Introduction 

Last year’s NHS planning round moved quickly. The first Medium Term Planning Framework was published on 24 October 2025, less than nine months after the previous year’s operational planning guidance, and organisations then had to develop their first three-year plans within a compressed timetable. 

For many trusts and ICBs, the sensible response was to adapt what already existed. Activity, workforce and finance models had often been built for different purposes and at different levels of detail, so getting to a credible first submission sometimes meant accepting compromises that would not be part of an ideal planning process. 

This year offers a chance to revisit those choices. As we set out in our companion article on what to expect from the 2027/28 planning guidance [insert link when published], the national framework is more likely to evolve than to be rebuilt, leaving more scope to improve the quality of the plans underneath it. 

At The PSC, we think operational planning works best when it is treated as one integrated, clinically led process. Activity, workforce and finance may sit in separate technical models, but the assumptions connecting them should be transparent and consistent. 

 

Figure 1: How population needs flow through demand and activity into workforce, capacity and finance 

The difficulty is making that logic work consistently across a large organisation. The steps below are the areas where we think trusts and ICBs can make the biggest improvement before the next formal planning cycle gets under way. 

The article covers eleven areas: 

1. One reconciled baseline: Making activity, workforce and finance start from the same view of the organisation 
2. The underlying trajectory: Understanding where the organisation is heading before any improvement is added 
3. Demand, required activity and deliverable activity: Keeping the three separate so that trade-offs are visible 
4. Capacity before workforce: Deriving workforce from the operating model rather than setting it independently 
5. Productivity: Distinguishing extra output and released capacity from genuine cash savings 
6. The financial mechanism: Modelling how income and costs actually behave rather than applying average cost 
7. Initiatives built from operational change: Starting from how a service will work differently, not from a savings target 
8. Where work moves: Capturing workload that transfers between services and overlap between schemes 
9. Scenarios: Testing the assumptions that could materially change the answer 
10. Quality and performance: Keeping access, safety and outcomes inside the triangulation 
11. Keeping the plan alive: Using the plan to track delivery after submission 

We then set out a practical test that can be applied to any major service, and finish with why this year is a good time to revisit last year’s compromises. 

1. Start with one reconciled baseline 

Good planning depends on everyone starting from the same view of the organisation. Historic activity, workforce, income and expenditure should reconcile with the current forecast, while recurring and non-recurring items, committed service changes and existing CIPs should be clearly separated. 

The organisational structure matters just as much as the totals. Specialties, services, cost centres and divisions often do not line up neatly across operational, workforce and finance systems, which can create apparent differences that are really differences in definition. 

The technical models do not all need to sit in the same workbook or platform. They do need to use the same time periods, organisational hierarchies, definitions and baseline adjustments if they are going to be triangulated reliably. 

2. Build the underlying trajectory before adding improvement 

The next step should be to understand where the organisation is heading without further intervention. That means applying demand growth, known pay and inflation pressures, current workforce trends, existing capacity constraints and the full-year effect of decisions already made. 

Only savings or service changes that are genuinely committed should be included at this point. Aspirational CIPs or transformation assumptions should not be allowed to improve the baseline before the gap has been understood. 

This gives the organisation a proper view of the operational and financial problem it needs to solve. It also prevents savings already assumed in the baseline from being counted a second time when new initiatives are added. 

3. Keep demand, required activity and deliverable activity separate 

Demand, activity and capacity are often collapsed into one planning number, but they answer different questions. Demand describes what is generated by the population and referral pathways, while required activity describes the amount of care needed to meet access, waiting-time and quality objectives. 

Deliverable activity is constrained by workforce and physical capacity. Beds, clinics, theatres, diagnostics and community services all place limits on what can actually be provided. 

The final planned activity level is therefore a choice. It reflects investment, productivity, demand management and the amount of backlog or performance risk the organisation is prepared to carry. 

Keeping those quantities separate makes trade-offs visible. If demand grows faster than deliverable activity, the result may be a larger waiting list rather than a balanced service plan. 

