Category Archives: NHS

Consider the following simplified scenario. You manage a team.  The team consists of four senior bods (let’s call them B‘s) and one junior admin support bod (let’s call them A).  The team works efficiently with the B‘s fully utilised doing work that only a B can do and A taking messages, organising meetings, taking minutes and the like. The B‘s cost you £50k per year a piece; A costs you £25k. So your total cost is (please excuse the maths-speak): 4B + A = 4(50k)+25k = £225k.  And because, in this idealised scenario, the team is perfectly efficient let’s accept that it provides the same 4B + A = 4(50k)+25k = £225k of value.

Now imagine that austerity is biting and you are being asked to find at least 10% in cost savings. (If you work in the public sector this will, by now, be ringing bells.) You decide there is nothing for it, A will have to go and your B‘s will have to “absorb” that admin work: take there own messages, organise their own meetings, write their own minutes. £25k saving right? Result. Or is it?

Let’s take a closer look at your new world. Yes, undoubtably your costs have reduced by £25k, but what has happened to the value?

You look closer and you notice that each of your four B‘s is now spending the equivalent of a day a week doing the stuff A used to do. So each of your B‘s now spends 20% of their time doing £25k value stuff… but your still paying the £50k cost for that time. Financially, your team is now considerably less efficient. How much so? Well, your costs are down to 4B = 4(50k) = £200k.  But your team’s value has reduced to 4(80%(50k)+20%(25k)) = £180k.

You’ve cut £25k off your costs, but in doing so, you lost nearly double that – £45k – in value.

Moral of the story? When you’re cutting costs, always have an eye to the value you may be destroying.

Ah, it’s a new year.  Must be time for another fun round of SLA negotiations.  For those of you unfamiliar with this annual jamboree, it is the time when those who hold the NHS’s purse strings (commissioners) sit down across the table from those who spend the purse (providers) to draw up a contract which will ultimately decide who ends up holding the deficit.

On a less flippant note, here are my top three pre-match notes to self.

1. A realistic activity plan.  When agreeing next year’s activity plan, try try try to end up with something which differentiates impartial forecast from wishful thinking.  The starting point for any plan must be a cool analytical assessment of the minimum activity likely to be required, not simply how much can be afforded. Glossing over this by agreeing to a plan you don’t believe is not saving you time, it is wasting you time: you’ll only end up having a fight later in the year by which time it will be too late to do anything constructive about it.
2. Priniciples & definitions.  Accepting your contract will include performance metrics with financial penalties, agree both the principles of these (what is the logic for their application) and their technical definitions (exactly how are they measured and applied).  Having a tightly agreed definition helps avoid in year arguments about what performance is and whether or not a penalty applies. Where arguments do arise, having agreed principles in place can help settle them more amicably.
3. Clinical involvement.  Get clinicians (on both sides) involved as early as possible. Ditto service General Managers or equivalent. This is the best way to make sure your plans and targets are sensible, believed and understood by those with the power to change practice.