Value-for-Money?

We all say we want good value for money from the NHS but what does that mean?

Q1: What do patients value?

Q2: How much public money is consumed by the NHS providing what patients value?

The first question is easier to answer because we are all patients at some time or other. What I value, as a patient, is accurate and complete information that I can use to understand my condition, what the management options are, and what the expected outcomes should be. I need to know this so I can make an informed decision.

What I need and value is a diagnosis, a plan, and a prognosis.

How much money is consumed by the NHS in providing that value is a tricker question to answer. So, to illustrate that I will use a clinical service that I am very familiar with: A hernia service.

A hernia is a condition where an internal part of the body pushes through a weak spot or opening in a surrounding tissue that is meant to hold it in place.

A common type of hernia is one that pushes through the muscles of the abdominal wall, and this sort of hernia can cause severe pain and sometimes even life-threatening complications. So, diagnosing and treating these common hernias is a valued service that the NHS provides.

The commonest hernias are usually quite easy to diagnose. They are lumps that appear in the groin or near the tummy button on standing and coughing or straining, and that go away when lying down and relaxing.

Treating a hernia usually requires an operation, so referral to a surgeon who is experienced in doing these operations is a required step in the care pathway. What the surgeon does first is to confirm the diagnosis, outline the options for treatment together with benefits and risks, and then perform the operation. These are all value-adding steps from the patients perspective.

The time taken for a consultant surgeon to provide this value is easy to estimate. For example, an outpatient consultation to confirm the diagnosis and agree a treatment plan takes about 15 minutes. The operation itself takes about 45 minutes, so that is one hour in total of value-adding work.

So, what does 15 minutes of consultant general surgeon time cost the NHS?

Here’s where an AI-bot can help (p.s. AI = Assisted Investigation). When I asked that question it returned an estimate of about £20 together with a detailed explaination of how that cost was derived. As a tax-payer that sounds like pretty good value for money.

The next question I asked my AI-bot was “How much money does the Treasury (i.e. the UK taxpayer) pay to an NHS service provider to deliver a consultant-led new outpatient appointment?” The answer was £173.

So, if it costs the NHS provider £20 for the consultant surgeon’s time to deliver the diagnosis-and-plan that a patient needs and wants, and the NHS provider is paid £173 for that service, then what is the other £153 needed for?

Finance experts will say “overheads”.

Lean experts will say “non value-adding work”.

So, what is “non value-adding work?”

It turns out there are two sorts: Required and Not required.

Required non value-adding work is necessary to deliver the value-adding work, such as booking a patient into clinic, providing the space for the clinic, employing the reception staff, outpatient nursing staff, and so on.

Not required non value-adding work is not necessary but it happens because things do not always happen right first time. Errors, mistakes and slips generate failures and extra work to avoid, detect and fix. This failure work is expensive, and often very expensive. And that extra work incurs extra cost which gets boiled into the total price.

So, now we know what else contributes to the cost … we are left with a question.

How much of the £153 for every new consultant-led hernia clinic outpatient appointment is spent on non-value-adding-not-required work?

That is a £64,000,000 question. Literally, because that is about the cost to the NHS every year to provide appointments just for patients referred with suspected hernias.

Quality is Free

is the title of a book that was published in 1979 and described decades of experience of delivering improvements in a global telecommunications company called International Telephone and Telegraph (ITT). The author was Philip B. Crosby and the premise of the book is that to improve profitability, the organisation needed to focus on quality, and a very specific component of quality: Defects.

The goal is Zero Defects.

The rationale is simple. Defects impair quality and create extra work; and extra work requires resources to do; and resources require cash to provide; and spending extra cash to address defects reduces profits. So, to improve profits we must focus on reducing defects.

So, if this was known 50 years ago, why isn’t Zero Defects the primary focus of all quality inprovement programmes?

The issue appears to be the definition of quality.

It is worth asking a Quality Improvement Practitioner what they mean by “quality” and the usual answer is along the lines of Dimensions of Quality such as:

Perceived quality – reputation or brand perception. Performance – does it do what it’s supposed to do? Reliability – does it do it consistently over time? Durability – how long does it last? Compliance – does it meet required standards? Features – what extras does it have? Serviceability – how easy is it to maintain or repair? Aesthetics – how does it look, feel, or sound?

A typical example of this are the dimensions of quality promoted by organisations such as the Institute of Healthcare Improvement (IHI) which uses the following six dimensions as the foundation for defining and measuring quality improvement (QI):

Safe – avoiding harm to patients from the care that is intended to help them.

Effective – providing services based on scientific knowledge to all who could benefit, and refraining from providing services to those not likely to benefit.

Patient-centered – providing care that is respectful of and responsive to individual patient preferences, needs, and values.

