Can hospitals ever learn to love the auditors?

General hospitals will be able to choose between making enormous savings or treating thousands more patients a year if they adopt better financial management practices, according to a study conducted by District Audit, the body that conducts most NHS trust audits.

A survey of hospitals three years ago found a potential average saving of pounds 250,000 at each district general hospital. The adoption of more business- like management since then may have helped to achieve these savings, says DA. Hospital efficiency varies greatly in terms of the number of patients treated, especially in operating theatres and as out-patients.

Ian Merrick, a project officer at DA who conducted the study, was surprised at the frequent absence of basic good management, such as matching resources to demand. "This had not been tested as a principle in the NHS," he says.

The DA study established national and regional bench-marks for hospital performance in each speciality. Hospitals were then compared against the bench-marks, for example, in the average number of cases operated on in each operating session. The survey recognised that there might be reasons other than efficiency for variations in performance - for example, a seaside hospital may cater for more elderly patients, who may have more, and more complex, ailments.

Mr Merrick was surprised to discover that hospitals did not schedule operating sessions according to demand. He also recorded great variations in performance between hospitals. Where in some theatres there was a gap of 20 minutes between patients entering, elsewhere it was 10 minutes.

Mr Merrick says it is not his job to judge the reasons for the variations, merely to point out the findings to the chief executive to act on. He adds that it is understandable that management may then say that apparently poor performance in one speciality is justified, but not if they found good reasons in all specialities.

Where some theatres had only 5 per cent of scheduled sessions starting late, others had 75 per cent. "In only two or three hospitals were they monitoring this information," says Mr Merrick. "Unless they are carrying out monitoring, they cannot demonstrate that they are using their time well, nor can they direct management attention to resolve issues around the poor use of time."

Trusts were also failing to achieve maximum efficiency in their use of staff. Some hospitals were using a higher proportion of theatre nurses as sisters than were others. Average staff costs varied greatly as a result. Mr Merrick believes too few hospital managers have addressed the question of how many staff are needed in operating sessions. "You should have a systematic framework for deciding how many staff you need," he says. "But not many hospitals have done this. There has been no link made between the number of scheduled sessions and the staff needed."

In the period of the study many trusts made great strides forward. "There are success stories: one hospital did 12,000 operations in one year and the following year 15,000, knocked two sessions off a week, and took pounds 100,000 off the staffing budget in a year," says Mr Merrick. This was achieved by staff natural wastage, and gradual improvements to theatre practice.

While potential savings were not as great with out-patient cases, they were still significant. While Mr Merrick recognises that he risks being seen to be making clinical judgements, he points out that some hospitals see 25 per cent fewer follow-up cases than others for similar ailments. This means that some large district general hospitals unnecessarily see up to 30,000 out-patients a year.

Mr Merrick says this may be because some hospitals rely more on inexperienced senior house officers (SHOs). While SHOs need to see patients to gain experience it might be more efficient, suggests Mr Merrick, if they examined patients in front of a consultant to confirm the diagnosis. This should cut the number of unnecessary referrals and follow-up appointments, as well as nurses employed to support SHOs. However, adds Mr Merrick, this is a problem that will need to be addressed nationally.

Other health service problems also require a national solution, Mr Merrick says. For example, contract performance is judged by finished consultant episodes, which may merely mean that a patient has been referred to another consultant, while theatre sessions are governed by the number of operations needed. "This makes for great fun for contracting," he says.

Clinical staff may never love auditors but they may learn to value them, which would be just as well - as reforms bite deeper, and computer recording of data becomes more pervasive, auditors are going to become increasingly influential.