Costing in the National Health Service – from reporting to managing

Costing in the National Health Service – from reporting to managing

Introduction

According to the report, The National Health Services (NHS) was faced with challenges of transforming its services to patient-centered organization. The main goal behind this was to cut its cost of operation by £20 billion within a span of two years as from 2011 to 2014. In this regard, Healthcare Service management to offer effective and efficient is one of the challenging phenomenon. As a result of challenges that have been faced, NHS has been implementing and developing solutions such as adopting Patient –Level Information and Costing Systems (PLICS). Conversely, Monitor has been initiating its preferred solution of adopting Service Line Reporting (SLR) which has been supported by patient level data. According to CIMA recently contacted survey, it has revealed that more than 70% of NHS trusts have responded positively by adopting PLICS and SLR strategy in their daily operations. Besides, other sources such as consultation from management accountants, senior organizational managers and external venders like software suppliers has indicated that, efforts are being made to implement PLICS and SLR in NHS operational procedures. Therefore, engaging different stakeholders is very important as it facilitates development of successful implementation of these tools with aim of reducing cost of operations within NHS.

Discussion / Analysis

NHS analysis focuses on various activities, initiatives and provisions which explains major announcement and changes that has been made within NHS delivery while lowering its cost of operations. In this case, various tools which has been implemented to determine and access the cost of running health services with minimal cost being incurred by patients (Chapman & Kern 2010, 3). NHS has been improving over time due to increasing demand to cater for some complex treatment scenarios and need to provide better services to patients. This has come up with increase in cost of treatment which in turn has posted a controversial debate on whether good treatment services should linked with high cost by patients. Therefore, medical services have been classified as a myriad of problems rather than success in the health sector. According to CIMA findings, its key findings include; NHS settings out elaborate and very clear underlying cost philosophical analysis and management in its official DH documents. This is should clearly spell out cost involved and how cost paid by patient is conclusively arrived at. This has to be provided in official document which is provided by management in the hospitals. Additionally, NHS found out that, it was important to develop NHS staff training in relation to their roles and potentials which works out on constructed cost information as provided by health service management providers. Finally, according to Chapman & Kern (2010, 9), NHS has to develop cost evaluation evidence which is based on both PLICS and SLR potentiality and effectiveness. This has to be developed in order to be used in analyzing effectiveness of high cost of treatment and its related cost benefit analysis.

According to Nationalarchives.gov.uk (2017), the national archives and cabinet papers of 1950s, the trend of increasing cost of treatment in relation to new health services was sensationally effective and conformed to NHS provisions but it was still becoming more expensive. Due to increase in demand of better services, its cost had to increase to match with the growing demand. Chapman & Kern (2010, 6) stipulates that, the growing demand can be analyzed as shown in these scenario; in the year 1950, NHS cost the government £400 million, 1965 the cost of NHS cost the country £1,200 million and in 1975, it cost £5,200 million. This trend shows an increase in cost of providing health services to nationals. As the cost of NHS seemed to grow over a period of time, it was also being faced by duplication of duties as a result of bureaucratic style of leadership in these health sector. From the escalating cost on NHS, the issue was adopted by labor government and turned political phenomenon. The issue of cost remained to be at the center of the debate in successive years but this was resolved by Guilleband Report in his report. Guilleband found the cost of NHS was not in excess as it was being implicated and it was not possible to reduce the costs while keeping the quality of NHS unchanged.

