NHS financial temperature check - Briefing
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July 2015 NHS financial temperature check Finance directors’ views on financial challenges facing the NHS Briefing
Contents Introduction 2 Introduction Key findings 2 This is the third in a series of HFMA briefings setting Financial performance 3 out finance directors’ views on financial issues facing the NHS. Directors completed the survey during the Quality 8 last two weeks of May 2015. It draws on the responses What is the outlook? 9 of finance directors and chief finance officers1 (CFOs) of 117 (47%) provider trusts and 79 (37%) clinical Conclusion 12 commissioning groups (CCGs) from across the English NHS. It also includes the views of five of the seven (71%) Northern Ireland finance directors, four of the nine (44%) Welsh finance directors and two of the 15 (13%) Scottish finance directors. Key findings finance directors (59%), 42% of CCG The 2015/16 financial performance CFOs, 60% of CFOs in Northern of the NHS in England continues to Ireland and 50% of CFOs in Wales deteriorate across all sectors. Acute told us they had made significant trusts represent the majority of the changes to their 2015/16 financial deficit. There is a deficit overall in plan from what was originally local NHS organisations and the expected 12 months ago. small underspend of £151m across In 2015/16 there is a clear the 211 CCGs does not cover the distinction between the number of net deficit of £822m in the English English trusts (63%), which are provider trust sector. Financial plans forecasting a deficit, and the for 2015/16 show a similar position. number of CCGs (83%), which are NHS foundation trusts (FTs) reported forecasting a surplus. While the a £349m deficit for the year-ending percentages look similar, as in 31 March 2015, compared with 2014/15 the CCG forecast net surplus a planned net deficit of £10m2. is unlikely to be sufficient to cover the The NHS trust sector reported an net deficit in trusts. aggregate net deficit of £473m, Fewer than 20% of CCG and 10% compared with a planned net deficit of trust finance directors think there of £408m3. is a low risk to achieving their financial plans for 2015/16. Analysis of our survey shows: Finance directors are even less confident about achieving their Respondents in the majority of financial plans in 2016/17. CCGs reported that 2014/15 The key risks identified to year-end outturn was the same or organisations’ and health economies’ 1 CCGs use the terminology of chief finance officer (CFO), whereas NHS trusts and better than budget. But in the majority financial plans are slippage in cost FTs generally use finance director. In of English provider trusts and Welsh savings, increased demand and this briefing we sometimes use the term finance director to mean both finance trusts and local health boards (LHBs) particularly increased emergency directors and CFOs together, when it was worse. activity. describing the views of all of our survey respondents collectively In trusts the main drivers for this 66% of UK finance directors think 2 Performance of the foundation trust sector were an increase in agency staff quality will be maintained in 2015/16, year ended 31 March 2015, May 2015, costs (72%) and under-achievement 26% think quality will improve, while Monitor 3 NHS TDA Board meeting, 21 May 2015 of planned savings (55%). CCG 7% think quality will reduce. Paper D: NHS Trust Service and Financial CFOs considered the main drivers of Respondents felt that within their Performance Report www.ntda.nhs.uk/wp- content/uploads/2015/03/Paper-D-Service- variances to be acute contract organisation they probably have and-Financial-Performance-Report-for- programme cost increases (66%) or sufficient levers to improve quality March-2015.pdf for the period ending 31 March 2015 slippage on planned savings (53%). and financial performance, with the More than half of English trust exception of Northern Ireland.
