What is leaked capacity? Leaked capacity is lost activity, the activity that your department should have delivered but didn't. It is the discrepancy between job planned activity and the activity that is actually delivered. But do you know how much capacity your department is leaking and what this is costing your department?
The first task is to identify the mismatch between your job planned activity and your actual delivered activity. Let's say your department's budget includes 100 PAs of clinical activity agreed during the last round of job planning. During the first quater, you would expect these PAs to deliver 4,200 hours of activity.
You collect your department's actual activity and calculate that only 2,940 hours were actually delievered during the quarter, only a 70% match between job planned and actual activity.
Because of this 30% "leak" in job planned capacity, either the waiting list will grow or the department will have had to purchase additional activity through outsourcers or WLI payments. In our case, lets assume that our department replaced all of its lost hours of activity with WLI payments. How much has this leaked activity cost?
Every department can calculate their own cost of mismatch gradient to identify the cost of any level of leaked activity. This gradient can be calculated for any period using two measures, the total number of job planned hours of an activity and the cost in WLI's of 1 hour of activity. The graphic below shows the cost of mismatch gradient for our example department. The dotted line highlights the cost in replacement WLIs for a 70% match, £125,00.
This hypothetical department actually spent £250,000 on WLI's to maintian its existing waiting list. However this was because in addition to experiencing a 30% capacity leak, there was also a much higher demand during the period than expected.
But the department lead now knows that in the second quarter if they address the causes of the capacity leaks then they can save a significant proportion of the £125,000 spent on additional capacity.
If you want to understand more on how to continuously monitor your match between job planned and actual activity either contact us at staffingscience@staffingscience.co.uk or book a chat here or sign up for our 20 minute lunchtime webinars here.