News / Updated reference cost range narrows

The gap between lowest and highest cost acute trusts narrowed last year, according to the latest reference costs publication from the Department of Health.

Stripping out community providers, mental health trusts, ambulance trusts and single specialty providers, the reference cost index (RCI) for acute trusts ranged from 81 (Southend University Hospital NHS FT and South Warwickshire Hospital NHS Trust) to 116 (University Hospital Birmingham NHS FT).

An RCI of 100 equates to national average costs, while an RCI of 110 represents costs 10% above average.

The 35 percentage point range compares with a 58 percentage point range in 2006/07, when acute RCIs stretched from 80 to 138.

 There were some significant changes in individual RCIs compared with 2006/07. However, there were a number of changes in scope that make the figures more difficult to compare.

For example, adult critical care was included in the latest RCI but not in 2006/07, although accident and emergency activity was excluded for the first time in 2007/08. The use of the new market forces factor in the latest figures also works against direct comparisons.

The reference costs schedule also revealed wide-ranging costs for similar treatments and procedures. For instance, there were nearly 50,000 non-elective caesareans (19 years and over – HRG NZ03A). The average cost was £2,235 but the interquartile range – the range of costs for the middle 50% of providers – stretched from £1,822 to £2,561, a 40% difference in cost.

There were similar ranges in elective activity. Although there is no longer a single HRG for hip replacements, a major hip procedure for non-trauma (category 1 without complications – HB12C) had an average cost of £5,268 with a range of £4,486 to £5,872 – a 30% difference.

Cost differences will reflect different procedures and complexities within the same HRG, potentially different apportionment and costing approaches, as well as real cost differences.