Almost every cost improvement programme we are asked to look at has the same shape.
Year one lands close to target. Year two slips. By year three the plan has been quietly
rebased and the gap has moved into next year’s problem.
The instinct is to blame delivery discipline. In our experience that is usually the
wrong diagnosis. The programme did not fail to execute. It ran out of the type of
saving it knew how to execute.
Two different kinds of saving
Year one savings are transactional. Renegotiate a contract, tighten a rota, switch a
consumable, stop paying for something the organisation no longer uses. These are
genuinely valuable and they have three properties that make them easy to bank: the
benefit is visible in a single budget line, one identifiable person can authorise it,
and no clinical pathway has to change.
Year two savings are structural. Redesign a pathway, consolidate a service, change
where and how care is delivered. These have the opposite properties. The benefit is
spread across several budgets, no single person can authorise it, and clinical practice
has to change for the money to appear.
A programme resourced for the first kind will deliver the first kind, and then stop.
Not because anyone gave up, but because the remaining opportunities need a capability
the programme was never given.
What this looks like in practice
When we led CIP diagnostics and planning for Royal Devon and Exeter NHS Trust, the
gap on the table was around seven million pounds. The transactional layer did not get
close to it. Reaching the number meant identifying and validating fourteen further
projects, most of them cutting across service boundaries, and then doing the slower work
of building stakeholder agreement behind each one.
The renal service redesign at North Cumbria is the same story at a smaller scale. The
plan was worth two and a half million pounds over three years. None of that came from
procurement. It came from a detailed current state analysis, a lean future state design,
and the removal of duplicated testing that no individual budget holder had visibility of,
because the waste was distributed across several of them.
Three things that separate programmes that keep going
Diagnostics that reach the clinical drivers
A finance-led diagnostic tells you where cost sits. It does not tell you why. The
questions that unlock structural savings are clinical: why does this pathway generate
this activity, which decisions drive the variation, and what would have to be true for
the decision to be made differently. If the diagnostic never reaches those questions,
the programme’s pipeline will only ever contain transactional ideas.
Clinical engagement before the number is public
Once a saving has been announced, engagement becomes negotiation. Clinicians are
being asked to agree to something already committed on their behalf, and the honest
answer to any question about feasibility has become politically expensive. Engaging
during diagnosis rather than after it costs more time up front and saves a year of
resistance later.
A pipeline built ahead of the year it is needed
Structural savings take twelve to eighteen months from identification to recurrent
delivery. If year two’s schemes are being identified in year two, they will not deliver
in year two. The programmes that hold their trajectory are working on the year three
pipeline while banking year one.
The uncomfortable implication
If your plan is heavily weighted towards non-recurrent and transactional schemes,
the second year problem is already baked in, whatever the current year’s reporting says.
That is worth knowing early, because the window to do something about it is now rather
than at the point the variance appears.
The organisations that break the pattern tend to be the ones that stopped treating
CIP as a finance exercise with clinical consultation attached, and started treating it
as a clinical change programme with a financial target. It is a slower start and a
steadier finish.