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Patient data may give NHS an unfair edge

Powerful patient-level costing systems may give NHS hospital providers an unfair advantage in contract negotiations unless they are required to share their data with commissioners.

The Nuffield Trust today published the results of a research project to establish whether hospitals can make efficiency savings through the introduction of patient-level information and costing systems (PLICS). These IT systems allow providers to track income and expenditure at the level of individual patients, instead of tracking aggregated clinical specialties or service lines.

Nuffield Trust researchers found that the evidence that introducing these systems would produce short-term savings was “modest”. Their report said that, despite the Department of Health’s hopes for PLICS improving “clinical ownership” of hospital finances, specific examples of them prompting “changed clinical behaviour towards providing more efficient care” were “surprisingly rare”.

However, they reported that PLICS was a powerful source of data that providers could use to inform contract negotiations or the development of national NHS tariff prices. One trust told the researchers that “one of the main purposes of its PLICS system” was “the ability to lobby on and inform future tariff development”.

The report concluded that the “advent of PLICS means providers have a very advanced understanding of their costs, something to which the commissioners are not guaranteed access”.

It warned: “This creates an information asymmetry, which can have a detrimental effect on the efficiency of a market.”

To guard against this, it suggested policy-makers could “mandate some level of cost information sharing between all providers and commissioners”.

The report also warned that as NHS providers learn more about which of their services generate a surplus, some may “try to reduce their activity in areas that are not profitable”.

Ian Blunt, one of the authors, told HSJ that at the moment many trusts facing deficit simply seek to increase their activity.

However, as the use of these systems gave them more accurate information trusts were going to start “thinking seriously about their position against tariff” for individual services.

He added: “That does have the potential for organisations to start focusing on that surplus-generating work, and trying to reduce the amount of deficit generating work they’re doing.”

In this situation, the NHS Commissioning Board would have an important “monitoring” job to ensure continued equity of access to care, the report said.

The researchers also analysed a full year of anonymised patient-level data - from 2008-09 - for one trust that introduced PLICS in 2007. They found that only 17 per cent of the trust’s cases had costs that fell within 10 per cent of their appropriate tariff payment.

Readers' comments (9)

  • Why on earth would any provider in a market evnironment choose to share and thus diminish their competetive edge?

    You can't generate business growth by giving away your trade secrets!

    It's this sort of thinking on the un-intended consequences of the reform policy that have been sadly missing.

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  • Dr Suparna Das

    Quite agree with Anon 11:36. As an iPhone user, do I really know how much it cost Apple to tweak the iPhone 4 to an iPhone 5? Is the £600 price tag worth a few tweaks when I can get the tried and tested Samsung GSIII for under £400? But some will still queue all night tonight at the temple of Apple. That's how markets work.

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  • As a newcomer to the nhs (one month today!) I detect a total strategic drift on these issues. On the one hand I'm expected to put apparently ever-increasing amounts of granular costing and activity data in the public domain, and on the other I'm supposed to be entering into an "any willing provider" marketplace, in which I have to try to sell my services to and in competition with organizations who have free access to my "trade secrets". If the DH is serious about the efficiency of markets, then see it through - commissioners will simply have to live with the lack of information and genuinely test the market to get the best price / quality combination. If not, then please accept that markets cannot deliver the improvements expected. But leaving things as they are will resolve nothing - I have already seen the strategic confusion playing out at a local level in decreasing trust between commissioners and providers.

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  • What an incredibly depressing article to read.

    I thought the commissioners and providers of the NHS would work together and share costs for the common good ie to provide the best possible care for the patients under their care using the finite resouces available.

    The more this Govt splits up the NHS the more fortresses are built within it. This lack of trust will only get worse before it gets better as people have to relearn the lessons of the previous organisation.

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  • If you are in deficit monitor will be on you like a ton of bricks hence plics is just one tool to help you focus on becoming more efficient. I bet Mr Ali Parsi knows where he can make money and so must all trusts to survive the future cuts. Mr. Blunt obviously doesn't live in the real world.

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  • I just can't believe this. Why should commissioners have access to our data, that we have spend so much time and effort (and cost) compiling ? What contribution have commissioners made to this process? I think commissioners should spend a lot more time looking at there own data, because in my experience many lack a basic understanding of what they are commissioning let alone the ability to identify and implement QIPP schemes.

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  • Anon 11.36 is spot on. As for Anon 2:42 -Welcome to the NHS! Sadly it gets increasingly depressing as you go on and issues like this get worse, everyone with half a brain loses their jobs leaving the incompetants in place and then they all act surprised when things don't work -or issues such as this come up. Everyone that works for the NHS and has an ounce of intelligence were warning about this back in 2010, and many other issues besides -which politicians and senior Execs in the NHS are now for some reason suprrised are rearing their heads

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  • Have the Nuffield Trust not heard of Reference Costing - the process every year where all providers submit all their detailed costing information in a common format to the Dept. of Health?

    In a world where prices are set centrally (based on Reference Costs) is this information asymetry really a problem? Or are the Nuffield Trust assuming that pricing will be increasingly locally determined in the future...

    If you want to champion the market, information asymetry is part of the package I'm afraid.

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  • Tony is right.

    To the extent that there is a market, it only makes sense that competition is based on service and outcomes, and not price - hence we have national tariffs.
    With national tariffs, why do commissioners have any interest in understanding costs?

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