Estimating the financial savings from maintaining the level of acute services with fewer hospital beds

All district health authorities are obliged to use resources most efficiently. One approach to increasing efficiency is to identify measures which allow service levels, in terms of patients treated and standards of care, to be maintained at a lower cost. This could be achieved by maintaining service levels with fewer hospital beds. Reducing lengths of stay by removing organizational delays and expansions of day-case care, are policies which can increase patient caseload per bed. This paper puts forward an approach for estimating the resources released by such policies and assesses the savings achieved by realizing efficiency gains identified in a previous study by Beech et al. (1987). That study identified significant potential for maintaining services with fewer beds, with the expansion of day-case care being a key mechanism. However this paper concludes that when services are maintained with fewer beds, the vast majority of hospital costs remain fixed. It also reaches the alarming conclusion that as a vehicle for reducing costs, day-case care is much less effective than previous studies have implied. However, increasing hospital throughput per bed does release capacity to treat more patients. The proposed reforms of the NHS (Secretaries of State, 1989) envisage an internal market for health care, allowing hospitals to enter into contracts with purchasers of health care. The approach to costing described in this paper is applicable to assessing the increased costs associated with such developments. These extra costs can then be compared with expected income.