3 There is less confidence, however, the combined net deficit of £822m in when asked whether they have the English provider sector, £599m sufficient levers to effect change in is attributable to 54 acute FTs and their local areas. £536m to 36 acute NHS trusts. The Finance directors gave mixed aggregate acute sector deficit of responses about whether they expect £1,135m is offset by surpluses in the to see structural reconfiguration in the non-acute sector. next 12 months, suggesting reconfiguration will take place based However, there are 27 non-acute FTs on local circumstances. and NHS trusts in deficit in 2014/15 The majority of finance directors compared with 6 in 2013/14, showing responding to our survey do not that 2014/15 has been a challenging believe the organisations in their area year across all sectors. have sufficient resources to support their long-term financial plans. Regionally there is little difference, except in London, where there are Financial performance proportionally fewer trusts in deficit. The financial performance of the NHS However, this masks the difference in England continues to deteriorate between the largely financially across all sectors. There is a deficit sustainable FTs in inner London and overall in local NHS organisations the outer London NHS trusts that are and the small underspend in CCGs struggling to balance their books. does not cover the net deficit in the English provider trust sector. In the local commissioning sector, NHS England reports that CCGs have The most recent reports from national underspent allocation by £151m in agencies and regulators show: aggregate, but it was not split evenly across the country7. According to NHS FTs reported a £349m NHS England, the underspend in deficit for the year ending 31 March CCGs includes £156m of planned 2015, compared with a planned net spending on continuing healthcare deficit of £10m4. 77 of the 152 (51%) claims that was to be made in FTs reported a deficit5. Acute trusts 2014/15 that has been moved to represent the majority of the deficit future years, and payments to but FTs in every sector reported CCGs under the Quality Premium a deficit. scheme that were £66m lower The NHS trust sector reported an than planned. aggregate net deficit of £473m, compared with a planned net deficit of Excluding these non-recurrent £408m6. A total of 40 of the benefits, there was a small net 99 (40%) NHS trusts reported a overspend within the CCG sector. deficit, with a combined gross For 2015/16, NHS England plans deficit of £614m. to draw down £400m of prior Across the 211 CCGs, there was a year surpluses in addition to the small underspend of £151m7 announced 2015/16 allocations, (0.2% of allocation). According to plus £179m of expenditure deferred NHS England, ‘this position benefited from the final quarter of 2014/15. 4 Performance of the foundation trust sector from significant one-off items that Year ended 31 March 2015, May 2015, Monitor have materially contributed to the The financial position of the NHS in 5 Year-to-date, unaudited, financial underspend. Excluding these items, the devolved nations has not been information there was a small net overspend reported publically yet. 6 NHS TDA Board meeting, 21 May 2015 within the CCG sector’. Paper D: NHS Trust Service and Financial Performance Report www.ntda.nhs.uk/wp- Performance against plan content/uploads/2015/03/Paper-D-Service- The outturn figures reported by Analysis of our survey responses and-Financial-Performance-Report-for- March-2015.pdf for the period ending 31 NHS England, Monitor and the Trust found that in most CCGs the 2014/15 March 2015 Development Authority (TDA) make it year-end outturn was the same or 7 NHS England Board Paper PB.150528/06, clear that there is financial pressure better than budget. In the majority May 2015 www.england.nhs.uk/wp- content/uploads/2015/05/item7-board- across the NHS. The most severe of English provider trusts and Welsh 280515-upd.pdf deficits are in the acute sector. Of trusts and LHBs it was worse.
4 NHS Financial Temperature Check Chart 1: 2014/15 year-end outturn compared with the 2014/15 budget More than 50% of finance directors in these organisations reported a n better n same n worse worse year-end position than was 60 planned, as shown in Chart 1. 50 We asked respondents to cite causes % of finance directors 40 for the main variances between outturn and plan in 2014/15. Among 30 trusts, the main drivers were a rise in agency staff costs (72%), in 20 many cases driven by Care Quality 10 Commission recommendations, and underachievement of planned 0 CCG Trust Health and Local health Territorial savings (55%), leading to adverse (England) (England) social care trust board board performance against plan. (Northern Ireland) (Wales) (Scotland) Some trusts improved their performance against plan. The main drivers for this include increased Chart 2: Main variances between 2014/15 outturn and plan in trusts activity and other non-recurrent items, such as TDA funding, which 80 make it important to understand the 70 underlying financial position as well as the reported position. Chart 2 60 summarises the main responses. % of finance directors 50 The reasons remain consistent with 40 our previous surveys. In December 30 2014 we found: ‘Over 40% of provider trust finance directors reported the 20 main drivers of the worsening year- 10 end financial forecast are unforeseen 0 increases in pay costs, allied with lower than expected savings from Rise in Underachievem’t Increase Increase in Increase in Increase in cost improvement plans’8. The agency of savings in turnover non-pay clinician other pay costs plans costs pay costs costs proportion of finance directors reporting these cost pressures has increased since December 2014. While most CCGs achieved or Chart 3: Main variances between 2014/15 outturn and plan in CCGs improved on planned performance, CFOs considered the main drivers of 70 variances to be programme cost rises 60 % of finance directors (66%) or slippage on planned savings 50 (53%). CFOs also identified growth in 40 continuing care claims and contract 30 overperformance by provider trusts 20 in all sectors as additional costs. 10 Chart 3 summarises the responses. 0 Increase in Underachievement Increase in Increase in These are consistent with our programme costs of savings plans prescribing costs allocation on acute contracts survey in December 2014 but the proportion of CFOs reporting these cost pressures has increased. In our previous survey, the figure was 35% 8 NHS Financial Temperature Check for both drivers. Results, December 2014, HFMA www.hfma.org.uk/nhstemperaturecheck/ dec14/December 2014 The most common response from CFOs in Wales and Northern
