News / Corporate spend could be cut by £400m, trusts told

The NHS could save more than £400m a year
on corporate services, including finance and payroll, if all trusts performed as well as the average, according to NHS Improvement.

In March, the oversight body sent each trust a bespoke analysis of their corporate costs. It found significant unwarranted variation in an overall spend of £3.2bn a year. 

The work follows on from last year’s Carter report, which found considerable variation in corporate and administration costs. There was some criticism at the time Carter was published that it made comparisons based only on pay costs, ignoring where organisations had outsourced service provision. But the NHS Improvement analysis, based on a targeted collection, includes both pay and non-pay spending.

NHS Improvement said the top 10% of trusts that spent the most on corporate services had an average spend of £7.50 per £100 of funding for patient care. But, at the other end of the scale, corporate services cost the 10% of lowest spenders an average of £2.80 per £100 of patient care funding.

The analysis was based on returns from nearly all trusts (230 out of 236). Small trusts spent proportionally more – those with a turnover of less than £300m spent the equivalent of £5.40 per £100, while those with more than £300m turnover spent £3.90. 

Looking at specific examples, NHS Improvement said the average cost of producing a payslip was £4.28, but for some it was more than £5 and in outliers almost £10.

Overall, if all trusts achieved the national average, the NHS would save £422m a year.

Jeremy Marlow (above right), NHS Improvement’s executive director for operational productivity, said: ‘The closer you look at the NHS the more you see variation in what things cost and the knock on effect this can have on hospitals and patients is huge.

‘We want to support trusts to have high-quality, efficient corporate services they can rely on and we are asking them to work together to become more efficient, so that the NHS as a whole can benefit.’

Individual reports on corporate services costs were sent to providers. But the data will be available on NHS Improvement’s Model Hospital in the near future. After a year in prototype form, the Model Hospital, which brings together wide ranging metrics on provider performance, has now been formally released.

For more details on the Model Hospital, see Leading by example