Unlocking Cost Efficiencies in NHS Corporate Services: An Operating Model Approach

The NHS is facing significant financial challenges, following real terms growth of just under 3% between 2019 and 2024, below the 3.4% that was promised and the historic rate on which growth had been based*.  Many Trusts are struggling to meet ambitious financial plans for the year, as well as set themselves up for success in subsequent years. This means many organisations still have a large value of additional savings to find, in year and recurrently.

Trusts have already made significant strides in identifying efficiencies, but finding additional savings is increasingly difficult. Protecting front-line patient care is crucial, so efforts often focus on maximising savings within Corporate services.

Commonly corporate services have grown organically over time to meet short-term challenges rather than serve a strategic purpose, a trend intensified by the pandemic, and leading to an NHS-wide 15%** increase in the corporate services workforce between 2020 and 2023. In addition, these services have often been consolidated in some way previously, but are rarely fully integrated with different legacy ways of working and processes still unaddressed. The cumulative effect of organic growth and/or incomplete integration leads to misaligned ways of working, skill disparities and duplicated effort across teams. This presents a significant efficiency opportunity.

The urgency for immediate savings often leads to arbitrary posts reductions or blanket recruitment freezes, risking the loss of critical skills and capacity and jeopardising the effective function of the frontline clinical services Trusts are looking to protect. Taking an operating model approach to efficiency within corporate services helps Trusts retain essential capabilities while aligning changes with their strategic goals.

An operating model approach defines the vision, strategy, and objectives for services, aligning with Trust-wide goals. It identifies necessary functions, skills, and working methods to deliver these objectives. This helps pinpoint low-priority or redundant areas of functionality, creating cost efficiency in line with strategic aims. Opportunities range from quick efficiency gains to medium and long-term changes, benefiting Trusts both in year and in subsequent financial years. An operating model approach also involves greater co-design and engagement from delivery teams and service users than other cost improvement approaches, making changes more sustainable.

There’s no one-size-fits-all, as opportunities differ based on each Trust’s context and cost improvement journey. Yet, several themes have emerged among the multiple Trusts we’ve worked with in taking this approach within corporate services:

1. De-prioritisation of activity not strategically aligned: Re-profiling resource to focus on projects, processes and functions aligned to the Trust and system’s strategic aims, enabling a reduction or cessation of activity where this is not the case.
2. Consolidation to reduce duplication: Identifying duplicated efforts within or between functions, allowing teams to work more efficiently, such as centralising transformation resources.
3. Adopting new or adjusted working models: Adjusting how teams operate to achieve cost efficiencies, often modernising services and leveraging new technologies such as Artificial Intelligence and Robotic Process Automation to support productivity and efficiency.

To make sure this approach works, there are three crucial success factors. These help to ensure that the right opportunities are identified, teams within the Trust understand and support changes and that the opportunities are fully realised in the current year and beyond:

1. Staff involvement is crucial

 Staff input and experience should be at the heart of the process so that change is co-created, resulting in better solutions and a more positive experience for staff. This can be achieved by using a thorough and comprehensive staff engagement approach and by genuinely committing to co-design.

2. Allowing room for innovation

 Simple efficiencies have usually been identified, making it necessary to be increasingly innovative to identify new ways of working. In addition, solutions in the future are increasingly likely to involve a multi-organisation or system response to create shared corporate service models, which brings added complexity. It is important to create the space for innovative and forward-thinking ideas so that staff can envision and describe how corporate services should evolve to operate differently than before.

3. Data-driven teams and use of benchmarking

 Use of benchmarking and data to provide comparison and insights across other organisations’ corporate services brings evidence to accelerate planning and decision-making, alongside stakeholder insight. This ensures that changes are well-informed, solutions are suitable, and staff concentrate on areas with the greatest potential.

Learn more about our work in organisational transformation here.