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Move to patient-level costing ‘challenging’ but necessary – NHS Improvement

NHS Improvement has said that while moving towards patient-level costing will be “challenging” and costly for some providers in the current financial climate it will deliver long-term benefits.

Plans to implement costing changes are still subject to a statutory impact assessment, but NHS Improvement said it expects that every acute provider will be required to comply with its proposed healthcare costing standards for England, to be formally published in January 2018, and with annual cost collections from July 2019.

It added that the change is necessary as weaknesses in the current use of reference cost data “make it difficult to determine the true cost of the provision of care and to develop service-wide improvement plans”.

The new regulator said that about 70% of the service has already implemented patient-level information and costing systems (PLICS) in one form or another, or is in the process of doing so. The installation of a PLICS would also be essential to support the new approach to costing.

However, the implementation and operational costs for the system range from £138,000 to £288,000 per year, depending on the size of the provider. The regulator did note that it recognises this level of investment “may be challenging for providers”, adding that Boards need to scrutinise all spend to ensure that it is in the best interests of patients.

Richard Ford, costing director at NHS Improvement, noted: “More accurate costing shows us where and how resources are spent. We are confident that providers that implement patient-level costing produce high-quality information that can be used locally to identify how patient outcomes can be improved and where efficiencies can be made.

“However, we appreciate that procuring, installing and running these systems comes at a cost. When faced with competing calls on limited funds, provider bBoards must have confidence in committing resources to this endeavour.”

In the 'patient-level costing: case for change' report, NHS improvement added that its proposed route to a mandatory patient-level cost collection would take four years for each sector of the service.

The regulator has also published the draft 'Healthcare costing standards for England: Acute focus' for use by its acute sector roadmap partners, and also to signal the direction for the rest of the service. It added that roll-out across all providers would be based on the following timetable:

“Acute sector: In January 2018, we would publish the costing standards we intend to be mandatory for the acute sector. These standards would be forward guidance, applying to the 2018-19 financial year. In July 2019, there would be a mandatory collection against the new costing standards for the acute sector.

Mental health and ambulance sectors: In January 2019, we would update the costing standards, and the mental health and ambulance sectors would join the acute sector in the mandatory use of the standards. These standards would be applied from the 2019-20 financial year.

“Community sector: In January 2020, we would update the standards and publish Service-wide costing standards that would be mandatory for the whole Service. They would apply to the financial year 2020-21, with the integrated collection occurring in July 2021.

“The implementation timetable for the installation, test and run for PLICS systems is dependent on the timetable for standards implementation.”