UPDATE COMMENT
A September 2012 Nuffield Trust paper,
‘Patient-level costing: Can it yield efficiency savings?’, illustrates hospital trusts’ growing analytics capability and I commend it to all commissioners. It focuses on what are called PLICS – Patient-level information and costing systems. These describe how provider organisations can build a clearer understanding of the patient experience as a continuum of care. They compare patient experiences for the same condition and when the data is assembled at this industrial scale over an extended period of time, managers can begin to recognise the variations in costs relative to hospital income for groups of patients, particularly within the same healthcare resource group, or HRG. You are even able to see performance differences between consultant teams. Scarily, the report found that only one in six chargeable cases incurred costs within 10% of the tariff price, which also means, of course, that a lot of PCTs have been overcharged. Hospitals have nearly always invoiced by the procedure and rarely by the episode of care. This is not payment by results, of course, but fee-for- service, a pricing methodology long abandoned by progressive healthcare systems around the world. The NHS needs to be moving to a reward system which pays for good outcomes, and penalises sub-optimal delivery. Now if this information is valuable to hospitals, just imagine what commissioners could do with it, particularly when combined with the primary care data, which will become increasingly accessible to CCGs. The real disappointment for our healthcare system is that, at present, hardly any commissioner is anywhere near having the level of business intelligence necessary to help it deliver its mandate to promote healthcare effectiveness while controlling costs. Until we get there, we have no option but to trust hospitals to do some of the commissioners’ work for them by using their data to drive greater efficiency and productivity into internal operations. Their self-interest, we hope, will match the needs of the population.
BIG DATA What I know from every industry or company in which I have worked is that where there is a knowledge asymmetry, one side really finds itself disadvantaged
“During the booing years, I never once advocated that the US healthcare system should be brought here, God forbid, but I certainly knew we had a lot to learn from the US approach to analytics”
competitively. We live in a world where knowledge is expanding at an awesome rate. The data ‘exhaust’ from the technology employed in every aspect of life is growing almost exponentially, take Google for example. This is all part of what’s now recognised as the ‘big data movement’. The NHS provider side is also becoming a real big data player as the information systems in which it has invested hundreds of millions come through and start to deliver. Now, I don’t want to advocate the kind of arms race we see in US healthcare, but I’m not sure that the interests of the NHS will be best served by providers continuing to have a disproportionate influence of their local markets, particularly when we are going into an extended period of financial constraint. What I’d like to suggest is that while CCGs catch up by creating their own information systems, they should be able to access the learning in the hospital knowledge pool to help them improve their decision-making. Certainly, this should happen in the true spirit of what the NHS stands for. But attitudes are changing as the market separation hardens. Knowledge is being used to create power and exert competitive advantage. This means that if I were the lead CCG commissioner for a trust where I know PLICS is being used, I’d ask politely if I can see it. Hopefully, they would accede, but if the answer is no, then I’d write into the annual contract a requirement for the CCG to have access to all the data on an ‘open books’ basis. But, it shouldn’t need to come to this, should it? So you see why I have always been so
assertive about strengthening the role of commissioning in playing its role in shaping future healthcare. Markets only work where they are close to a state of equilibrium and this has never happened here. Executed properly, certainly with the rigour we see in the US, effective commissioning offers the promise of regulating and controlling costs and ensuring that the consumer interest is better protected. I know from my dealings with upwards
of 30 PCTs over six years that there are real opportunities for significant savings across the NHS. But they won’t come if hospitals are allowed to unduly influence the design of local health economies. Their self- interest will always be paramount. I don’t know of a single large hospital in England that hasn’t seen year-on-year growth in its income over the past 10 years. And, of course, during all this time, NHS policy has been to move care out of hospitals, which should have led to a lowering of their funding allocation. Somehow the flywheel of PBR – plus the growth of unscheduled care – has just kept on delivering increased income for hospitals. I’ve never had the time to do the work, but does anyone know of a place where the acute trust’s share of the commissioner’s budget has actually gone down? Which takes me to the inevitable conclusion that the trend in hospital activity has got to be reversed. To achieve this objective, commissioners need to create market equilibrium. Investing in big data is paramount. Get it and use it and all the booing would have been worthwhile.
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