Running costs


Ten ways to reduce costs in a post-Covid world


Drawing on a career of 25 years in procurement, Christoph Marr, managing director of health and social care procurement specialist Marr Procurement, outlines ten ways to reduce care home costs


It is often said that businesses fail on the way out of a crisis and this may well be the case following the Covid-19 pandemic, not least because of the removal of furlough payments, the Infection Control Fund and a range of business grants. We therefore anticipate a tough 2022 for UK PLC and in particular for the health and care sector. Under increasing financial pressure


from reduced income and increased operating costs, and without clear, long- term support plans from the government, never before has there been such a need for care homes to reduce and control operating costs. The role of procurement or purchasing


is sometimes seen as transactional, a means to an end or a necessary compliance – especially in the care sector where the focus, quite rightly, is usually on care and operations first. Yet procurement, delivered professionally, is a fundamentally important and strategic tool for any health and care provider. The key aim of many procurement


programmes is to drive down operating costs without impacting quality while reducing business risk and improving supplier performance. An added bonus while achieving these aims, is to collaborate internally, building relationships and trust by delivering great outcomes for the business. The good news is that after 18 months


Figure 1. Saving levers


of fighting fires, managing PPE inflation and supply chain disruption, many procurement managers now have a seat at the boardroom table and/or now have a greater influence on cost control than ever before. So, if you have responsibility for


procurement (strategic) or purchasing (tactical) in your organisation and you are struggling to identify and realise real savings, Figure 1 shows ten levers to help you consider how you can quickly take cost out of your business without impacting crucial quality of services.


1. Review all operating costs The first thing you must do - if you have not done so already - is to extract and review all operating spend data from the last 12 months including employee and third-party costs; for the latter, using a


After 18 months of fighting fires, managing PPE inflation and supply chain disruption, many procurement managers now have a seat at the boardroom table and/or now have a greater influence on cost control than ever before


October 2021 • www.thecarehomeenvironment.com


24-month period is preferable. Typically, the two biggest expenditures


for care providers are people and property. Working openly with HR, finance and operations stakeholders from the outset, in such a way to win hearts and minds, is fundamentally important. For instance, this could mean cost- modelling your employee salary, employer national insurance, pension costs or hourly rate against your revenue and assessing performance against industry norms. Alternatively, assess the ‘make versus buy’ - what can you manage yourselves or outsource to preserve cash. This also means reviewing your


property portfolio for opportunities to reduce or release fixed monthly costs. Many organisations and employees now opt for flexible office options and working patterns. Looking back over the previous


24 months of spend is key but so is considering future expenditure profiles. As an example, Marr clients spend £353m a year on temporary agency staffing and the volume of hours consumed during Covid fell by 43 per cent - making it currently seem less of a priority to tackle. However, we are now seeing agency spend rising again. Tackling such a key area of spend now is vitally important - do not wait. Even organisations that


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