PLC data is a critical tool for trusts looking to optimise their performance and ensure best use of available funding and resources.

David Beeson looks at how it should be used for the best effect.

The old carpenter’s maxim, “measure twice, but cut once” holds true for any decision-making process. It’s especially topical in healthcare at the moment.

The issue is, in order to make effective cuts, you need to know exactly what you’re cutting. If a trust is not sure which costs relate accurately to which services, there’s a very real risk of cutting care, not waste. 

Patient level costing is an approach that gives detailed insight into areas where seemingly excessive costs have been incurred. By linking costs directly with patients, it reveals the specific issues and areas of concern that cannot be seen from service line reports and average reference costs - giving a basis for meaningful discussions between commissioners, clinicians and finance managers. 

But like any precision instrument, a patient level costing and information system (PLICS) does need to be used correctly. Here are some of the most common questions and answers I have encountered on implementing, populating and using PLICS.

How does PLC provide relevant information for my trust?

Simply, it gives every decision-maker in a trust a single version of the real costs of the activities and procedures as they were actually performed within the trust, for each patient. So all parties have the same information about what has actually happened, instead of working from averages and estimations. 

Of course, this information may spark initial discussions along the lines of “that can’t be right, can it?” or “does this make sense?” 

Out of this process comes an understanding, shared between managers and clinicians, of where specific problems are, and what action needs to be taken to prevent them occurring again.

How do I persuade staff to record the detailed data?

This is a circular issue – the more costing data that is logged into PLICS, the more relevant the pool of data becomes. One way to incentivise staff is to feed back the costs to clinicians, as this can serve as a reality check and spur further system use to make data sets more complete.

But don’t let perfection become an obstacle – recording patient data has to start somewhere. Conveying the message to staff that entering the data is good both for patients and the trust should help encourage buy-in. 

How should I share information with commissioners?

Because the information in PLICS relates directly to individual patients, it identifies what actually happened in each case. It can therefore show why an apparent overspend across a group of patients happened, and help explain this to a commissioner.

While PLC has been mostly limited to the hospital sector – acute or mental health providers – it could also be extended to cross-community care costs. This way, the total costs for a patient’s care, not just within a hospital, but also in terms of an overall pathway, could be identified and optimised by commissioners. 

How should I allocate and divide costs for split cases?

This is a common issue, and PLC is an excellent method for identifying and allocating the specific costs in split cases, as it works at the finest possible level of detail.  Managers can see both the overall cost of the entire case, and the split into components associated with each consultant (e.g. orthopaedic and plastic surgery). In turn, this helps ensure that information is accurate on both costing and income. 

A similar approach can also help trusts position themselves competitively as expert providers of services:  if they can demonstrate ability to perform certain procedures at a lower cost than nearby trusts, they can start to market themselves to commissioners as a service-sharing partner.

How can PLC data be used to lobby for additional budget?

Put simply, the PLC data helps trusts to develop and justify cases for additional funding.  For example, the cost of certain categories of cardiac care is massively affected by whether or not cardiac perfusion is needed. 

The difference can take a case from being a net earner for the trust, to a source of significant loss.  With PLC evidence to hand, the Trust is in a much stronger position to negotiate off-tariff payments to cover excess costs.

What these answers show is how the dialogue between finance and clinical staff is helped by PLC data, guaranteeing quality of care while giving clear visibility of costs.  In the longer term, PLC data from trusts could start to be aggregated to help create more accurate reference costs, in turn leading to more accurate national tariffs. 

And because PLC delivers answers to difficult questions on the costs of care, it can also help to ensure that cuts happen only in the right places