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Improving quality and saving money with NICE guidance

The NHS is being asked to focus on ensuring quality care whilst at the same time planning for a challenging financial situation. The NHS Confederation suggests that a fundamental look at how the service runs is required, focussing on quality and process improvement and the adoption of evidence based best practice. [Dealing with the downturn, NHS Confederation].

Improving quality will often improve patient safety and generally enhances patient experience. This can all deliver cost savings. As part our contribution to supporting the NHS in these new, challenging circumstances, we have produced a list of what we estimate to be cost saving guidance .

Any service review will provide a good opportunity to check compliance with NICE guidelines. Some of our guidance will have financial implications so when implementing guidance organisations need:

  • effective financial planning to make the best use of available resources
  • good links between finance, staff, clinicians, implementers and commissioners

The Audit Commission report “Managing the financial implications of NICE guidance” recommends that organisations should:

  • develop a sustainable approach to financial planning
  • use horizon scanning to identify forthcoming guidance
  • systematically cost the impact of implementing guidance

How NICE supports financial planning

NICE supports the financial planning process by providing:

  • costing tools that indicate the national estimated cost of implementing NICE guidance and support estimating the local cost. Read more about costing tools.
  • a forward planner (updated monthly) to assist with horizon scanning and includes estimates of cost where available. Read more about the forward planner.

Payment by results

Payment by results (PbR) is a transparent, rule-based system for paying provider organisations. It aims to:

  • reward efficiency
  • support patient choice and diversity
  • encourage sustainable waiting time reductions

PbR uses a tariff that is based on past reference costs. The tariff currency is the healthcare resource group (HRG). HRGs are standard groupings of clinically similar treatments, which use common levels of healthcare resource.

Read more about PbR on the Department of Health website.

Managing the financial impact of NICE guidance

The cost of implementing recently published NICE guidance is not included in the reference costs. To ensure the PbR tariff is sufficient, NICE and the Department of Health's tariff setting team identify the impact of the guidance and adjust the tariff accordingly.

NICE guidance may have an impact by:

  1. Changing activity levels at tariff rates.
    For example, recommending that hysterectomy should not be used as a first-line treatment solely for heavy menstrual bleeding is predicted to reduce the number of hysterectomies undertaken. This should be reflected in activity levels in service level agreements or contracts, but has no impact on the tariff.
  2. Changing the cost of providing particular services.
    For example, recommending a more expensive device be used in an operation that is coded to an HRG. The change in costs should be reflected in the tariff for that HRG.
  3. Changing the cost of providing services unrelated to specific services.
    For example, the cost of nutrition guidance affects all outpatient referrals and admitted patients. This would require an annual uplift across the whole tariff.
  4. Affecting services and activity not currently covered by PbR.
    For example, high cost chemotherapy drugs or mental health services. Commissioners should use the cost template and local knowledge to calculate the financial implications, and agree changes to service level agreements or contracts for non-PbR activity.

The forward planner includes comments on how guidance may affect PbR.

This page was last updated: 14 September 2009

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Selected, reliable information for health and social care in one place

Accessibility | Cymraeg | Freedom of information | Vision Impaired | Contact Us | Glossary | Data protection | Copyright | Disclaimer | Terms and conditions

Copyright 2014 National Institute for Health and Care Excellence. All rights reserved.