Healthcare quality and efficiency support team: annual report 2013

Organising for Quality and Efficiency

NHS Education for Scotland: Activity Based Costing and Benefits Realisation

Background/Context

NHS Education for Scotland (NES) has undertaken activity based costing reviews across the whole organisation to seek areas for improvement and efficiencies. All eight directorates have received an activity based costing report outlining recommendations for improvements.

Problem

NES has had to deliver significant cash releasing efficiencies over the last three years and it has therefore been increasingly important for directorates to understand how their activities consume resources. This allows directorates to make assessments around whether the correct level of resource is being applied to support various aspects of their business. The activity based costing reports have indicated several consistent themes:

• duplication of effort
• standardisation of approach
• resources available
• technology advancement
• opportunity for integration as areas that directorates and NES should concentrate on as part of their improvement plan

Aim

The aim is to identify improvement opportunities, including benefits realisation plans, within each directorate and areas where collaboration and integration will be most effective.

Action Taken

NES has used activity based costing methodology as an initial approach to identify directorate activities (tasks) and associated resource costs. From these reports, each directorate has produced a benefits realisation and improvement plan. NES monitors progress being made and the realisation of benefits through its organisational performance improvement programme.

Results

The activity based costing reviews have enabled benchmarking and comparison of resource to outputs that have enabled areas for savings to be identified that would not otherwise have been possible.

Efficiency Savings and Productive Gains

• Directorates have categorised their benefits realisation in the following ways:
• Cash releasing - this has been achieved through organisational change responding to the recommendations particularly around duplication and standardisation of business processes. As a consequence some NES staff have taken the opportunity to apply for voluntary severance and directorates supported this through organisational change and redesign. Around £750,000 was released as a result of this process. In addition, £44,000 has been realised across NES as part of directorate improvement plans.
• Quality improvement - several Lean events have taken place during 2012-13 and introduced streamlined business processes, removing waste and improving efficiency.
• Productive gain - NES has been able to take on additional work without additional resources, using the capacity created from the activity based costing reviews.

Sustainability

NES has put in place a small organisational performance improvement team with the responsibility of providing an overview of all directorate improvement/benefit plans. The team work closely with all directorates providing improvement support, facilitation and monitoring of milestones within the plans. The NES Organisational Performance Improvement Board meets every eight weeks to review the plans and shares best practice/deliverables. This Board is chaired by the Deputy Chief Executive and has representatives from all directorates as the nominated 'improvement lead', the Employee Director, Deputy Head of Human Resources and Head of Organisational Development.

Lessons Learned

Having a team responsible for oversight of all performance improvement activity across the organisation ensures that directorates respond to the recommendations in the activity based costing reports. Close partnership working is crucial along with human resources and organisational development support. Developing, and delivering, clear benefits plans has been the most challenging aspect for directorates.