This might sound like an exam question for NHS finance managers but it is vital to determine the unit costs of your consultant delivery and what the hourly cost of consultant service delivery is.
Programmed activities (PAs) are the currency of NHS consultant capacity. One PA delivers an expected four hours of weekly activity (not forgetting premium time or Welsh variations) which across the year, assuming 10 weeks leave, translates into 168 expected hours of activity. But how much does this activity cost?
The table below shows the increase in salaries for NHS consultants over the last 2 years. Today, a consultant, with 8 years service, earns £118,884, up from £99,425 two Septembers ago due to recent pay awards and the concertinaing of years it now takes to reach the top of the pay scale.
Clinical excellence awards (CEAs) add to this basic pay. Although, new clinical excellence awards are no longer given out, existing awards are still valid with Trusts directed to pay a minimum of £7,900 on average per consultant. The cost of a PA further increases through pension contributions (23.8%) and Employers NI (13.8%).
To calculate the "average" cost of a PA, we therefore need to consider the average years of service. Data suggests that the average age of consultant appointment is 38 (RCOG) and that 63% of consultants are older than 45 (NHS England, 2023). Conservatively therefore, the "average" consultant has at least 7 years of service.
Pulling all these costs together, the cost of a PA is just under £16K and the budget cost per hour of expected activity is £94.
Every department will have a different cost per PA, dependant on their consultants years of service. But this number is useful to calculate, as it can then be used as a yardstick to compare hourly rates of additional activity to review them for reasonableness.
However, these budget costs assume a 100% match between job plans and service delivery. The "real" hourly cost of service delivery can be significantly different depending on whether there is a mismatch between job plans and actual delivery. To find out how the "real" costs of activity can be different and the double financial whammy of leaked capacity, please read my next post here.