Leading the savings drive?

The healthcare budget is huge, there is no denying, but it has been pressured into efficiency savings year on year for well over a decade now. It is interesting to note that the facilities teams, that comprise about 25 per cent of healthcare staff, have been required to produce efficiency savings year on year of about eight per cent for many years. Elements of the savings have come from efficiencies in the way in which our staff work, old working practices have long gone, flexible rosters and multi-skilling are things that the facilities teams started to introduce in the 70s and 80s.

SMALL CHANGES, GREATER EFFICIENCIES
As an example, I can recall having a new Carpenters Workshop built at the now defunct and dilapidated Royal Hospital, Wolverhampton, in 1984 and it included a dedicated paint area so that the carpenters could prime their own joinery. Some of the estates team were also trained to install and maintain suspended ceilings to avoid us having to bring specialist (and therefore expensive) contractors in for small upgrades. The knock- on effect of such changes in working practice was that our maintenance work became more efficient and effective as we no longer had to either leave ceiling tiles out because they had been damaged by staff who did not know how to remove them, or wait till a contractor could call in to effect the repairs.
   
With this background, and acknowledging that not all the NHS has been as successful in moving working practices forward, it is clear that all NHS bodies are going to be looking to their facilities teams to lead the way as cost savings are sought. In spite of government assurances that the healthcare budget is going to be grown year on year for the term of the Parliament we are already seeing demands from finance directors to their facilities colleagues to make significant savings.
   
The most recent benchmarking data from our own Benchmarking Club shows some wide ranging cost spreads in key areas – but also some very poor and in some cases missing data. As always we have to ask: “How can effective and efficient management be based on poor or inadequate management information?” One of the significant questions is highlighted by the spread of the FM spend.

UTILITIES COSTS
Energy, or more correctly, utilities costs, account for roughly a third. This is a growing cost per unit due to climate change levies. While we can make better use of utilities through savings measures and better building management systems there is a cost associated with the controls or systems and the opportunity cost can outweigh the short term savings. We have all been driving the energy use down for many years with campaigns aimed at staff (turn the lights off when you leave the room) and more efficient equipment, both in major plant and end consumer items, as technology has developed. But again, moving forward has a direct cost unless built into the normal replacement programme. So as savings are made by deferring the capital (or revenue) replacement budgets we see the loss of energy and other utility saving opportunities resulting in inflated costs in other budgets.
   
Reviewing the data shows that there have been significant changes in space occupied and the costs associated with it. Comparing 2000 with 20081, occupancy costs have risen from £150 to £200 per square metre – an increase of a third on a steady rate of increase. Operational costs have risen from £56 to £78 per square metre – again an increase of about a third. Utility costs have risen from £9.93 to £21.91 per square metre – an increase of 121 per cent.
   
At the same time we have seen a reduction in gross internal area in use of about 12 per cent, which means the fixed costs (services overheads) increase relative to the space in use. Going back even further in time shows a more significant reduction in space occupied as the surplus estate programme of the 1990s was effected.

FINDING WHERE SAVINGS CAN BE MADE
It is very interesting to see that Nigel Edwards, director of policy at the NHS Confederation, makes similar points in a very different context in its publication ‘Dealing with the downturn: using the evidence’2. In this he cites that a saving of £110,000 can be achieved by closing a four bed medical bay or £900,000 by closing a 24 bed ward but that these savings cannot be released (i.e. they are not real) until such closures are made on a large enough scale to release the containing building. We have made these points before but it requires a different approach to see where actual savings can be made.
   
Reducing the number of patients treated increases the cost per patient as the overhead cost increases. Reducing (or delaying) the replacement budgets result in lost opportunities for savings. There are some obvious savings that can be made but inevitably they require investment. CHP (combined heat and power) units that use waste to generate electricity for either internal consumption or export to the grid are an obvious one but should the NHS be involving itself in the development and management of such units? Wind power is another obvious source of green energy but can we really accept wind turbines of an appropriate size on hospital estates? It will be interesting to see how the green technology companies rise to this challenge. Perhaps we will see partnerships between such companies, NHS bodies and local authorities to address some of these issues with a share of the savings.
   
Looking at other issues in the facilities arena it is interesting to see that the cost of cleaning has increased from £19 to £28.50 over the period from 2000. The step up in cost per square metre matches the introduction of the NHS Cleaning Manual in 2005 when we had a definitive standard which could relatively easily be costed and proven. The consequential decrease in HCAI figures is something we must do our utmost to ensure we do not lose in the drive to reduce costs. Throwing the baby out with the bath water springs immediately to mind.
   
Backlog maintenance has long been an issue with the NHS estate and it is interesting to see a reduction of a third in this figure. Renewing the healthcare estate has obviously had an impact on this as PFI and LIFT schemes have seen new properties come on line to replace some of the old; but as we look again to a reduction in these programmes it is worrying to think that we might now see a steady rise in maintenance backlog as a result of cost savings drives.
   
Again following Nigel Edwards’ principle of ‘using the evidence’ we know that reducing maintenance regimes result in more breakdowns causing an increase in backlog and more importantly generating problems for our medical and nursing colleagues. Reducing the cleaning schedules will return us to days of the ‘dirty hospital’ that the media seemed so keen to report. Poorly maintained and/or cleaned buildings are less welcoming, more expensive to run and increase the risk of putting our patients and visitors in harms way.
   
Picking up on one point made in the ‘Dealing with the downturn’ document there is clearly room for what commerce calls ‘sweating the assets’. Whilst wards are in use 24/7 the majority of the remainder of a hospital estate is used for between six and ten hours per day. In pure business terms this is not efficient use of an expensive resource but to maximise the use of this element of the estate we would also have to radically change working practices and possibly patient patterns. The sort of question that could perhaps be asked is: “Could we reduce the size of out patients by running a 3 x 8 hour shift pattern?” Thus producing 100 per cent occupancy of the expensive resource. Whilst some patients visiting out patient clinics would be pleased not to have to take time off work the thought of a 03:00 appointment is definitely not appealing.     
   
Applying the same thinking to back office functions is perhaps more of a possibility with a reduction in office space by hot desking in rolling shift patterns. As always the only real way that such changes could be made to be really effective is by having them built into new build or major refurbishment such that we only occupy the space truly needed and not that which the current users have inherited from previous practice. But as noted before we can only release such savings if we can close and dispose of whole buildings so the real opportunities for savings come where we occupy relatively small stand alone buildings or rent office space off hospital sites. Of course the increased use of facilities will also result in increased maintenance and occupancy costs.

IDENTIFYING WASTEFUL PRACTICES
So where can the savings come from? Yes there is undoubtedly still room for more efficiency savings but this is more likely to come from innovative use of the space we already occupy rather than by not looking after it to the standards we have sought for years to build up. For me one of the most wasteful things I have seen in my now over 30 years in the healthcare sector has been re-organisation. We seem to have been forced into a culture of change for changes sake and the consequential rebranding that goes with it. I wonder how long before some bright spark suggests we disband the Primary Care Trusts and ask the GPs to manage the commissioning of healthcare services; after all they no longer have to see their patients within 48 hours.

1 Healthcare Facilities Consortium Benchmarking Club Trend Report 2009
2 “Dealing with the downturn: using the evidence” published by the NHS Confederation ISBN: 978-1-85947-184-5