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Definition: patient-level information and costing systems

  • Last modified date:
    24 February 2009
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Patient-level information and costing systems (PLICS) represent a change in the costing methodology in the NHS from a predominantly "top down" allocation approach, based on averages and apportionments, to a more direct and sophisticated approach based on the actual interactions and events related to individual patients and the associated costs.


Patient-level costs are calculated by tracing resources actually used by a patient and the associated costs by using actual costs incurred by the organisation in providing a service or event.

Patient-level costing is defined by the ability to measure the resources consumed by individual patients. Resources for inpatients should be measurable for each day or part day from the time of entry and admission to the hospital until the time of discharge.  For outpatients and non-admitted A&E attendances, the consumption of resources will be on an occasion of service basis.

Resources should be ascribed to patients on a clinically meaningful activity basis in accordance with the principles of activity based costing. A minimum set of costs driven by activity should include:

  • wards
  • pathology
  • imaging
  • pharmacy services and drugs
  • prostheses
  • therapies
  • critical care
  • operating theatres
  • special procedure suites
  • other diagnostics
  • emergency department
  • outpatients

High cost treatments and procedures in specialty hospitals should also be allocated to individual patients on an activity basis.

As far as is possible overheads should be allocated to these areas prior to allocation to patients, on the closest proxy to activity. It is not acceptable however to allocate any of the above resources as "overheads". In the event that data is missing proxy allocations must be created. These might include standard costs (e.g. prosthesis by procedure) or service weights (i.e. data from other sources as substitutes).

It is not sufficient to allocate ward costs by overall length of stay. Adjustments must be made for both the patients admission and discharge days and for their acuity (i.e. severity, co-morbidities).

Patient-level costing is the resourcing consequences of clinical activity and is primarily informed by the measurement of that clinical activity. Clinical validity is therefore underpinned by the accuracy and legitimacy of that core activity data. This necessitates the involvement of clinical staff in the definition, documentation and authentication of raw data inputs into a patient level information and patient level costing system.

Benefits of implementing PLICS

  1. An ability for an organisation to truly understand their economic and financial drivers. PLICS can provide transparency to an organisation of their income and costs at a service and sub service level on a monthly basis.  It provides the capability to bench mark, analyse, investigate and evaluate the make up of the organisations service costs.  There is a further ability to benchmark individual cost elements (e.g. nursing costs, drugs, theatre cost) and patient cost profiles against other providers.
  2. Dramatically improved clinical ownership of operating information. Dialogue can be had about resources consumed by individual patients with similar diagnoses and comparisons can be made against peer groups, teams, individuals as well as care pathways.
  3. Provides crucial information to inform any future change in the grouping and classification of patients. A detailed knowledge of the cost distribution of individual patients rather than the average cost is a necessary precondition for best in class classification.
  4. Provides necessary and crucial information to inform funding policy for payment of high and low outliers for each HRG. Distribution of patient cost is again a prerequisite to ensure the calculation and payment of a long term sustainable price to an efficient provider – a critical goal of Payment by Results (PbR).
  5. Provides valuable data in discussions with commissioners.

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