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Topic 4 Reading Acute Health Clinical Costing Standards 2011 Notes

Accounting Notes > Accounting in the New Public Sector Notes

This is an extract of our Topic 4 Reading Acute Health Clinical Costing Standards 2011 document, which we sell as part of our Accounting in the New Public Sector Notes collection written by the top tier of LSE students.

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"Acute Health Clinical Costing Standards 2011/12" (HFMA, 2011)

"Acute Health Clinical Costng Standards 2011/12" (HFMA, 2011) Foreword

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Good costing information is key to day-to-day management, but it will be absolutely vital during this coming period to inform decision-making to improve both the quality and costeffectiveness of services The data needs to be derived in a uniform way, ensuring cost variations result from differences in clinical practice and the costs of treating patients, and not simply as a result of different costing approaches Acute Health Clinical Costing Standards are compatible with the NHS costing manual First draft published in 2009

Introducton

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Standards refer to clinical costing rather than just patient level costing Previous approaches to costing in the NHS have been dominated by a top-down approach o But can only produce information about high-level costs or average costs o Would not show you how those costs had arisen Clinical costing represents a change to this process by aiming to identify the resources consumed directly by individual patients o Once identified, these individual patient costs can be aggregated to provide HRG level costs or specialty costs with the added advantage that these higher level costs can be drilled into to provide full detail of how they have been derive o i.e. a bottom-up approach Not all costs can be easily attached to an individual patient o In the NHS we do not typically record all of the specific interventions that are involved in each patient's care Indirect or overhead costs - such as the costs of payroll etc. can be divided among all patients based on appropriate allocation and apportionment methods This information can be reliably used to inform decisions around patient services and help improve quality and cost performance Adhering to these clinical costing standards should lead to an overall improvement in the quality of the underlying cost data used to produce reference costs and in the quality of costing in general in the NHS

Standard 1: Classificaton of direct, indirect and overhead costs

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All general ledger costs need to be classified as direct, indirect or overhead There may be occasions when costs need to be classified in different ways for specific reporting purposes o For instance, Monitor guidance suggests a different approach to classification for service line reporting
? E.g. the standards classify pathology as a direct cost but Monitor's guidance reports it as an indirect cost Wherever practicable costs should be allocated on an activity basis rather than treated as overheads

Standards 2: Creaton of cost pool groups and cost pools

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All service costs or fully absorbed direct costs (direct costs inc. allocated indirect and overhead costs) need to be grouped into associated cost pool groups Will enable the comparison of costs at the individual and accumulated patient level for benchmarking purposes Will provide useful and informative groupings by which to analyse and report costs

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