In the Model Hospital, we apply the 'market forces factor' (MFF) to some metrics, to take account of the fact that local costs such as wages, land and buildings are different depending where you are in the country. So for example, the cost per 'weighted activity unit' (WAU) is adjusted for the fact that land costs are higher in central London than more rural locations.
In past years the MFF we used was the scaled underlying MFF from reference cost data. The reference cost data contains information submitted by each trust about how much it costs them to provide health care to patients, and gives the national average costs.
For financial years 2018/19 and later financial years (when Cost per WAU is constructed from PLICS data, not reference cost nor it’s successor NCC ‘National Cost Collection’) – we scale the underlying MFF to achieve a balanced quantum across the (PLICS) costs in consideration. The scaled MFF value used for each provider can be found as a metric here: Model Hospital Metric: Market Force Factor.
The MFF takes the form of an index. This allows a provider’s location-specific costs to be compared with every other organisation. It is also used in reimbursement/tariff to 'compensate' providers for the cost differences of providing healthcare in different parts of the country.