Healthcare is facing unprecedented financial pressures. Rising treatment costs, increasing demand, and reimbursement shortfalls are forcing providers to rethink how they measure and manage resources. Traditional costing methods—built on broad averages—no longer provide the accuracy required for sustainable decision-making.

Enter Patient-Level Information and Costing Systems (PLICS). By linking healthcare activity data with financial information, PLICS shifts the focus from generic averages to the actual costs of individual patients and their care pathways. This is more than an accounting upgrade—it’s a fundamental shift toward transparency, accountability, and value-based care.

What Is Patient-Level Costing (PLICS)?

Patient-level costing is a method of assigning real costs to the actual treatments, services, and resources each patient consumes. Rather than estimating through averages, PLICS calculates costs at the most granular level: per patient, per episode of care.

In the NHS, PLICS data now covers inpatient admissions, emergency care, outpatient attendances, mental health spells, community care contacts, and IAPT (Improving Access to Psychological Therapies) appointments. This comprehensive scope ensures that every part of a patient’s care is captured and accounted for.

Why It Matters for Healthcare Leaders?

1. Enhanced Financial Transparency

PLICS gives healthcare managers and clinicians a clear, detailed picture of costs. Instead of relying on averages that obscure the true economics of care, organizations can analyze the actual cost of individual pathways within hospitals and across entire health systems.

For the first time, providers can answer questions such as:

• What does it really cost to treat a patient with a specific condition?
• Which care pathways are the most efficient?
• Where are resources being overused—or underutilized?

This visibility supports better budgeting, contracting, and long-term planning.

2. Strengthening the Clinical Connection

Costing data is no longer an abstract finance exercise. By linking clinical outcomes with associated costs, PLICS creates a bridge between clinicians and finance teams.

When doctors see how their decisions directly affect patient-level costs, they become active partners in financial stewardship. This connection supports cost-effective care pathways without compromising clinical quality.

3. Supporting Value-Based Healthcare

Value-based care requires a clear understanding of both clinical outcomes and costs. PLICS delivers the cost component, enabling healthcare leaders to measure value at the patient level, benchmark performance, and design sustainable models of care.

What are the benefits of PLICS?

• True cost insights – Identify the actual costs of care at the patient level.
• Resource optimization – Allocate staff, beds, and equipment more effectively.
• Reimbursement Accuracy – Ensure contracts and payments accurately reflect actual costs.
• Service line analysis – Spot profitable and loss-making services.
• System-wide transparency – Compare pathways and performance across providers.

What are the Challenges of Implementation?

Implementing patient-level costing is not without difficulties:

• Resource requirements – Significant investment in IT infrastructure, staff training, and process redesign is needed.
• Change management – Shifting to PLICS requires new ways of working across clinical and finance teams.
• Compliance standards – New reporting requirements add pressure to already stretched organizations.

The upfront costs can be substantial, but the risks of not adopting PLICS—blind spots in cost data, poor reimbursement, and inefficient service delivery—are far greater.

Policy and NHS Commitment

NHS England has made PLICS a national priority. The Costing Transformation Programme (CTP) is driving implementation across acute, mental health, ambulance, and community providers. From 2024/25, PLICS collections cover the full financial year, ensuring consistency and enabling system-wide benefits.

This commitment signals that patient-level costing is not optional—it’s becoming the standard for healthcare financial management.

Real-World Impact and Use Cases

Without PLICS, healthcare organizations face critical blind spots:

• No insight into the true cost of patient care
• Inability to identify profitable vs. loss-making services
• Uncertainty about reimbursement adequacy
• Limited ability to support value-based initiatives

With PLICS, providers can:

• Compare the cost-effectiveness of different treatment pathways (e.g., surgical vs. non-surgical approaches).
• Assess whether reimbursements cover actual care costs.
• Benchmark performance between trusts and regions.

For example, an NHS Trust could use PLICS to analyze hip replacement pathways, identifying which approach delivers the best patient outcomes at the lowest cost—leading to system-wide improvements.

FAQs

1. What’s driving the urgency for patient-level costing now?

The convergence of rising healthcare costs, tighter reimbursement models, and increasing demand for transparency has made patient-level costing essential. Traditional costing systems are no longer sufficient for the complexity of today’s care delivery. PLICS gives organizations the data they need to survive in an environment where every decision is scrutinized for efficiency and value.

2. How can we justify the upfront investment?

While implementation requires significant resources—IT infrastructure, training, and process redesign—the return on investment is long-term sustainability. PLICS helps organizations eliminate inefficiencies, optimize service lines, and secure fair reimbursement. The real cost of not investing is operating blind, making decisions without knowing whether services are viable or sustainable.

3. What role can PLICS play in addressing healthcare affordability?

Healthcare affordability depends on understanding and controlling cost drivers. PLICS highlights where money is being spent, where waste occurs, and which interventions are most cost-effective. By aligning care delivery with accurate cost data, providers can reduce unnecessary expenses while maintaining or improving quality, ultimately helping patients access care at a lower financial burden.

4. How does PLICS align with our value-based care initiatives?

Value-based care requires measuring both outcomes and costs at the patient level. While outcomes are often well-documented, true cost visibility has been the missing piece. PLICS closes that gap, enabling organizations to design care pathways that maximize clinical quality and financial sustainability. This makes PLICS a cornerstone of value-based healthcare strategies.

Conclusion

Patient-level costing represents a major step forward in healthcare financial management. It offers granular transparency, connects finance with clinical practice, and supports the move toward value-based care.

Yes, implementation is complex and resource-intensive. But the cost of inaction—operating with financial blind spots, underfunded services, and unsustainable pathways—is far higher.

For healthcare organizations, the question isn’t whether they can afford to implement patient-level costing.
It’s whether they can afford not to.