NHS finances in urgent need of accurate controls

NHS finances in urgent need of accurate controls

How many of us would pay a restaurant bill or a hotel bill without checking with being charged for what we had actually used? I would hazard a guess not many, particularly in these financially straitened times. This is, however, what is happening in most Clinical Commissioning Groups (CCGs) across the country. A recent Audit Commission Report ‘Right data, right payment,’ estimated the error rate in billing between hospitals and GP practices is £3.51 Billion per annum. The NHS needs to find ways to reconcile this vast sum – urgently.

Currently CCGs across the country are declaring deficits and scratching around for Quality, Innovation, Productivity and Prevention (QIPP) programs to make efficiency savings for next year whilst ignoring the most obvious way of balancing their budgets – validating their secondary care invoices. Invoice validation is not about removing money from secondary care. It is simply about making sure CCGs are getting what they are being charged for by secondary care. I would also argue that this is good, old fashioned corporate governance. 

The NHS efficiency drive to deliver better patient outcomes is being hindered by a vast amount of money being billed in error. Every episode of care undertaken in secondary care has a nationally set tariff so that effective control of budgets can be implemented. The new NHS structure which comprises 211 CCGs which are responsible for the 8,400 GP practices in England, have been allocated budgets according to the population size and health prevalence in their areas.

In essence GP practices and the CCGs are at the forefront of primary care with a mandate to deliver improvements in patient services and outcomes within a fixed budget which is part of the £90 billion spent annually by the NHS. Currently hospitals that provide general and acute care, A&E and maternity, account for £46.8bn. According to the Audit Commission the error rate in the bills sent from hospitals to the CCGs and GPs is 7.5%, which is a staggering £3.51bn, and equates to £417,857 for every practice in England!

These errors range from the same episode of care being billed twice to ‘male hysterectomy’ episodes. There is some undercharging but overall the two thirds of errors are in favour of the hospitals. The consequence of inaccurate control of finances is critical in maintaining the patient services which are under considerable pressure.

This is proven by an East Midlands CCG who recently found that from an annual budget of £155 million there were errors totalling £12,458,862. To put this in context these funds would pay for ALL the following episodes of care; 24,000 first outpatient appointments, 1,566 cataracts, 1,249 hernia repairs and 960 hip replacements.

Without accurate control of budgets it will be impossible to optimise the NHS plan to deliver improved patient outcomes from current budgets. Some CCGs (formally PCTs) are aware of the problem but continue to use invoice validation methods which only identify about 45% of the more obvious errors (male hysterectomies). These techniques, known as Automated Invoice Validation (AIV) and Service Level Agreement Management (SLAM), simply run a computer algorithm which does not reference the important information held in the GP clinical systems. GPs record detail of all referrals to hospital and subsequently enter the patient discharge results. This vital source of information is the only way to cross reference the accuracy of the bills from hospitals.

The CCG who identified over £12 million of errors used a combination of the traditional software, AIV & SLAM, and a new algorithm “iQV”, which does reference the information held in GP clinical systems to identify 95% of the errors and supports the practices with patient risk stratification.

Other important information is also available only by cross referencing the data in GP clinical systems; it has been identified, by using the iQV software, that patient discharge information from the hospital can be anywhere up to 2/3 weeks after the patient has been discharged. In consequence the GPs are unaware of subsequent changes to medicinal requirements and possible on-going support for the patient. Hence the iQV algorithm not only allows effective control over the accuracy of secondary billing but can also highlight shortcomings in timely communication from secondary care.

CCGs have one statutory duty – to deliver a 1% surplus at year end. Currently many CCGs already have already or are about to declare deficits of several million pounds. The question the governing bodies of CCGs should be asking is, ‘Given the magnitude of billing errors highlighted by The Audit Commission, are these deficits real or are they caused by overbilling from secondary care?’

Currently the majority of CCGs cannot accurately validate secondary invoices due to their use of outdated analysis software. Unfortunately, this situation is also compounded by staff in some CCG informatics and finance departments taking the attitude that the ‘old’ methods of validation are good enough. Can CCGs meet the challenges of: an aging population, increasing incidence of disease and increasing input cost inflation whilst ignoring a potential 4-7% drain on their budgets through overbilling? Invoice Validation is not a sexy solution to healthcare delivery – mainly because it is looking to managers to deliver the savings – but that does not mean that it can be ignored.

If the iQV algorithm delivers as promised, one CCG that recently announced an estimated £5.9-11 million year end deficit (based on £20million secondary care contract over-performance) could have turned that worst case £11million deficit into an £11 million surplus. You can buy a lot of healthcare for £11 million!

Published by Andrew McHugh is pracmanhealth

My name is Andrew McHugh. I was a GP Surgery Practice Manager in one of the largest GP Surgeries in Oxfordshire from June 2006 - May 2016. I have extensive experience in cross cultural settings overseas and within the business community of the UK. I have a particular interest in strategic planning and the future of the NHS. I am very clear that we cannot progress by delivering more of yesterday's solutions. I don't have any off-the-shelf solutions. The solutions to the problems that face the NHS and General Practice are multifaceted and anyone who says he has found the solution hasn't understood the complexity of the problem. The first stage to addressing the vulnerability of individual practices, General Practice as a whole is to admit we have a problem. Only then can we have any hope of overcoming those problems.

One thought on “NHS finances in urgent need of accurate controls

  1. Excellent blog! Do yyou have any helpful hints forr aspiring writers?
    I’m planning to start my own blog soon but I’m a little llost on everything.
    Would you advise starting with a free platform like WordPress or go for a
    paid option?There are so many choices out there that I’m totally confused ..
    Any recommendations? Thank you!

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