Clearly articulating your service's value, impact and contribution to productivity is vital to gaining support from stakeholders.
It also creates a platform for successful discussions and negotiations.
Understanding the costs of your service and the different elements within it will show its value and efficiency. It will also help you gain stakeholder support for any proposed service improvement.
This information will help you and your finance support identify the viability of your service and any proposed development. It helps you highlight what cost savings you can make to your local healthcare provision.
You can download Calculating the cost of your service from the bottom of this page for a step by step guide to calculating the cost. The following points are important to consider when you embark on any cost analysis.
Accurate costing requires an in-depth knowledge of your service. In a small service this exercise would best be undertaken for the entire service. In a larger organisation divide the service into areas which best reflect the structure of the service.
Collect your data
In order to cost the service, it will be necessary to collect detailed staff activity data. Download activity analysis guidance for help with this.
Engage your finance team
Contact your finance team or business manager responsible for the service before starting the costing process. They will be able to provide accurate budget figures and expertise with costing services.
Finance will be able to explain and provide accurate capital and corporate costing figures as well as any income generated by the service, e.g. private patients, unbundled tariff etc.
Some services may need specialist coding advice. If this is the case, you need to engage with your clinical coding team.
Engage your IT team
Does your service uses an electronic system to record and collect data and activity? If so, you may be able to use it for the costing exercise. It’s useful to engage the expertise of your IT team here.
Engage your wider stakeholders
To help your stakeholders engage with the costing process, you need to develop a communication plan that includes them. This will help them understand why the exercise is taking place and where they can assist in the process.
Engage your staff
Staff are an intrinsic part of this exercise and should
- be encouraged to engage in the process,
- be clear and realistic about the data they provide,
- understand why information is required and how it will be used.
Staff should be reassured that the activity analysis will not be used as a performance tool.
Engage your commissioners, contract managers and planners
You must establish the baseline activity your service is currently contracted to deliver. This information is best obtained from the contract managers or commissioners. It will be helpful as a starting point for future negotiations.
The type of information you should find out is:
- What type of contract is in place for all services which are provided? Commonly this is via a ‘block’ contract or by a cost per case model.
- What is the source of the money entering the budget; eg. from a public health project, waiting list initiative?
- Are services provided under the terms of a service level agreement (SLA)?
- What patient or numerical outcomes are the service required to deliver?
- What are the key performance indicators (KPIs) for the service?
- Are patient reported outcome measures (PROMs) or patient reported experience measures (PREMs) a requirement of the contract?
Once you have accurate data and understand the cost of your service, it will be possible to use this data in conjunction with activity and outcome data to review your service. It will highlight where you need to take action to reduce costs, increase productivity, and help make the case for change.