As an accountant and a Scotsman I’m well aware of the stereotypes around being tight fisted and penny pinching. In fact, I’m quite proud to admit I fit in with that particular stereotype, although ‘proud’ is not the word my better half would use to describe me! However, in recent years it has become more socially acceptable to be frugal or thrifty. The economic situation over the last few years and an increase in environmental awareness around our own carbon footprint has increased the need to reduce waste and live within our means. This is evident with the rise in popularity of budget supermarkets, Martin Lewis, extreme couponing and the ‘bag for life’, to name but a few.
So what’s this got to do with the health board? I wanted to talk about waste and CRES or Cash Releasing Efficiency Savings and how the responsibility sits with everyone employed by the board and how it’s not really a million miles away from what we do every day at home.
Financially managing a health board is similar in some respects to financially managing your household. We all have to manage our household bills and outgoings to live within our income budget. If your outgoings are more than your income then you have a problem, one of the solutions being to reduce your expenditure.
In terms of the health board, in the current financial year we received a 2.7% uplift in our annual budget allocation, the equivalent to about £7 million. At the same time our expenditure has increased by £14 million (made up of incremental uplifts, pay awards, 7% drugs inflation, general inflation, etc). In order to balance the books we need to save £7 million which we look to achieve through CRES. Although the responsibility for formulating the CRES plans sits primarily with the General Managers, everyone, as an employee of the NHS, has the responsibility to use resources efficiently and to avoid waste.
There are a number of concepts and theories around waste and lean working, the majority of which originate from the Toyota Production System and relate mostly to manufacturing. However one of these concepts can be applied to the healthcare environment and even your own household. This concept is known in Japan as muda (無駄) which is a term for anything that is wasteful and doesn’t add value and if you’ve ever heard Jason Leitch (Clinical Director of The Quality Unit, Scottish Government) talk about finance then you may be familiar with the notion.
Jason does however warn that once you’re aware of the 6 concepts of muda you will start seeing waste everywhere. This may lead to you become as annoying around the house as I am. The 6 categories of muda are:
- Delay – idle time spent waiting for something such as appointments, test results, reviews, spare beds, late starts to theatre or clinics or even meetings that go on longer than they should. Under utilisation of clinic spaces so delaying time for appointments. How often do you wait around picking your kids up from their various after school clubs and hobbies?
- Re-work – performing the same task a second time, re-sending, re-scheduling, late cancellation of clinics or theatres, repeating questions, multiple bed moves, performing multiple diagnostic tests. Re-laundering clean towels or linen. Or cleaning the kitchen floor at home only for the dog to run through with muddy paws
- Over-production or Over-service – manufacturing of products or information that is not needed, such as precautionary “defensive” medical tests, “routine” blood tests taken without considering clinical value, inappropriate imaging which then leads to findings of clinically insignificant features, leading to further imaging… surplus medications, excessive levels of paperwork. For example, at home – your subscription TV package, how many channels do you actually watch?
- Movement – the unnecessary transport of people, products or information, such as requiring patients to see a primary care provider before seeing a specialist who is clearly needed. Asking patients to attend their GP for investigations, results, prescriptions when these can be arranged while the patient is in secondary care. The unnecessary movement of patients between wards. Requesting patients to attend a hospital clinic when a phone call or letter would provide the same information. At home – driving the kids to school after they’ve miss the bus.
- Defects – design of goods that do not meet customer needs such as medication errors, wrong side surgery, laboratory labelling errors and clinical errors.
- Waste of Talent, Spirit and Skill – failure to address the many hassles in everyday life, hunting and gathering, re-calling, the same things every day. Making decisions without the involvement of the whole front-line team so missing valuable contributions. People disengaging due to lack of feeling valued and appreciated. I’m sure we can all relate to this at some point.
As you can see, waste is everywhere. The real challenge is highlighting it and coming up with a solution to tackle it. One of the most prominent messages I’ve came across as a regular reader of the blog is ‘the standard you walk past is the standard you accept’. This is an incredibly powerful comment particularly in context with patient safety and quality but the same also applies to waste and protecting the valuable resources we are so privileged to have access to.
The CRES challenge is huge but if we can all remove some of the waste from our day it can soon add up to a realisable tangible benefit. For example, it only costs the board £0.43 to launder an item such as a towel or a pillow case but we launder nearly 2 million items per year at a total cost of nearly £800,000. Even something as small as segregating waste properly has an impact. The disposal of clinical waste costs £400 per tonne compared to £100-£200 per tonne for normal waste – last year it cost £216,000. It is estimated that around 50% of waste is subject to incorrect segregation. Assuming we could divert even 20% of our clinical waste into black bag stream domestic waste, we would save around £30,000 per year.
So as the old thrift saying goes, look after the pennies and the pounds will look after themselves. On that note I’m off home to turn down the thermostat.
Ross McGarva is a Management Accountant at NHS Dumfries and Galloway