Established practice
Your costs are rising every quarter and your margin has nowhere left to go
Energy, agency staff, supplies, and insurance have all increased sharply. Most independent hospitals absorb these rises rather than renegotiate, and steady annual cost increases with flat revenue can erode operating margin dramatically over time.
- steps
- 8
- steps
- to start
- 1 to 2 weeks
- to start
The short answer
When costs rise faster than revenue, the answer is rarely one big cut. Build a 12-month cost baseline, then work through the few categories that drive most of it: workforce and agency, consumables and procedure packs, energy, and supplier contracts. At the same time, check that your prices and insurer tariffs have kept pace.
8 steps
Do it yourself: step by step
0 of 8 done
Group the last 12 months of spend by category (substantive staff, agency, consumables, drugs, energy, facilities, IT, insurance, professional fees) and compare with the previous year and with revenue growth
- Time
- 1 to 2 weeks
- Typical cost
- £0
- Who does it
- Finance lead
Done when: You can show which categories grew faster than revenue
This problem is Solvable.
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Cost base review workbook
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Cost base review workbook
1. Cost baseline
| Category | Last year | This year | Change % | Revenue change % | Gap | Owner | Priority (high, medium, low) |
|---|---|---|---|---|---|---|---|
| Substantive staff | £[x] | £[x] | [x]% | [x]% | [x] pts | [name] | |
| Agency and bank | |||||||
| Consumables and implants | |||||||
| Drugs | |||||||
| Energy | |||||||
| Facilities and maintenance | |||||||
| IT and software | |||||||
| Insurance | |||||||
| Professional fees | |||||||
| Total |
2. Top 20 supplier register
| Supplier | Category | Annual value | Contract end | Notice period | Price review clause | Owner | Action and date |
|---|---|---|---|---|---|---|---|
| [supplier] | [ ] | £[x] | [date] | [x months] | [ ] | [name] | [ ] |
3. Cost per case, top procedures
| Procedure | Cases a year | Consumables per case | Theatre minutes | Staff cost per case | Total cost per case | Tariff or price | Margin |
|---|---|---|---|---|---|---|---|
| [procedure] | [x] | £[x] | [x] | £[x] | £[x] | £[x] | £[x] |
4. Savings tracker
| Action | Category | Expected annual saving | Agreed saving | Date agreed | Owner |
|---|---|---|---|---|---|
| [action] | [ ] | £[x] | £[x] | [date] | [name] |
Avoid these
Common mistakes
- Cutting across the board instead of targeting the categories that grew fastest.
- Letting supplier contracts auto-renew because nobody tracks end dates.
- Changing consumables without involving the consultants who use them.
- Cutting staff in ways that increase agency spend.
- Working only on costs while prices and insurer tariffs stay unreviewed.
Free personal check
Done by Paul Robinson, not software
Give me three numbers and I'll show you where your cost growth is coming from
What I need from you
- Revenue growth over the last 12 months (%)
- Cost growth over the same period (%)
- Your largest cost category after pay
What you get
- The size of the gap and what it costs per year
- Which categories usually drive it in hospitals your size
- The three areas to work on first
Within 2 working days
No sign-in, no sales call. I read every request myself and reply on WhatsApp.
Free tools
Check where you stand
Benchmarks
Total UK healthcare expenditure rose 6.5% in nominal terms and 2.4% in real terms between 2023 and 2024
Healthcare costs are rising faster than general inflation
Insured admissions fell 2.6% in Q1 2026 compared with Q1 2025, the first Q1 fall in five years
Insured revenue growth cannot be relied on to absorb cost increases
A hospital with £20 million of costs that removes 2% to 4% through contracts, packs and agency control saves about £400,000 to £800,000 a year
Illustrates the scale of a structured review
Solvable estimate
Paul Robinson
14 years in UK private healthcare
I solve this one for hospitals
Want a hand? I'll look at your situation and tell you the three things I'd tackle first.
A few quick questions, about two minutes. I read every one myself and usually reply the same day.
No sales call unless you ask for one. Just a straight answer from me.
I reply personally, usually the same day.
Questions
Frequently asked questions
Where should we start?
The two or three categories that grew fastest against revenue. Often that is workforce, consumables and energy.
Will consultants accept standard packs?
They are more likely to if they are involved, see the cost data and keep clinical choice where it matters. Start with the highest-volume procedure.
Should we use a procurement consultant?
Worth it for large or complex contracts. Check whether they charge a fee or a share of savings and how savings are measured.
How quickly will we see savings?
Contracts save when they renew, so the supplier register sets the pace. Agency and consumables can move within a few months.
Should we raise prices instead?
Do both. Check self-pay prices and prepare insurer renewal evidence alongside the cost work.
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