Subsequently, different professionals were contacted to give their views on effective implementation of PLICS and SLR which required critical shift in cost behavior analysis. It proposed need to trace cost in NHS in order to be able to manage cost involved. Further, it purported that, cost should not be conceived as inevitable burden since it can factored for transformation process cost activity analysis. The ideal process would be to implement a good path way of approaching analysis cost behavior rather than asking effective management questions. The report argues that, the principle of Activity Based Costing (ABC) would offer potentiality of investing in both PLICS and SLR to gain greater benefits from the system. To have effective ABC, it is important to understand activity in the NHS (Nationalarchives.gov.uk, 2017). In most of the cases, these activities are aggregated into more general categories such as internal and external reporting clinical units. In NHS reporting concepts, important to note the word activity is used to refer to particular outputs, specifically clinical procedures incorporating various work processes. In respect to this, a lot of effort is focused on allocating all concerned cost in these clinical activities and procedures. In the year 2004, introduction of pbR changed the way healthcare was funded in conjunction to roles of determining the cost of NHS. NHS funding is direct from national taxation and due to this, a lot of changes has been done in NHS. It has been incorporated into constitution and is guided by legislation. In many cases like England, the 2012 Health and Social Care Act shifted the responsibility of determining the health care cost from Health Department to be a common and shared responsibility of NHS (Managing the National Health Service Shifting the frontier? 1988, 3).

Similarly, in the case of accounting and finance function, it involved changing of cost behavior analysis which is not the key activity in clinical management. It still involved management of clinical activities of central NHS administration (GREAT BRITAIN 2011, 12). Any cost which is labelled as overhead and is inevitable makes it to be forgotten and has been excluded from NHS performance cost analysis. When ABC goes ahead to question the direct or overhead costs, it is only seeks to make its greater part of cost to its direct cost management. The dangers involved in top-down model is that, risks and benefits cannot be understood or easily consider them. It is highly advocated that, overheads cannot be regarded as nature facts but facts related to cost pull structure and can be transformed directly to activity cost analysis. Activity analysis allows transparent and logical identification of any risk and support thinking of designing of activities in general. In the evaluation of critical appraisal, the ABC analysis has presented NHS with broad category of events which has been used to map patients’ need of better treatment and cost involved. The trustworthy and value of CIMA and other bodies research is worth to be implemented since it gives clear pathways through which NHS has developed and its related cases of cost increase in providing the required services. In this context, (WALSHE & CHAMBERS 2009, 27), the ABC concept has increased the value of service provision and matched it with the cost incurred by patients. Finally it has harmonized NHS by making it shared responsibility to all people. This has been achieved through provision of NHS insurance which creates a common pool of funding NHS to patients.

Conclusion

The main approach is focused on the analysis of the cost and value of treatment offered by NHS. Since there is increasing demand on effectiveness and efficiency of NHS, ABC has come up with greater PLICS and SLP inspiration. By analyzing the key findings and the importance of PLICS and SLP, the value of NHS has seen a lot of improvements in terms of service delivery. This has been achieved through tailoring activity needs in order to achieve NHS set objectives. Since many of these contributing factors are far from being linked to patients and have been thought to be unmanageable, NHS must adopt changes that are geared towards saving cost of running NHS. By adopting ABC analysis which is a useful cost behavior that is to offer many NHS attractions. Through use of ABC analysis, it might outweigh cost involved in implementing it, hence more beneficial to patients. By having more transparency generated ABC activity analysis, it works by allocating cost to activities more accurately which starts by identifying and doing activity mapping in NHS. Apart from approaches produced by both central and finance department, ABC focuses on participation of every entity involve in the process of transformation. It is highly recommended that, NHS services be accorded in relation to NHS and ABC strategies in order to provide better health services with affordable cost.

References

Christopher S. Chapman & Anja Kern. (2010). Costing in the National Health Service: from         reporting to managing. Imperial College London

GREAT BRITAIN. (2011). National Health Service landscape review: thirty-third report of s      ession 2010-12: report, together with formal minutes, oral and written evidence. London,    Stationery Office.

MAHON, A., WALSHE, K., & CHAMBERS, N. (2009). A reader in health policy and   management. Maidenhead, Berkshire, England, McGraw Hill/Open University Press.

Managing the National Health Service Shifting the frontier? (1988). Boston, MA, Springer US.    http://nbn-resolving.de/urn:nbn:de:1111-20130801688.

Nationalarchives.gov.uk. (2017). The Cabinet Papers | Management in the 1950s.   Available at:             http://www.nationalarchives.gov.uk/cabinetpapers/alevelstudies/management-1950.htm     [Accessed 29 Mar. 2017].