5 Table 1: Proportion of organisations’ contracts signed by CFOs Were all contracts signed by Were all contracts signed by date of survey response? 31 March 2015? No Yes No Yes CCG 68% 32% 93% 7% Trust 58% 42% 90% 10% Ireland was underachievement of Chart 4: Forecast 2015/16 year-end financial position savings plans. In Scotland, the two n deficit n break even n surplus respondents both highlighted an increase in prescribing costs. 100 Contracts and financial plans The majority of contracts between 80 commissioners and providers in the % of finance directors English NHS remained unsigned at 60 the time of our survey, as shown in Table 1. Some respondents told us that contracts had been agreed but 40 simply not signed. Other reasons for not signing contracts included 20 disputes about activity levels, leading to formal arbitration, or with agreeing local tariff arrangements. 0 CCG Trust Health and Local health Territorial In the majority of cases organisations’ (England) (England) social care trust board board (Northern Ireland) (Wales) (Scotland) financial plans have been submitted to their regulator or national agency. 91% of CCG CFOs and 85% of trust forecasting a surplus in their plans, finance directors told us they had as shown in Chart 4. Some 63% submitted their plans, with similar of English trusts are forecasting a levels in the devolved nations. This deficit at the 2015/16 year-end. The does not mean the plans have been responses for the 2016/17 financial approved however. In our December year show more trusts forecasting a 2014 survey we found that one in five surplus but the distinction between trust finance directors told us they the financial position of CCGs and had been asked to submit a revised trusts remains clear cut. forecast by their regulator (either Monitor for FTs or the TDA for NHS Among CCG survey respondents, trusts), demonstrating the scrutiny 83% forecast a surplus, but it is applied by regulators. important to understand the business rules they are required to comply Almost all organisations revised their with. CCGs are required by NHS 2015/16 financial plan from what was England’s financial planning business originally expected 12 months ago. rules to make a minimum surplus More than half of English trust finance equal to either 1% of allocation or directors (59%), 42% of CCG CFOs, the 2014/15 surplus, less any agreed 60% of CFOs in Northern Ireland and drawdown, whichever is the greater9. 50% of CFOs in Wales told us they However, in the large majority of had made significant changes. cases the surplus is brought forward from the prior year, not generated In 2015/16 there is a clear trend in-year. If CCGs reported on the showing that, of our survey same basis as provider trusts, the 9 Supplementary information for commissioner planning, 2015/16, respondents, English trusts are large majority of CCGs would show a NHS England forecasting a deficit and CCGs are break-even position.
6 NHS Financial Temperature Check CCGs are not permitted to spend the surplus in CCGs is not cash- brought forward resources without backed and so is unavailable for a specific business case and spending. CCGs are only allowed to approval from NHS England. submit a deficit plan in unavoidable The business rules applying to circumstances, as determined by CCGs mean that in many cases NHS England. However, after taking these differences into account, the Table 2: Analysis of forecast 2015/16 financial position by sector CCG sector would still appear to be in better financial health than the provider sector. Sector Deficit Break-even Surplus Acute 77% 9% 14% The forecast improvement in trusts’ Acute and 85% 0% 15% financial performance in 2016/17 may community be attributable to finance directors’ expectations that financial recovery Acute and 81% 8% 12% plans will address financial difficulties specialist brought forward from 2014/15. But Ambulance 33% 33% 33% trusts will often revise their medium- Community 0% 0% 100% term financial plans closer to the Community and 29% 21% 50% beginning of the actual financial year. mental health Most English trusts reporting a Mental health 43% 0% 57% deficit are in the acute sector, while Specialist 50% 25% 25% community trusts are relatively financially sustainable, based on our survey responses. Table 2 Table 3: Analysis of 2014/15 reported outturn by sector summarises the responses. For (combined figures for NHS trusts and FTs) comparison, the reported outturn for 2014/15 is summarised in Table 3 Sector Deficit Break-even/ surplus showing an increase in the proportion of forecast deficits across every Acute (including specialist) 59% 41% sector, apart from community. Ambulance 20% 80% Community 14% 86% In all sectors except the Welsh Mental health 28% 72% NHS, most respondents told us their organisation’s forecast 2015/16 Source: HFMA analysis of Monitor and TDA figures year-end position is worse than the 2014/15 year-end position. Chart 5 Chart 5: Is the 2015/16 year-end forecast position better, the same or summarises the responses. Some worse when compared with the 2014/15 year-end financial position? 78% of provider trust finance directors and 50% of CCG CFOs forecast a n better n same n worse worse financial position at the end of 2015/16 than their 2014/15 outturn. 100 Most respondents reported the 80 degree of risk associated with % of finance directors achieving their organisation’s 2015/16 60 financial plan as high or medium, as in Chart 6. In England, only 16% of CCG and 10% of trust finance 40 directors reported there being a low risk to achieving their financial plans. 20 The key risks to achieving financial plans were identified as: 0 CCG Trust Health and Local health Territorial Slippages in cost savings (74%) (England) (England) social care trust board board Increased demand (64%) (Northern Ireland) (Wales) (Scotland) Emergency activity (55%) Spending on agency staff (50%).
