NHS Confederation: shared services could save millions

Led by Tony Spotswood, chief executive of Royal Bournemouth and Christchurch Hospitals foundation trust, the review looked at ways of streamlining functions including information management and technology, finance, human resources, procurement and payroll. Spotswood's report ( PDF ), aimed at chairs and chief executives of both commissioner and provider organisations in the NHS, concludes that maximum efficiency would come through sharing services in most cases. The report says there is substantial scope for cost efficiency savings through greater standardisation of processes and the wider deployment of technology, even within existing shared services. IT currently accounts for 38% of NHS shared services in England, for 21% of finance departments and 9% of payroll. One characteristic of shared service arrangements within the NHS, identified by the review, is the development of shared technology platforms. The North East Patches Shared System Group was established in 2001 after organisations saw a clear advantage in setting up systems to eliminate unnecessary processes, using technology and aggregated information to achieve procurement savings. The document says that organisations often think they must implement a standard technology platform and common processes before moving to the shared service. But in practice, the common platform can be significantly delayed and it is not unusual to find a shared service running four or five systems. The labour cost reduction and productivity gains can be invested in the technology, says the report. The report says that once the processes are under the control of the shared service, it can become less difficult to standardise these processes. It says that primary care trusts (PCTs) have the greatest potential for savings, with back office costs accounting for some 9% of their total spending. This compares with average back office costs of 3% in the acute sector and 4.6% in mental health trusts. The report points to another review, led by NHS deputy chief executive David Flory, which is evaluating the potential for PCT back office functions to be provided on a national or regional basis. This is likely to lead to a substantial reduction in total spending and unit costs, by taking advantage of scale and automated process redesign. Jim Easton, the national director for improvement and efficiency at the Department of Health, says in a forward to the report: "The headline savings are a conservative estimate and further opportunities exist through the transformation of middle and front office functions. "As GP consortia are established they will need to consider how to come together to provide shared back office services effectively. I am sure all boards will now act quickly to drive forward the recommendations detailed in this report."