How do you deliver long term transformational change at your hospital when the immediate concern is short term cost improvement? McKinsey senior expert Neil Griffiths has some ideas.

Faced with the current financial challenges many trusts are focusing on cost improvement programmes to underpin their long term strategies. However, these are unlikely to deliver long term transformational change and a more fundamental look at how hospital and healthcare services are delivered is now required.  

Here we outline some steps to answer the question: what does it take to transform a hospital?

Have a vision

Before embarking on any change or transformation programme it is essential to paint an inspiring vision for the future. Using this vision to motivate change and maintain momentum is key, as the trigger for transformation is typically a “burning platform” issue that requires short term, immediate action such as cost cutting or turnaround. As we all know, this alone is not sufficient to deliver deep and ongoing change.

Identify a model of change for delivering that vision

Transformation has to be sustainable in the long term. Step two, therefore, should be to identify a model in which to manage short term action while maintaining the visionary and sustainable picture of the future.  

We found the three phase “unfreeze, transform, refreeze” model of change, developed by behavioural scientists Kurt Lewin and Ed Schein, to be a helpful framework to manage a transformation process (see box, below).

Hospitals need to “unfreeze” their status quo and identify their vision with good insight into their current performance, their external environment, changing regulatory requirements and patient demands. This gives them evidence of the scale and depth of the transformation programme.

Monitor policy director Toby Lambert believes providers need to further understand the relationship between efficiency and cost. Fundamentally, hospitals need to be realistic about cost improvement programmes and ask themselves, “Are these deliverable with our available resources?” Given that foundation trust plans outline proposed savings of 2.4-8.5 per cent for each of the next three years, this implies that some are being overly ambitious while others may be too cautious.

Tips for finance directors

How to help transform your organisation

  • Take the lead in setting the ground rules for where savings are achievable
  • Constructively challenge your chief executive – are the numbers and targets ambitious yet achievable? Will you make your savings target?
  • Empower your team. Business analysts on the ground in each service line can be your eyes and ears, keeping you informed on whether cost savings will really be achieved
  • Befriend your clinicians and take the time to explain your decisions to them
  • Don’t be afraid to network. Talk to other finance directors, especially those in trusts like your own. Share results. What are they doing that you could learn from?

Have strong and willing leaders at all levels

As well as good use of data and insight, several contributors to forums and conversations facilitated by the McKinsey Hospital Institute raised the importance of consulting those with a “clear accountability for delivery” – thereby recognising that successful transformation necessitates an engaged and invigorated workforce.

Derby Hospitals Foundation Trust chief executive Sue James recognises that transformation is about “engaging with our clinical and managerial leaders, both about the scale of [the] challenge itself, but [also] establishing a new way to address it”.

Royal Bournemouth and Christchurch Foundation Trust chief executive Tony Spotswood is two years into a three-year transformation programme, with £27m worth of savings to date. He attributes the trust’s success to three key factors: clearly identifying your lead executives and clinicians; “empowering the organisation by making sure that key staff are equipped with the necessary skills”; and rigorous outcomes tracking across the whole trust.

Chesterfield Royal Hospital Foundation Trust chair Richard Gregory advises that boards need to cultivate leaders at all levels of the organisation, promote open and transparent communication and adopt a “total patient focus”.

Matthew Kershaw, director of provider delivery at the Department of Health, advocates small step changes underpinned by a clear vision: “Use staff, the local population and broader stakeholders to identify options and embed change.”

Tips for chief executives

Five pointers to successfully transform your hospital

  • Get clinicians on board and on the board. It has been said many times but they are key to making change sustainable and effective;
  • The answer may not be in the room. Listen and learn from chief executive colleagues; see them as part of your improvement community, not your competitors;
  • Think about step change not big bang. A number of small frontline improvements can yield surprising results;
  • Don’t be afraid to make big decisions about service reconfiguration, but fully explain the reasons for them to your community and your workforce;
  • Measure everything – but also challenge, re-measure and redefine data where needed.

Be rigorous and robust in implementation

The Virginia Mason production system has helped the Seattle-based non-profit integrated provider deliver remarkable results.

Borne from financial pressures in the late 1990s, this approach is patient centred in that the company focuses on eliminating waste as a way of adding value and improving the patient experience. 

The system has taken time to develop, and the company faced resistance from some quarters as it introduced standardised care pathways for common conditions. Its response was straightforward and robust – all employees are expected to participate in the effort. The approach has resulted in several programmes of improvement and change within the hospital, and the Virginia Mason Institute has also been created to further embed the change process and help spread the best practice. 

The Virginia Mason production system has:  

  • cut laboratory results reporting time by 85 per cent;
  • increased the time nurses spend in direct patient care from 35 per cent to 90 per cent;
  • reduced professional liability insurance by 48.8 per cent;
  • reduced pharmacy distribution time to patients from 2.5 hours to 10 minutes.

Time is moving on and, as many NHS hospital leadership teams are realising, the traditional annual cost improvement programme model will not help transform them into institutions that constantly deliver results. Success will depend on setting compelling shared goals, a common language and a drive to always improve and deliver the vision.

How to apply ‘Unfreeze, transform, refreeze’


  • Define a clear case for change. Be transparent about your reasons
  • Challenge the data: does it really describe performance in your hospital – if not which data does?
  • McKinsey Hospital Institute’s hospital diagnostic tool has helped “unfreeze” a current view of performance for every hospital in the country. This process often includes challenges to the data but, more fundamentally, provides evidence of the scale of response needed in the coming years


  • Tackle the uncomfortable decisions head on
  • Be prepared to think about and implement a long term vision for your organisation


  • Use data to measure your transformation
  • Don’t panic. Give changes time to take effect before deciding whether they have been successful