Service line reporting + reference costs = readily available solution
Monitor's guidance to prospective foundation trusts on service line reporting leaves you to define your own service lines.
But that's easier said than done. Individual healthcare resource groups (HRGs) are just too detailed. Slight alterations to the allocation of costs can turn a profitable HRG into your worst cash loser. Using specialties as service lines is also plagued with difficulty because specialty definitions differ widely from trust to trust. What you call general medicine just isn't the same as at the trust next door, and when part of the required analysis is by market share, that's important.
HRG chapters don't suffer so much from these problems: the level is not so detailed that the result exhibits extreme sensitivity to differences of cost allocation, and the definition of a HRG chapter does not vary from trust to trust. Conveniently, reference costs contain all of the data you need.
The drawback to this approach of course is that reference costs don't actually record profit/loss. Rather, they indicate the cost variance against the national average. They use the episode rather than the spell as its currency, and they don't take account of any of the adjustments made to tariffs under Payment by Results. But as tariffs are set from average reference costs, with a finished consultant episode to spell adjustment, and as adjustments for short stays will impact on most trusts in a similar way, might it be a valid analysis, at least as a first step or as a question-raiser?
The figures below, all for the same trust, illustrate what is possible using only readily available data from 2005/06 reference costs. The portfolio analysis indicates serious growth potential exists in an already profitable chapter (cardiac work). But there's also a major financial risk if activity in a further chapter, where the trust is perhaps doing more activity than its expected share as a result of being a specialist centre, were to reduce.
The cost variance charts can be used to direct management attention to those areas where costs are above the norm. In this case, savings of up to £1 million in one chapter should be possible.
If you haven't already looked at your own reference costs in this way, you might find it useful to help you improve your bottom line.