Patient-level information and costing systems (PLICS): a mixed methods study of current practice and future potential for the NHS health economy

Background
Traditionally, in healthcare, the cost object was either a service line (e.g. orthopaedics) or a clinical intervention (e.g. a hip replacement). From the mid-2000s, the Department of Health recommended the patient as the cost object to enable a better analysis of the cost drivers in healthcare, resulting in Patient Level Information and Costing Systems (PLICS). Monitor (the economic regulator for healthcare) proposes PLICS data will now form the basis for mandatory prices for healthcare services across all care settings.
Methods
Our main aim was to investigate the use of PLICS. We surveyed all English Foundation Trusts and NHS Trusts and undertook four case studies of Foundation Trusts. Three were generalist and one, specialist. We also surveyed Commissioning Support Units to explore the potential for PLICS in commissioning.
Findings
The most significant use of PLICS was cost improvement within the Trusts, particularly to meet Cost Improvement Programmes. There was only modest utilization of PLICS to allocate resources across services and settings. We found that Trusts had separate reporting systems for costs and clinical outcomes, engendering little use for PLICS to link cost with quality. Although there was significant potential for PLICS in commissioning, 74% of survey respondents at Trusts considered their PLICS data to be commercially sensitive and only 5% shared this with commissioners. The use of PLICS in community services was, generally, embryonic owing to the absence of currencies (units of healthcare for which payment can be made), service definitions and robust data collection systems. The lack of PLICS data for community services, allied with the commercial sensitivity issue, resulted in little PLICS presence in collaborative cross-organizational initiatives, whether these were between Trusts or across acute and community services. PLICS data relate to activities along the patient pathway, for example, diagnostic tests, care procedures and length of stay. Such costs make sense to clinicians. We found that PLICS had created greater clinical engagement in resource management albeit that the Trust finance function had actively communicated PLICS as a new costing tool and often required its use in, for example, business cases for clinical investment. Nevertheless, 58% of respondents reported receiving PLICS reports quarterly, with only 23% having a monthly PLICS report. Operational financial management at the Trusts was through service line reporting and traditional Directorate budgets. PLICS was considered more of a strategic tool.
Conclusions
Both PLICS and service line reporting identify and interrogate service line profitability. Although, currently, Trusts cross-subsidize to support loss-making areas under the tariff, they are actively considering disinvesting in unprofitable service lines. Financial pressure within the NHS, along with its current competitive, business oriented ethos, induces the Trusts to act in their own interests rather than that of the whole health economy. Yet many policy commentators suggest that care integration is needed to improve patient care and reduce costs. Although the Health and Social Care Act (2012) requires both competition and the collaboration needed to achieve care integration, the two are not always compatible. We conclude that competitive forces are dominant in driving the current uses of PLICS.
Word count: 500

Keywords: Patient level information and costing systems; resource allocation; competition; collaboration; NHS Trusts; whole health economy