Hospitals: what do they do and how much does it cost?BMJ 2012; 344 doi: https://doi.org/10.1136/bmj.e1759 (Published 14 March 2012) Cite this as: BMJ 2012;344:e1759
All rapid responses
We enjoyed reading John Appleby's data briefing on hospital activity and costs in the NHS, especially his take on the most commonly recorded "intervention". Moreover, presenting the 2009-10 National Reference Costs (NRC) data as a bubble infograph makes it easier for the average reader of the BMJ to have an overview of, what is, a very complex subject to understand, analyse and grasp. Also, we appreciate that NRC data have been used in this briefing to make a wider point about sustainability and suitability of the hospital model of care in today's economically constrained times.
For anyone out there who wishes to understand further how English hospitals cost their activity with NRC, we have put together an article here based on 2010-11 NHS reference costs http://e3intelligence.com/2011/12/the-cost-of-care-and-the-urge-to-merge/
It discusses how reference costs are calculated; what they are used for (calculating the PbR tariff, the Reference Cost Index and benchmarking hospitals); and the key limitations of NRC data, with illustrative examples. For example, we found that, in 2010-11, all hospitals in England had lower than average costs in a single specialty i.e. general medicine. Statistically, this is impossible and is simply an artefact of the way in which the national mean is calculated, which ignores specialty.
Knowing full well how difficult it is to analyse NRC data as published by the Department of Health, we have built a reference costs analyser in MS Excel 2010 which will allow users to look at and compare hospital activity costs at all levels - from global to detail. And we ask, if hospital mergers are the answer to saving money, then why is it that 17 large acute Trusts have costs that are higher than expected? Isn't bigger better? Or have they reached a tipping point in size resulting in diseconomies of scale?
We hope all BMJ readers find our input helpful.
Competing interests: Both Suparna Das and David King are Directors and co-founders of e3 intelligence Ltd, a UK limited company that promotes business skills for better healthcare.