4. Translate activity through capacity before changing workforce 

Workforce should follow from the operating model rather than being set independently of it. A statement such as “activity grows by 3% while workforce remains flat” only becomes meaningful if the plan shows how the same staff will deliver more. 

Different services need different capacity drivers. Outpatients can be translated into clinics and productive clinical minutes, theatre activity into sessions, utilisation and case duration, inpatient demand into admissions, length of stay, occupancy and staffed beds, and community activity into contacts, caseloads and productive hours. 

Those operational requirements can then be translated into workforce by staff group and skill mix. Leave, sickness, training and other non-productive time also need to be allowed for if the resulting WTE requirement is going to be credible. 

This makes the planning discussion much more concrete. Clinical and operational teams can challenge assumptions about occupancy, utilisation or productive time rather than being asked to agree an unexplained workforce number. 

5. Be precise about what productivity actually delivers 

Trust-wide measures such as the National Cost Collection Index can mask real opportunity. It is, therefore, useful to benchmark against peers on individual metrics (length of stay, theatre utilisation, contacts per clinical WTE etc.), setting an ambitious yet realistic target and quantifying the potential opportunity of achieving it.  

However, these kinds of productivity improvements can create several different kinds of benefit, and they should not all be valued in the same way. More output from the same resources is different from releasing capacity, redeploying staff or reducing cash expenditure. For example, fewer outpatient follow-ups may create headroom that can absorb demand growth, instead of releasing cash savings, while a reduction in agency shifts may create an immediate cash benefit.  

Similarly, some improvements may take time to result in cash-releasing savings. Substantive workforce reductions require enough change in workload to make them operationally deliverable and fixed cost changes are typically stepped, being associated with identifiable units of capacity such as clinics, sessions, or beds. For example, achieving a shorter length of stay may release bed-days, but the reduction needs to achieve a certain level of size and sustainability before a ward could be allowed to close. 

Some apparent productivity opportunities could also be aberrations, resulting from differences in data capture or service design. An apparently low day-case rate may reflect more procedures being delivered or recorded as outpatient activity, rather than unnecessary overnight admissions, while low community contacts per staff member may reflect incomplete activity capture rather than low productivity. Where providers plan to close a gap as part of their medium term financial plans, they should first be triangulated against related measures and tested with clinical and operational teams.   

These distinctions are particularly important where productivity is being used to close a financial gap. The plan should make clear which benefits are operational, which improve resilience and which genuinely reduce expenditure. 

6. Model the financial mechanism rather than applying average cost 

Operational change should flow into finance through the way income and costs actually behave. Additional activity does not always generate additional tariff income, and lower activity does not automatically release average cost. 

Income therefore needs to reflect the relevant contract and payment mechanism. Pay needs to follow the actual WTE, staffing mix and implementation timing, while variable non-pay should move only where the cost is genuinely driven by activity. 

Fixed cost should be treated more cautiously. If a change reduces activity but does not allow usable capacity to be removed, the financial benefit is likely to be much smaller than an average-cost calculation suggests. 

Implementation also has a cost. Investment, double running, redundancy, programme support and opportunity cost should appear in the plan where they are required to make the change happen. 

7. Build initiatives from operational changes rather than savings targets 

A CIP figure tells you how much money needs to be saved, but not how a service will work differently. The better starting point is the operational mechanism. 

For each significant initiative, the planning team should understand which patients or costs are affected, the starting position, the intended change, when it begins and how quickly it is expected to build. The resulting effect on activity can then be passed through capacity and workforce before the financial benefit is calculated. 

A length-of-stay initiative, for example, should start with the patients and bed-days affected. Only once that is understood can the team judge whether the change is large enough to alter staffed beds, workforce or cost. 

The same principle applies to outpatient follow-ups, theatre productivity, admission avoidance, skill mix and digital automation. It creates a plan that can be monitored against operational delivery rather than one that only reports whether a financial target has been met. 

8. Account for where work moves 

Some of the most important NHS transformations transfer workload rather than remove it. Avoiding an acute admission may create additional work in community services, while earlier discharge may require more intermediate care or rehabilitation. 

