What is the Cost Weighted Output (CWO)?

The Cost Weighted Output for your trust represents the value to the NHS of the clinical activity conducted by your trusts in the 14/15 financial year.

It is calculated using the MFF adjusted reference cost dataset (to remove the effect of regional variation in the price of salaries, land and buildings costs etc).

To calculate the CWO for your trust each unit of activity is multiplied by the average cost of providing that treatment across all NHS providers.

The CWO for your trust equals the sum of the 'Expected Cost' field within the MFF adjusted reference cost data set. (Note – although we use the MFF Adjusted Reference Cost data set for calculating CWO, the resulting values for each trust would actually change very little if we were to use the non-MFF adjusted Reference Cost data. This is because most types of acute trust activity are carried out in all parts of the country and as a result the average of cost of each type of activity is usually very similar in both the MFF adjusted and unadjusted data sets.)

Although Cost Weighted Output is based on the expected cost field within reference costs, this is not necessarily the same as what we expect trusts to spend to deliver that volume of CWO. CWO is expressed at national average prices, and so trusts in London will typically spend more than the value of CWO to provide the same volume of activity. To calculate the 'Expected Cost to your trust of providing a given volume of CWO', the CWO value will need to be multiplied by the MFF value for your trust.

As we have been developing these metrics we have tried presenting them and explaining them in different ways and our approach has evolved over time based on the helpful feedback we have received from trusts.

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