by Sarah Rollason | 23 November 2016
Prederi was personally commissioned by the MD of NHS Hertfordshire CSU to be acting Finance Director and deliver a full output based review of the entire CSU service which assessed the true drivers of cost, the actual unit activity cost and the profit and loss making customers. To then use this information to help them better run their business.
NHS Hertfordshire Integrated CSU wanted to assess all their outputs and activities to see how much each cost in total including overheads, what drove those costs and who the customers are and how profitable is each one. The major part of this was to understand the IT costs by output and activity.
A team of Prederi costing experts delivered a full output based review of the entire CSU service and through workshops assessed the true drivers of cost, the actual unit activity cost and the profit and loss making customers.
Prederi delivered the following support throughout the project:
Our solution also gave a new view of the financial relationship with customers by looking at whether each provided net revenue or net cost to the CSU. This was possible through the detailed review of all costs and activities and to truly understand how those costs varied with time, volume and cost driver. It enabled the customer to fully understand the cost base of the contract.
In the IT business we were able to better allocate the overheads to where they were meant to lie. This meant that it was possible to ascertain what was the fair value of an output like the man-day. An understanding of how to divide overheads into fixed and variable, direct and indirect was essential to showing how our model was both fair and valid.
It enabled business managers to understand what drove the activity volume and related costs for the first time. This led to a different view of how to best run their business. It also allowed management to review relative performance between similar geographical areas by proper evidence based benchmarking.
A model that facilitated bidding for new work and re-assessing current contracts with NHS Trusts and GPS which enabled the organisation to better run the organisation as a commercial business.