Sharing information on the cost of treatment could help achieve better patient outcomes at a lower cost, says Professor Sue Llewellyn. But, given the current tensions between collaboration and competition in the NHS, some trusts seem unwilling to provide the ‘commercially sensitive’ information to commissioners that would help make this happen.

A recent Parliamentary health select committee report urged the NHS regulator Monitor to move quicker in reforming the system for pricing treatments. But central to the ability to know the right price for procedures is having information on costs.

This is where much of the problem lies – and it goes to the heart of a contradiction that challenges the healthcare reforms introduced by both the last and the current governments. Competition and the adoption of commercial markets are seen as essential in driving improvements in the quality of care, while at the same time bringing down costs. Reducing costs is unavoidable, given the recognised potential £20bn NHS funding gap in England.

But achieving cost reductions requires providers to learn from the best practice of other providers and for commissioners to understand what is a reasonable price. Yet a competitive environment and commercial contracting discourage providers from sharing information they fear could assist competitors to bring down costs to improve their competitive position, or erode their position of informed knowledge when negotiating with commissioners. Without this type of information it is very difficult for the new procurement bodies – the Clinical Commissioning Groups – or Monitor to do their jobs properly.

This dilemma sits at the heart of a project being led by the University of Manchester to analyse the use by health providers of patient level costing data.

Early findings from the research reveal that 74% of finance directors at NHS providers regard patient level cost data as commercially sensitive. As a result, they believe the data should not be shared with commissioners. A mere 5% had shared their data with commissioners, while some providers share the information with other providers in order to benchmark costs, but the results of this benchmarking are confidential within the provider group.

Directors of providers are clear, though, that patient level data on costs is necessary for their own trusts to plan service provision and bring down costs. Some 64% of the 98 providers involved in the research have systems in place to record costs at patient level, or are in the process of implementing schemes.

A clear and in-depth understanding of patient level costing and related outcomes can provide opportunities to develop value-based public health care systems in Europe. Public value in health care is created by treating patients in ways that minimise costs at the same time as maximising clinical outcomes. The patient-level information and costing system – PLICS – has been implemented in the NHS on a voluntary basis since 2007. It is a method to record all significant activities that happen to individual patient from the time of admission until the time of discharge and calculate the resources consumed by using actual costs incurred by the organisation.

Directors of NHS trusts intend to extend their use of the patient cost data. But at present there is limited use of the data. Three quarters of trusts are not using the data to consider the relationship between cost and quality, but many trusts are using the data to compare the cost of specialities. Often the data are central to producing business cases for new investment in a specialty. Almost all the directors involved in the research believe the data can be the basis for an improved dialogue with clinicians regarding costs.

While it is positive that so many trusts are adopting systems to collate and use patient cost data, it is disappointing that they are not using the data more extensively. Potential applications for the data are much more comprehensive than the actual uses they are currently being put to.

We expected to see more examples of how costs had been brought down through enhanced technical efficiency. We also expected to see much more examination of the relationships between cost and quality based on the data. Ultimately, patient level data should lead to evidence-based performance reporting and benchmarking.

There are significant barriers to the use of patient level data, many of which are related to weaknesses in communication not just between providers and between providers and commissioners, but also within provider bodies. In some instances this is based on a lack of knowledge about how to best use the patient level data.

Both structural and skills issues hold back provider bodies from fully utilising patient level data. Financial data has to be presented in ways that clinicians can understand because there is a lack of financial skills amongst clinicians. Many NHS trusts suffer from the lack of formal mechanisms for joint working between clinicians and finance managers.

Our initial research has, though, identified several areas of best practice, where commissioners and providers together used patient level costing data to improve quality and efficiency. It is difficult to see how productivity can be improved, best practice learnt from, and costs brought down without this type of partnership approach using patient level costings – and for this to be linked to an analysis of the relationship between cost and quality.

Our research on PLICS has identified benefits, barriers and pragmatic use of patient level costing data. It provides ideas to deal with healthcare management challenges in the NHS and across Europe through joint efforts of commissioner and provider organisations.

The survey is part of a study (project number 11/1016/04) funded by the National Institute for Health Research (NIHR) as part of its health services and delivery research (HS&DR) programme.

• The views and opinions expressed therein are those of the author and do not necessarily reflect those of the HS&DR Programme, NIHR, NHS or the Department of Health.