ISC Medical Blog

In an era when the NHS is asked to demonstrate austerity, there is an array of questions asked at consultant interviews on the topic of cost reductions, of the type:

1. How can we maintain quality of care whilst cutting costs at the same time?
2. If I told you that we needed to cut costs in your department by 15%, where would you find the cost savings?

In giving answers to such questions, the majority of candidates are having trouble distinguishing between cost savings and cost efficiency. Some then picked on by interviewers or get feedback that they had a poor graps of basic business concepts. I thought it would be useful to deal with this topic in an article in an attempt to remove any ambiguities.

Cost efficiency means that for a given cost, you are making the best use of the resources available. So for example, if a nurse costs the department £35,000 p.a. then she is cost efficient by being made to see as many patients as possible. In other words, you are getting the most out of the cost.

Cost cutting however refers to the fact that the cost of employing the nurse in the first place would be lowered. In other words, this would involve demoting her to a lower salary (tricky!) or making her redundant (tricky too, but far more feasible). 

Note that when you are making the nurse see more patients, you are actually cutting the cost of dealing with one patient (since her salary is spread over more patients than before but you are not cutting the cost of her employment.

When you get questions on cost-cuttings, they refer to cutting the overall cost and not the cost per patient. Overall, there are many ways in which costs can be cut in an NHS environment, which would include:

1. Making staff redundant (salaries are the biggest expense).
2. Using cheaper drugs (drugs are the second largest expense).
3. Moving to day-case surgery, thus enabling a cut in the number of ITU beds, lowering the number of infections and readmissions (thus enabling redundancy of staff)
4. Using cheaper staff to carry out tasks (e.g. replacing doctors by nurses, consultants by senior staff grades.
5. Using permanent staff instead of locums
6. Replacing one consultant by increased PAs for the other consultants in the team (the total cost to a Trust of paying 8 consultants £10,000 more is lower than paying one consultants £80,000)
7. Encouraging follow-ups to be done by GPs (thus enabling redundancy of staff)

So for example, in anaesthesia, implementing pre-operative assessment clinics would lower the number of cancellations because patients would be better assessed and any risks identified. This would result in a fuller utilisation of the resources available and therefore greater efficiency, but not in cost savings because the trust would have to pay the salaries, theatre time, etc just the same.

Hope this helps! Good luck to everyone!