Highlights: Economic model & price benchmarking

The NJR provides a service to help NHS organisations achieve transparency in implant pricing

One of the services to be developed as part of the new economic model was Implant price-benchmarking.  This was initially established to enable procurement organisations to compare the prices that they were paying for implants with other procurement organisations.  The service was piloted with a limited number of Trusts and Health Boards and participation was gradually extended. 

NHS organisations supply the NJR with details of their pricing which are then linked to their NJR data so that usage rates and costs can be determined.  It has been established that the average prices for primary hip procedures vary between £800-£2,150 per organisation and for primary knee procedures, between £1,000 and £1,950 per trust.  If Trusts and Health Boards paid the best price for components, it is assessed that annual savings could be over £220,000 per organisation.

There are two levels of service:

• The INFORM service is free to those that have paid their subscriptions to the NJR. It provides an organisation-level report, available via NJR Management Feedback, comparing the prices paid for components with national benchmarks for the average and best prices
• EMBED is a new service for 2015/16, accessed through payment of an additional and separate subscription.  It aims to provide a more detailed understanding of expenditure on, and usage of, implants, leading to a reduction in expenditure without compromising patient outcomes.  It does this by providing data at both an organisation level and a consultant level, where appropriate.  The service is aimed at surgeons, service managers, finance managers, and procurement managers.

Anyone who wishes to subscribe to EMBED or find out more information about the service should contact the NJR Centre’s service desk.  Currently 65 NHS and procurement organisations are providing pricing information to the NJR.

The NJR changed the way it is funded to reduce its cost burden to the NHS

From 1 April 2014 the NJR changed the way in which it was funded, moving from a levy raised on the sale of implants to a subscription model.  The purpose of the change was twofold:

• To reduce the cost of the NJR to the NHS and independent sector who were bearing the full operational cost of the registry
• To ensure a fair and proportionate contribution from other, key stakeholders, including the orthopaedic device industry

The subscription is based on the number of procedures submitted to the NJR or, if higher, the number of procedures recorded on the Hospital Episodes Statistics (HES) service in England or the Patient Episode Database Wales (PEDW) service in Wales.  The previous complete financial year’s submissions are used to calculate the subscription for the forthcoming financial year.

By invoicing NHS and independent healthcare providers directly, it was possible to remove the Supplier Administration Fee and reduce the subscription charge per procedure from £20 (gross) to £15.60.  The new and current net payment is £13.  This represents a significant cost saving.

The response to the payment of the subscription invoices has been variable:  some healthcare providers paid almost immediately, others had to be notified of late payment on a number of occasions, and, from some, there has been no financial or other response.  In some instances, Regional Clinical Coordinators were asked to speak directly to provider management.  It is thought that, in many cases, procurement systems were caught unawares and were not set up to deal with the invoice.  It is anticipated that the process will become part of regular financial administrations for 2015/16 subscriptions.

A number of revenue generating services have been developed which should enable the NJR to reduce the operational costs of the NJR.  The two key services that have been developed are Implant price-benchmarking and NJR Supplier Feedback.