Highlights: Economic model & price benchmarking

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

Price Benchmarking started as a Department of Health (DH) initiative under the Quality, Innovation, Productivity, and Prevention (QIPP) programme.  Although funding for the pilot was provided by DH, Price Benchmarking now forms a core part of the NJR. Trusts provide pricing data to the NJR from the pricing catalogues they receive from implant suppliers and the implant and price is matched to procedures held in the NJR where the same implant has been used.  Linking the pricing information to NJR data has the following benefits:

• Price is linked to usage
• Implant combinations used in procedures are linked
• Implants are linked to surgeons
• It supports the clinical evidence of implants
• It supports analysis by patient demographics

From the resulting analysis it is possible to determine the variation in price paid for implants throughout the NHS.  

The INFORM service is provided to trusts and health boards as part of their subscription to the NJR.  An INFORM report includes information on implant usage and spend by manufacturer, implant pricing comparison against national benchmarks, estimated savings, implant costs by surgeon, manufacturer and joint by surgeon, and brand costs and use (including potential savings).  As at 31 March 2016, 73 trusts and health boards were providing pricing data to the NJR with, however, only 61 of those providing useable data.

The advanced reporting service, EMBED, is a subscription service that enables procurement and healthcare management teams to drill down further into their pricing data.  It also provides surgeons with individual reports which are made available to them via NJR Clinician Feedback. Reports include:

• A surgeon’s procedures including joint, type, patient status (age and ASA grade) and implant costs.
• A surgeon’s procedure details by type and joint, manufacturer, catalogue numbers, brand, and cost by component and the cost of the whole procedure.
• Enhanced analytics including implant cost by patient type, surgeon-level mean implant cost, age profile, uses of ceramics, cost and clinical evidence.

All reports can be categorised by joint type, stage (primary or revision), procedure type, age group, gender, ASA grade, and cost profile.

As at 31 March 2016, 16 trusts and health boards were subscribing to the EMBED service.

Following feedback from hospitals, the NJR has also started to look at views of pricing data associated with outcomes data. This work is in its early stages. 

Further information about Price Benchmarking and the INFORM and EMBED services is available from the ‘Implant procurement’ tab on the NJR website.

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

Last year it was reported that, from 1 April 2014, the NJR had changed the way in which it was funded, moving from a levy 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.

The new subscription model reduced the cost of the NJR from a levy of £20 (gross) per procedure to a subscription of £15.60 per procedure.  The current net payment is £13 which represents a significant cost saving.

It was also reported last year that there had been variable responses to the subscription invoice and, although a small number of Trusts had still failed to pay the 2014/15 subscription, the response rate for the 2015/16 subscriptions was significantly better. This is mainly due to procurement systems now being set up to deal with the invoice and the process becoming embedded in financial administration.

Using the services of a VAT consultancy, the NJR has also explored the possibility of NHS trusts being able to reclaim the VAT element of the subscription from HMRC.  This resulted in a claim being submitted by a large orthopaedic trust to HMRC as a test case.  Trusts will be informed of the outcome of the claim in due course.