7 The perceived risk to achieving Chart 6: Finance directors’ estimated degree of risk to achieving their financial plans increases for 2016/17, organisations’ 2015/16 financial plans with the majority of respondents n low n medium n high reporting having plans with a high level of risk. We asked respondents 100 to identify the main risks to the overall 80 financial stability of their health % of finance directors economy. They were: 60 Increasing demand (76%) 40 Increasing emergency care activity (65%) 20 Slippage on cost saving schemes (54%) 0 The impact of social care financial CCG Trust Health and Local health Territorial constraints – for example, delayed (England) (England) social care trust board board transfers of care (49%) (Northern Ireland) (Wales) (Scotland) Integration (46%). We also asked respondents about the Chart 7: The main mechanisms CCGs are planning to meet the achievability of their organisations’ financial challenges ahead 2015/16 financial savings plans. Unsurprisingly, respondents were 80 more confident about achieving the non-recurrent elements of their plans 60 rather that the recurrent savings. % of finance directors Some 69% of CCG CFOs and 72% 40 of trust finance directors are very or quite confident their organisation’s 20 2015/16 non-recurrent savings plans will be achieved. Respondents in Scotland feel it is too early to say and 0 there is a mix of views in Wales and Integration/ Increased Investing in Investment Redesigning Reducing redesigning integration community in primary pathways unnecessary Northern Ireland. pathways bt health services care within acute clinical across and social (eg to avoid sector variation There is less confidence about community/ care/BCF hospital achieving the recurrent elements of MH/acute schemes admissions) savings plans. CCGs CFOs have greatest confidence, with 46% feeling very or quite confident – slightly Chart 8: The main mechanisms trusts are planning to meet the higher than trusts, at 39%. financial challenges ahead 100 We asked finance directors about the main mechanisms they plan on using to meet the financial challenges 80 ahead. CCGs are planning % of finance directors integration of services with other NHS 60 organisations (80%), integration with social care (76%) and investment in 40 primary care (68%). The responses are summarised in Chart 7. 20 To meet trusts’ financial challenges, finance directors plan to make 0 savings on agency staff (87%) and Reducing Procurement Reducing Estates Integration/ Redesigning pay costs cost savings unnecessary rationalis’n redesigning jobs to cut procurement costs (81%) and by spent on clinical MH/acute/ the cost of reducing unnecessary clinical variation agency staff variation community/ non-clinical (60%). Chart 8 shows the responses. pathways headcount Respondents from Northern Ireland
8 NHS Financial Temperature Check are primarily planning redesigned joint working. Some CCG CFOs feel acute pathways (80%), procurement they have limited influence on the savings (60%) and agency cost cost of unplanned demand in provider savings (60%) to meet financial organisations. Some also feel that challenges. In Wales, respondents provider trusts can become financially are planning clinical standardisation challenged as a result of conflicting (100%), investing in community priorities. For instance, national policy services (75%), integration (75%), changes issued after local plans have acute sector pathway redesign (75%), been agreed have caused uncertainty and agency staff cost reduction (75%). in health economies. Most finance directors agreed Respondents also identified barriers that their organisation’s stability to finding local solutions due to a depends on working jointly with perceived lack of a coordinated other organisations, as summarised approach to system management and in Chart 9. Respondents provided sustainability by different regulators. additional details about barriers to Some provider trust finance directors feel the scale of their funding can Chart 9: Assessment by directors of whether their organisation’s determine the success, or otherwise, stability depends upon working jointly with other organisations of their attempts to influence decision- making in their health economy – 100 n CCG (England) they cannot effect change unless they 90 n Trust (England) are the largest organisation. n Health and social 80 care trust (Northern Trust finance directors agreed with % of finance directors 70 Ireland) their CCG counterparts that the lack n Local health board of a single voice across the system 60 (Wales) from regulators has a direct impact on 50 n Territorial board local reconfiguration. Respondents (Scotland) 40 recognised that improvement to services requires joint working and 30 collaboration. However, the size of 20 deficits in some acute trusts can lead finance directors to make decisions 10 that prioritise the interest of their 0 organisations above those of the Yes No Don’t know health economy, to avoid jeopardising their own financial positions. One Chart 10: Anticipated change in quality of patient services in 2015/16 respondent suggested the solution is CCGs and trusts ‘breaking the rules 100 together’ to work more innovatively n quality will and address financial problems at improve health economy level. n quality will 80 stay the same n quality will Quality reduce Despite being pessimistic about the % of finance directors 60 financial position of the NHS for the n don’t know current and future years, 92% of all finance directors do not expect the 40 quality of services to deteriorate. Some 66% think that quality will stay 20 the same and 26% think that it will improve. Responses for each sector are summarised in Chart 10. 0 CCG Trust Health and Local health Territorial (England) (England) social care trust board board This is consistent with the results (Northern Ireland) (Wales) (Scotland) of our two previous surveys in June 2014 and December 2014.
