Hospital defends management costs increase

BOSSES at Ipswich Hospital last night defended the �700,000 increase in management costs over the period of a year.

Health campaigners have criticised the rise as “unfair” however figures show that the percentage of management costs compared to the overall income the hospital receives for services has actually decreased by a fraction. The salary of the hospital’s chief executive Andrew Reed has also been frozen.

In the hospital’s annual report, 2008/09 management costs were �8,968,000, which is 4.31% of the overall income. However in 2009/10 management costs rose to �9,663,000, but is just 4.27% of the overall income.

Andrew Reed, the hospital’s chief executive, claimed the rise in costs is partly due to a new programme involving management consultants, which has led to improving patient care.

Yet Dr Dan Poulter, MP for Central Suffolk and North Ipswich, slammed the increase, saying: “One of the problems with health care organisations is they fail to focus on frontline services and a lot of the money goes into bureaucracy rather than patient services.


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“This is a public sector disease that has developed over the last few years. There is a tremendous focus on management rather than the frontline. There is also a big discrepency between the salaries of doctors and nurses compared to what hospital managers get.”

Prue Rush, Suffolk health campaigner, added: “It does seem a high amount when the rest of staff are having a hold on wages and taking pay cuts. Management does not seem to be showing solidarity with their workers.

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“They keep saying they are bringing these management consultants in but it does not seem they are not doing any better.”

Mr Reed defended the rise, claiming: “The standard way any organisation assesses its management costs is as a percentage of its income and under 4.5% is way below those in commercial organisations. Importantly as a percentage of our income, our management costs have actually gone down.

“The spending identified here is not about pay rises, we are not paying our managers more. The cost increase reflects several aspects, not least that we are a much busier hospital. We are also involving doctors in management more than before, and in April last year divided the hospital into seven business units, each headed up by a doctor, and we are paying these top doctors more for their management responsibilities. This new way of working has been nationally acclaimed.

“We also invested in a change programme involving management consultants which has been well publicised and is designed to quickly improve efficiency, how we treat patients and the quality of services on offer. This consultancy support is no longer with us and the resulting work has identified substantial cost savings and improvements to the quality of patient care.”

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