Timely – reducing waits and sometimes harmful delays for both those who receive and those who give care.

Efficient – avoiding waste, including waste of equipment, supplies, ideas, and energy.

Equitable – providing care that does not vary in quality because of personal characteristics such as gender, ethnicity, geographic location, or socioeconomic status.


This is all great but to get to the root causes of defects we need a more generic definition of quality. If we ask an AI bot that has been trained on the entire contents of the Internet (e.g. Chat GPT or Gemini) then we are offered this overarching definition:

Quality is “consistently meeting or exceeding customer needs and expectations.”

If we look into this generic definition of quality we see that the heart of it is “customer needs”. So, to define and measure the quality of any product, service or process we need to start with the customers and their needs. Which means we have to ask them, and from those conversations we can draw up a list of their requirements.

This list is then categorised into three parts – Must, Should and Could.

The Musts are essential requirements because if we omit any of them we will not achieve the outcomes our customers need. The Shoulds are desirable but not essential. The Coulds are possible and optional but are neither desired nor essential.

We focus on the Musts and we remind ourselves that these are outcomes. They do not tell us how we achieve them, but they will steer us to how we will measure them.

And this definition of quality gives us working definition of a defect. Any time we get an outcome that does not conform to an essential requirement then we have discovered a defect. And we already know that to improve value-for-money we need to detect and eliminate defects.

Our goal is Reduced Defects.
Our vision is Zero Defects.


But why bother?

It sounds like a lot of hard work. What is the potential upside?

This is where most people get a surprise that shocks them.

When we measure defects we find that the cost of defects is typically about 20% of the total costs and is often much more. So, for any organisation looking for financial viability and security, focussing on diagnosing and treating defects is a smart strategic decision.


What do we mean by the concept of “customer”?

The first answer that springs to mind is the ultimate recipient of our product or service – otherwise known as the external or end customer.

In the healthcare domain that is a patient. However, the process of delivering care usually has multiple steps and many people have to do many things to enable each step to work. Finance has to ensure enough money flows to where it is needed. Operations need to ensure tasks and resources are available when and where they are needed. Clinicians need to ensure their decisions are valid and their actions are effective. Informatics need to ensure the required data flows to where it is needed by Finance, Operations and Clinicians.

So, in addition to the external customer there are a multitude of internal customers and they too have needs, and they too will suffer the consequences of defects. So, eliminating defects from our internal processes is just as necessary.


But, how do we do that in practice?

One way to approach this is to consider the effect of a defect. It is usually a combination of disappointent, frustration, anxiety and some extra work for someone. This is called rework, because if the defect did not happen that extra work would not be needed.

The way to start is a simple self-reflective question.

Whenever anyone in any part of the organisation does some work they can ask themselves “Is this new work or rework?” The answer is often surprising. A lot of the work we do is rework. We are busy a lot of the time doing work that could be avoided if the new work was done right-first-time, i.e. defect free.

And when we interact with external customers, such as patients, we can ask them if their essential needs were met right-first-time? How many attempts did they make to get an appointment, or a diagnosis, or an explanation and possible treatment decision, or the treatment itself? And how long did they wait for each step?

And then we consider how much work was done, and how much cost was incurred by all the connected parts of the health care delivery organisation by not meeting the patients’ essential needs right-first-time. The answer is jaw dropping!

So, if the current problematic situation in health care is long waiting lists, overburdened staff, overspent budgets and a lot of unhappiness everywhere, then perhaps a focus on reducing defects makes a lot of sense.

But why?

Because every defect that we avoid will reduce workload, and that will eliminate the overburdening, and that will release staff time to reinvest in addressing the backlogs and reduce the waits. Quality improves, and Cost does not increase.

Quality is Free.


That sounds interesting, so where shall we focus first?

The best place to start are the defects whose causes fall inside our circle of control because the first beneficiary of eliminating those defects will be ourselves.

The next step is the defects that we unwittingly create and pass on to our customers – both internal and external. To find out if we are doing that we just need to ask our customers for feedback. What did they need and did we meet it?

Finally, we look at the defects we inherit as an internal customer from an upstream step in the process. These are the ones that most people complain about because (a) they are painfully aware of them and (b) they do not control the cause. That combination creates a lot of bad feeling. We can influence the cause, but only after we have learned how to eliminate the defects that we own.

It sounds simple because it is simple. It is not always easy though because we do not like facing up to our own failings, and we do not like stepping up to respectfully challenge those of others.

A mix of willingness, humility, curiosity, respect, perseverance and discipline is required and those are all positive traits that all of us can muster in ourselves and then encourage in others.

The prize is worth the effort. Everyone wins. And we win first.