9 But fewer finance directors now think to improve quality and financial quality will increase. At the same performance – except Northern point last year, 39% of respondents Ireland, as shown in Chart 11. thought that quality would increase, Finance directors are much less compared with 26% in our current confident about whether they have survey. No respondents in Northern sufficient levers to effect change Ireland expect quality to improve, in their local areas though – Chart while in Wales all respondents are 12. There is an overall view that expecting improvements. Overall 7% there is a weakness in strategic of finance directors expect quality to system management, which echoes deteriorate in 2015/16. findings from our previous surveys. Some respondents felt there are While the majority of finance directors multiple strategic influences in the did not expect quality to deteriorate system, which increases the risk that in their organisations, we asked organisations feel the need to work them to identify which aspects of in silos. The regulatory regimes for service quality generally are most CCGs and providers can also conflict. vulnerable as a result of the current financial challenges. Respondents felt waiting times (60%), access to Chart 11: Do you feel you have sufficient levers to effect change that services (57%), the range of services could improve quality and financial sustainability in your organisation? offered (43%) and the interface between NHS care and local authority 100 n CCG (England) provided social care (40%) were n Trust (England) most vulnerable. This was consistent 80 n Health and across the sectors. social care trust (Northern Ireland) % of finance directors We asked finance directors what n Local 60 changes they anticipate in the quality health board of patient services commissioned (Wales) or provided by their organisations 40 n Territorial board in 2016/17. In total, 84% felt quality (Scotland) would stay the same or improve, 4% were not sure at this stage and 20 12% felt quality would reduce. Finance directors reported that it 0 Yes definitely Yes probably No Don’t know was increasingly challenging to prioritise access to services and service performance while maintaining financial stability. Chart 12: Do you feel you have sufficient levers to effect change that could improve quality and financial sustainability in your local area? One said: ‘Patient safety and access 100 to services is not negotiable, so n CCG (England) pressure on finances is getting worse n Trust (England) rather than taking alternative courses 80 n Health and of action. Pressure on finances longer social care trust % of finance directors (Northern Ireland) term will have a detrimental impact n Local on the quality and safety of services 60 health board provided.’ (Wales) n Territorial board What is the outlook? 40 (Scotland) Finally, we asked respondents about their outlook for their organisations 20 and local health economies. Improving quality/financial stability 0 Respondents said they probably had Yes definitely Yes probably No Don’t know sufficient levers in their organisations
10 NHS Financial Temperature Check Some CCG respondents felt that, sustainability in their local area. despite having enough levers, Northern Ireland respondents said national and local guidance can fixed pay scales for medical staff, conflict, which can remove their nursing staff and fixed staffing ability to do things differently. For numbers generally are a key element instance, the national payment of system-wide cost, making it hard to system can provide disincentives influence financial performance. for organisations to work together. One trust finance director felt CCGs Respondents in Wales feel they have do not have the levers necessary to sufficient levers but do not have implement plans and that Monitor enough clarity about how service protects the foundation trust sector reconfiguration will be funded. from system change. Long-term plans and policy Our survey found that only 4% of Most finance director respondents respondents from CCGs felt they do not believe the organisations in definitely have mechanisms to their area have sufficient resources improve the quality and financial to support their long-term financial plans, particularly in England (92%) and Northern Ireland (80%) – Chart Chart 13: Do organisations in your area have enough baseline financial 13. The picture in Scotland was resources to implement the Five-year forward view or other long-term different – both respondents believe financial plans without the need for additional support? they have enough resources. 