A Bridge Between Clinicians and Finance

The clinician’s view of healthcare is based on individual patients: results of diagnostic tests, surgery carried out, medical treatment provided, etc.

The Finance department’s view is organisational: Trust, directorates, specialties, consultants and the income earned or costs incurred from care delivery.

These two views are worlds apart. The result has been a dialogue of the deaf between clinicians and financial managers. Clinicians, whose decisions are responsible for hospital expenditure, have no common language with Finance, which is charged with accounting for it.

And yet there is a link. That link is the patient record itself. Since Payment by Results, much of a Trust’s income is directly linked to patient activity. If we can include the cost incurred, we bridge the gap. The patient record, the basic unit of information for clinicians, becomes the key to understanding hospital financial performance.

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Costing to patient level

Getting costs down to patient level is complex for the same reason that finance and clinical departments have trouble communicating: a completely different

approach is taken to the two sets of information that have to be used.

A cat’s cradle: illustration based on three main cost drivers, Medical, Nursing and Theatres, shows the mapping of ledger entries to clinical resources followed by allocation to patient records using appropriate weightings.

Cost data takes the form of figures from the General Ledger associated with cost centres and subjective account codes. Some may match clinical categories, e.g. if a cost centre correspond to a specialty, while others may cut across clinical categories.

The first step in the Ardentia approach is to view costs as covering a series of components of care, resources such as ward nursing, diagnostic services, medical time, the different elements of theatre provision (nursing, surgeons, anaesthetists, consumables, premises), etc. The categories used should correspond to the cost buckets used for reference costing. We then:

• Map finance data onto these component resources for healthcare.
• Agree with clients the weightings to be used to apportion semi-fixed costs across patient activity records, at the lowest possible level: where costs are available at ward level, then

allocate them to ward stay records; otherwise allocate them to FCEs and attendances.
• If weightings can be derived directly from activity data (e.g. theatre minutes, bed days or hours, attendances) the system calculates them, otherwise it provides

functions to enter them by hand.

• Apportion actual costs to the activity records
• Assign direct costs to the relevant patient records wherever possible.

Care has to be taken to follow the logic of patient record structures to ensure that allocations are accurate. For example, FCEs and ward stay records may overlap.

Making the Results Available

Like all Ardentia solutions, Patient Level Costing delivers its reports over the web. This means that all you have to do is give any user you want access to your network, specifying what information and what reports he or she can see. The user needs no software other than astandard web browser.

All the usual functions of web consultation are available: clicking on reports to open them, drop down menus, drill down from level to level of reports. In addition, Arden- tia provides for ‘drill-through’ so that once a user with the appropriate access rights has identified a particular area of interest, say results for one specialty, practice and month, he or she can extract the corresponding individual patient activity records.

Complex data handling in patient level costing: apportioning costs between FCEs that overlap ward stays to obtain correct values at spell level.

The end point of this process is that cost values are assigned to every component within every patient record. Since Payment by Results asigns income to patient records, we can now do patient-level profitability analysis. And since we can group from patients to any other level, such as consultant or specialty, the analysis can be extended to those levels as well.

From historical records with actual costs, the system can calculate values to use as standard costs for each component by appropriate category of case, e.g. HRG and point of delivery. Trusts can change these values if they have better ones available. Standard costs can be used projections and ‘What If’ analysis, to answer questions such as ‘what would it cost us if we increased or

decreased this type of activity?

The apportionment process: different cost buckets are apportioned or assigned to different levels of activity data; they are mapped from ward stay to FCE to Spell. Tariff data is read at Spell level and apportioned to FCEs and non-tariff income apportioned to both levels. This means that costs and tariffs can be compared at FCE and Spell level, giving true patient based P&L reporting.

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Patient-level Reports

A series of reports allows analysis of the results at any level of aggregation from the individual patient upwards. This makes it possible to analyse income and expenditure by individual patients, by groups of patients (e.g. age, sex, post code of residence, etc.), by commissioner (e.g. by practice),by specialty, by consultant, by HRG, etc. or by any combination of all these

At any point, users can drill-through from any value shown to bring back the underlying patient records associated with it for follow-up research. For example, such patient records will contain the patient identifier allowing casenotes to be pulled and examined in order to explain anomalies.

Part of a standard reporting screen: note the navigation bar on the left, the buttons for printing and related functions at the top, with buttons for drop-down menus immediately below. The grid shows patient-based values displayed by specialty any of which can be opened up to give detailed lines for individual consultants.

Specialty Level Reports and Service-line Management

Because of the importance of service-line management, a set of pre-defined reports show information already aggregated to specialty level. This allows analysis specialty by specialty of case volumes, by point of delivery, with the associated income, expenditure and profit and loss values. In particular, these meet the Monitor requirement for service-line management.

The solution also calculates total standard costs by specialty and month for each component of care. It adjusts those costs for differences in standard unit cost and quantity of each component and compares the results with the actual expenditure. The difference, the unabsorbed cost, is a key piece of management information showing whether specialties are over or under resourced for the casemix they treat.

Reference Costs

The system apportions to patient level the same buckets of cost as used for reference costing. This means that aggregation to relevant case mix catego- ries, such as HRG and point of delivery, provides the basis to output reference cost data. Not only does that automate a major annual task, it also makes it possible to rebuild reference costs in-year as often as desired, to plot trends and monitor changes. In short, it makes reference costs a real management tool for the Trust.