs. The NCC relies on very detailed prescriptive methodologies and apportionments and requires a complex mapping from the general ledger to cost ledger resources and activities. In contrast, locally trusts use some of their own methodologies and a more simple mapping of the general ledger direct to cost pools.

For the NCC, critical care and high-cost drugs are reported in individual feeds, but locally they tend to be included within the activity and cost. And while some services are excluded for the NCC, such as patient transport and private patients and those from devolved nations, all services are included locally.

In feedback to NHS England, costing practitioners said that the NCC can take three to four times longer than creating trusts’ local PLICS outputs – and this can limit the time available to actually use the data to work with services to understand variation and improve value.

NHS England is now proposing to reduce the information requirements and concentrate on data that trusts use locally, with no need to create data specifically for costing purposes, and to remove the resource and activity mapping. And it believes the changes could be delivered over two years, with the NCC submitted in its current format for 2022/23 and 2023/24 and the new cost collection submitted in 2025.

NHS England said that implementing these changes would ‘lose the perfect model’. There would be a less detailed breakdown of costs and the NCC would move from billions of records to millions. But there would still be the ability to link to mandatory data sets and future updates would be simplified.

‘Even implementing all of these changes, the granularity of the PLICS files collected would be 80% the same as currently produced,’ the paper said. And there would still be good adherence to core costing methodologies. Initial costs of making the change would be offset by savings for both NHS England and trusts. ‘Most importantly, there would be a “single version of the truth” on costing data, with the same information produced and used both local and nationally,’ the paper concluded.

As trailed in earlier events, including the HFMA costing conference, there are also plans to automate the cost collection via the NHS Foundry information platform.