Managing costs may seem like a daunting task, but adopting some simple measures will reap serious long-term rewards, says Debjani Duncan
The recently issued Reform report calling for fewer hospitals and more competition is just the latest story to throw the spotlight on NHS finances. However, effective cost management is much more than just identifying savings. It’s also about how we sustain, measure and shout about them.
Create a cost conscious workplace culture
Some trusts are still struggling to meet the government’s target to reduce the patient journey to 18 weeks, resulting in more pressure on clinicians who have less time to devote to decision-making on procurement. The challenge to make savings must therefore start with every individual involved with procurement, whether it’s a receptionist choosing which paper to buy or senior clinical and managerial staff looking at service modernisation. Don’t just think about obvious places to save money.
Trust executives need to set an example by demonstrating to employees that they care about saving money, even on the smallest items. Don’t book the most expensive flights and hotels when you are asking your own management teams to take the budget option.
Furthermore, instil a sense of urgency and create a culture of cost consciousness where employees act immediately to reduce costs and maximise profitability. Celebrate cost reductions, whether that’s an article in the trust newsletter or an announcement on a staff intranet site.
Establish your costs
You may believe your costs are under control, but your perceived “well kept ship” may not be as leak proof as you thought. Forensically examine and benchmark your costs line by line. It is often our experience that this is where the barrier to making cost improvements lies as it demands significant resource, but it remains one of the biggest hindrances to saving money in the NHS.
The importance of innovation
Embrace new technology where appropriate, as innovative products and services can result in real long-term savings. This applies to all kinds of new developments, from low-tech, high volume consumable products to complex high-tech devices.
However, innovations fall into two categories: those that are re-iterations of existing products that have been around for a while; and those that are set to change the patient pathway in ways that both improve the experience for the patient and are less resource-intensive. Products that fall into the latter category can make really positive changes, such as reducing hospital stays or readmissions, lowering infection rates and cutting pharmaceutical bills.
If you’re in doubt as to whether a device is worth trialling, there are a range of resources to help, including the NHS Institute for Innovation and Improvement or the Centre for Evidence-Based Purchasing, which tests products and offers guidance on their quality, efficacy and potential for how they can save you money.
Another increasingly informative resource is the National Network of Clinical Procurement Specialists. Many trusts already have a representative who can tap into the wealth of knowledge within this network regarding product trials, safety issues, procurement policy and innovative practice.
While the initial outlay involved in trialling and purchasing new technology may be a deterrent, the potential for savings that will help the NHS and its patients in the longer term is great. Any upfront costs must therefore be properly assessed against whole life savings in the long run.
When the opportunity to invest in worthwhile new technology arises, check with others who have trialled the product rather than adopting an introspective approach. By learning from other organisations, you can save some of the initial expense involved in trialling new technology and feel more confident that you’re investing in something proven.
Similarly, clinical and procurement professionals must work as allies to ensure products are “fit for purpose” and that the clinical concerns around risk management and patient safety are taken into account for each purchasing exercise. Equally, clinical staff will become more aware of the impact that their commercial decision-making has on the trusts’ overall financial position.
Remember, savings are not realised at the point of the buying decision but only when the purchase is made. By working together the key element of compliance can be regularly monitored and addressed before slippage becomes too much of a problem.
Know the marketplace
Do not rely on your suppliers for information on the prevailing market prices and practices. Also, don’t waste time and energy on looking at individual item costs from different suppliers. By enhancing your knowledge of the supplier marketplace you will increase your confidence of using one supplier for a number of items and can often gain from a “basket” cost rate.
However, reducing costs is not just about going to a cheaper supplier. By following the tips above and working in partnership with your suppliers to identify cost cutting strategies you can, in the majority of cases, generate savings without affecting or disrupting standards of service through changing suppliers.
Create a long-term cost-management programme
Potential savings are great, but they don’t mean anything unless they are realised. After implementing a culture of cost consciousness, appoint cost champions to drive the programme forward.
Ultimately, the key balance for all NHS trusts will always be to save money while consistently ensuring that clinical quality is maintained or improved upon. Being more aware of your costs, championing a cost-conscious culture and not being afraid to embrace innovation, will all make a big difference to your savings and will ultimately improve quality of care.
Debjani Duncan, specialist consultant in healthcare, Expense Reduction Analysts.