Where Are Your Extreme Cost Outliers?

Briefing Note 69

Since Monitor introduced the concept of SLR/PLICS in 2007 the principles around costing have become well embedded in most NHS finance departments. We’ve worked with Trusts all over the country and everyone gets it, but very few costing teams have considered the quick wins that are involved in identifying extreme cost outliers.

The most effective way to get started is to focus on a specific medical condition or care pathway. There are a couple of different ways of looking at this – you could for instance start with a high volume, high cost HRG or you may want to look at a chronic condition.

As you start this project the other dimension you’ll want to consider is the level of clinical engagement you’re going to need in order to make your findings useful. This being the case you’ll probably want to start with a department that’s receptive to using costing in this way.

The last key resource is getting hold of someone in the information department with good IT skills – to effectively look at outliers you’re going to need to review clinical, financial and quality (in terms of health outcomes) data. Bear in mind though with this type of advanced costing work you, as an accountant, are just a facilitator – it’s up to your clinical colleagues to analyse the clinical and quality data.

There are four stages involved in identifying outliers, their cost drivers and putting place systematic improvements.

Stage one: construct a care map

A care map is a visual representation of a patient’s episode of care, including all clinical activities. This may span several months and include several specialties. It’s important to create the care map at a high level and thus let clinical and finance colleagues have visibility of the full cycle of care, not just the individual activities that are generally the focus of most lean or CIP schemes.

The care map is used as an analytical framework to bring together your clinical, financial and quality data so that you can monitor care delivery. This then encourages multi disciplinary discussions on how care is delivered.

It should start with the current standard of care and identify the major components of care and key decision points for the episode.


Stage two: associate relevant data

The components of care will have financial, clinical and quality data associated with them. When you put these datasets together you can then monitor delivery of care and therefore identify outliers and areas for improvement. A word of caution though – don’t overload your care map. Limit data to what is essential to identifying outliers.

Clinical decision making is informed by patient characteristics and the clinical data should provide insight into this.   A surgical HRG for instance will include data points such as comorbidities, possibly patient demographics and diagnostic results. You don’t need the patient’s complete records; you just need to focus on a small number of critical items that inform clinical decision making and therefore outcomes.

Financial data will come from your ledger and your SLR/PLICS costing software, but remember to limit the scope of it to understanding the component of care.

Quality data will encompass a wide spectrum of process metrics and other quality assurance information.

In bringing together quality data with finance and clinical data Trusts can assess the impact of quality improvement efforts.

Stage three: spotting your outliers and deciding what to do with them

Actually spotting your outliers is easier than deciding what to do with them. It’s at this point that clinical colleagues become invaluable in identifying the reasons for disparities.

There is a job to be done here in terms of presentation of this data in clinical terms in order to drive engagement. Rather than presenting data in pound note terms, a more effective approach is to describe how things impact on patient care. For example, the extra minutes in an operating theatre that could have been allocated to another patient.

Dimensions of the care map:

Component-of-care analysis

A lot of outliers may be identifiable from the total charges generated, but looking at the individual components of care will indicate why a patient is an outlier and suggest ways to prevent future instances.

Patient-level analysis

Once a patient is badged as an outlier the work should concentrate on the patient’s medical care in order to establish if action is needed.

Programme-level analysis

To analyse care delivery for the whole episode of care, all the data should be pulled together at the programme level. You can then assess the impact of your decision making in one component of care on the whole episode.

Stage four: Monitor care delivery and programme improvement

As you analyse the data and identify outliers your clinical colleagues must begin to address the underlying issues. This may require new procedures or difficult discussions with other clinical colleagues. Key data extracted and presented in the correct way will help them do this.

Your job as an accountant is to facility your clinical colleagues as they come to understand the financial implication of their clinical decision-making.