The same applies within providers. Higher outpatient throughput may create additional diagnostic or elective demand, and a reduction in agency staffing may depend on substantive recruitment happening first. 

Those effects should appear on both sides of the plan. Otherwise, a benefit can be recorded in one service while the cost of delivering it somewhere else disappears. 

Overlap between initiatives also needs to be managed. If several schemes affect the same cohort of patients, their benefits cannot simply be added together without checking whether they are genuinely incremental. 

9. Use scenarios where the uncertainty matters 

Three-year planning inevitably involves uncertainty. The purpose of scenario analysis is to understand which assumptions could materially change the answer, rather than to create large numbers of alternative forecasts. 

For many organisations, the important variables will include demand growth, length of stay, recruitment, pay inflation, productivity and the speed at which transformation benefits can be realised. A small number of well-chosen scenarios usually gives leadership teams enough information to understand where the plan is robust and where it is exposed. 

This is also useful when national assumptions change. If the model has already tested pay, demand or productivity sensitivity, an updated planning parameter can be incorporated quickly without reopening every part of the plan. 

10. Keep quality and performance inside the triangulation 

Activity, workforce and finance are often treated as the three sides of planning triangulation, but quality and performance provide an essential additional check. A financially balanced plan is not credible if it relies on unsafe occupancy, an unmanageable waiting list or a workforce requirement that cannot be delivered. 

The impact on access and outcomes should therefore remain visible throughout the planning process. Where the organisation has chosen to carry a risk, the size and consequence of that risk should be explicit rather than buried in the modelling. 

This is also where clinical leadership matters most. Planning assumptions about capacity, workforce and productivity should be tested by the people responsible for delivering the service. 

11. Keep the plan alive after submission

The final test is whether the plan remains useful once the national return has been submitted. Divisions should be able to compare actual demand, activity, workforce, performance and spend with the plan and understand why the position has changed. 

That requires controlled assumptions, clear ownership and a regular process for updating the forecast. It also makes the next planning cycle easier because actual delivery becomes part of the evidence used to refresh assumptions. 

Boards should be involved before the final numbers are produced. The useful discussion is about the assumptions, dependencies and operational changes that make the plan work, rather than simply whether the final position has reached balance. 

A practical test for any major service 

A planning team should be able to answer the following questions consistently for every major service or transformation programme. If different parts of the organisation give materially different answers, the plan probably needs more work. 

Area	What should be clear
Demand	What demand is expected, and what is driving it?
Activity	What activity needs to be delivered, and what can be delivered?
Performance	What does the plan imply for waiting lists, access, quality and outcomes?
Capacity	What beds, clinics, sessions or productive hours are needed?
Workforce	What WTE and skill mix are required, and are they achievable?
Income	How does the activity change affect actual payment?
Cost	Which pay, variable and fixed costs genuinely move?
Delivery	Which operational actions create the change, and when?
Risk	Which assumptions could materially change the result?
Ownership	Who is responsible for delivering and updating the plan?

The point is not to create a larger planning model. It is to make the causal links between demand, activity, capacity, workforce and finance clear enough that clinical, operational and financial teams can use the same plan. 

Use this year to revisit last year’s compromises 

Last year’s timetable made pragmatism necessary. Trusts and ICBs had to absorb a new medium-term planning framework quickly, so it was reasonable in many cases to adapt existing models and processes rather than redesign them completely. 

A more stable framework creates room to improve that position. Organisations can now reconcile the baseline properly, strengthen the connection between activity and capacity, make workforce assumptions more transparent and tighten the link between operational improvement and financial benefit. 

That should improve the national submission, but the larger benefit is internal. A good medium-term plan should help an organisation decide how it will actually run its services over the next three years and give it a basis for understanding when reality begins to diverge from that plan. 

We will continue to track the 2027/28 planning process and will publish our analysis once the national guidance is released. You can follow The PSC on LinkedIn for that update, and our companion article on what to expect from the guidance sets out the policy changes we think organisations should be watching. 

At The PSC, we work with trusts, ICBs and systems on integrated operational, workforce and financial planning, including building the models behind national submissions, strengthening planning and cost improvement proc