NHS TRUST COST IMPROVEMENT 2
Colchester Hospital University NHS Foundation Trust provides healthcare services to around 370,000 people from Colchester and the surrounding area of north east Essex. In addition, the Trust provides radiotherapy and oncology services to a wider population of about 670,000 people across north and mid-Essex.
The Trust’s £25m state-of-the-art radiotherapy centre at Colchester General Hospital became operational in June 2014.
Colchester Hospital has a turnover of circa £254m in 2015/16 of which circa £46m is spent on management and administration costs. The organisation was overspending significantly above plan and across the organisation. This trend was set to continue into 2015/16.
Benchmarking carried out in the past 3 years had suggested that there were efficiencies within corporate services to be achieved however these reductions had not been realised and therefore remained as opportunities for the Trust to obtain.
Based on the benchmark potential, the Trust aimed to set a target reduction of £5m cost reduction in 2015/16. It was anticipated that some of this would be achieved through a staff restructure and some will be through a review of the corporate services provided including non-pay reductions and efficiency. It was expected that £5m would be the part year benefit in 2015/16, with a full year effect of a greater value being achieved in 2016/17.
Data: GKT undertook a focused benchmarking exercise, using comparative data from:
• GKT's own benchmarking database consisting of 130 Trust wide reviews (Financial Recovery Plans)
• 190 Market testing exercises
• 170 Technical Evaluations
• 865 Service Reviews
• Over 180 assignments of working with commercial service providers in bidding for NHS and Public Sector contracts and a number of value testing reviews
Our database covers over 160 NHS Trusts, 38 Commercial Organisations and 8 Shared Services functions.
Validation: Through semi-structured interviews with the key service managers of those services that form the scope of this review we gained a good understanding of the services being provided. It is vitally important that any comparative analysis is based on like for like comparisons as it is not unusual for the range of service provision to vary significantly from Trust to Trust. Establishing a good understanding of the services in question is therefore imperative if the resultant analysis is to be meaningful.
Comparitive Analysis: Having established a suitable understanding of the service provision at the Trust, the levels of service being provided, the costs and quality of these services, our team then undertook comparisons of this performance with that of other Trusts. Details of the comparator Trusts were set out in our report.
This report examined the current CIP plans for each service and where specific schemes have been identified, these had generally been found to be realistic and deliverable. Where there was a shortfall between the CIP plan and the benchmarking analysis, or where the benchmarking had identified additional cost improvement potential, the report raised a number of potential cost improvement options for consideration, although further work subsequently needed to be undertaken with the relevant service leads to agree these.
Following this initial assessment, the review team met with the Directors/Service Managers of each of the Corporate Service areas to agree the specific initiatives that need to be implemented to bridge the gap and achieve the £5million Corporate CIP target. This involved updating the Corporate CIP Plan including the development of a cash-flow forecast to demonstrate how these savings will be delivered across the financial year.
The benchmarking analysis found that there were a number of areas where the Trust compares favourably with other Trusts, i.e. Colchester’s costs are lower than most in the following areas. However, the analysis also suggested that there were a number of areas where there appeared to be some scope for cost improvement. In total, these areas appeared to offer the potential for cost improvement of circa £4.7million for pay and non-pay related costs.
As mentioned earlier, a number of CIP plans had already been identified and a number were already reflected within the 2015/16 budgets. The key actions were now to agree the specific initiatives to bridge any gaps and the report listed a number of areas that should be the main focus of the Cost Improvement Programme.