100 n CCG (England) The key financial challenge is a lack n Trust (England) of pump-priming investment funds 80 n Health and social and that all extra funds are already care trust (Northern Ireland) committed to the better care fund % of finance directors 60 n Local health board (BCF) in England. Some respondents (Wales) felt the senior management capacity n Territorial board committed to the BCF would also 40 (Scotland) affect their ability to deliver long- term financial plans. Respondents 20 also highlighted problems with their organisations’ funding allocations. 0 Finance directors expressed concern Yes No Don’t know about the timing of the £8bn promised by the government and whether it Chart 14: Do you support the integration of health and social care in would be enough to meet demand the format envisaged under the ‘devo Manc’ proposals in England? and new quality initiatives, such as seven-day services. n CCG (England) 100 n Trust (England) A major policy development in the n Health and social care trust (NI) English NHS has been proposals for 80 n Local health board (Wales) integrating health and social care in n Territorial board (Scotland) the Manchester area – ‘devo Manc’. Welsh and Northern Irish respondents % of finance directors 60 generally supported this, English respondents less so – Chart 14. 40 Specific concerns about the proposals include possible additional 20 bureaucracy and local politics, especially where organisations are not co-terminous. There are also 0 concerns about whether budgets are Yes No Too early to say Don’t know held in the NHS or transferred to local authorities and whether the priorities
11 of NHS organisations and local Chart 15: Do you expect structural reconfiguration of organisations in authorities are sufficiently aligned. your area in the next 12 months? Many respondents are simply waiting to see whether the changes in 100 n CCG (England) Manchester are successful or not. n Trust (England) 80 n Health and social Alongside integration of health and care trust (Northern social care we asked respondents for Ireland) % of finance directors their views about whether there would 60 n Local health board be structural reconfiguration of the (Wales) organisations in their area over the 40 n Territorial board next 12 months. Chart 15 shows that (Scotland) opinion is split, suggesting a degree 20 of uncertainty. 0 Action required Yes No Don’t know We asked respondents to tell us what actions would be of most help to meeting the financial challenges in and collaboration, in particular their areas. The responses covered to reduce demand, especially national and local issues. emergency admissions. Recognising that organisations are Finally, finance directors continue struggling to achieve savings, many to call for honesty from politicians finance directors felt more realistic with the public about services that savings targets would be required can be provided within the financial to help avoid further deterioration in settlement agreed for the NHS. organisations’ finances. Respondents felt savings could be achieved in part In a separate question we also asked by actions to reduce agency staff finance directors to tell us the most costs and staff costs in general. effective actions they were taking to improve efficiency in 2015/16. They also suggested more realistic Responses covered clinical, process, expectations for reducing activity be local and national issues. set out in BCF plans and other plans for integrating services across health Many finance directors described and social care organisations. local schemes to redesign clinical pathways and models of care. As with previous surveys, many Examples include work to improve finance directors suggest changes case management of patients’ and improvements to the national care across organisational payment system in England would boundaries, particularly through help alleviate financial pressure. using neighbourhood-based multi- Some suggest addressing the disciplinary teams. In addition to this, purchaser-provider split in England some finance directors are planning and the system of regulation that to invest in seven-day primary care surrounds it. services to improve the management of patient pathways. Finance directors also called for greater integration of services, Underpinning clinical developments specifically more progress on the in their organisations, finance BCF in England. This is a slight shift directors told us they are planning in position from our previous survey, to develop their organisations’ when we found that some finance information management and directors were questioning the technology strategies to improve feasibility of the BCF as potentially staff mobile working, supporting too high risk to achieve its objectives. multi-disciplinary teams. Some were Allied to this, finance directors saw also planning to invest in electronic the need for improved joint working patient record systems.
12 NHS Financial Temperature Check Finance directors are also planning but many do not feel they have back-office efficiencies. Examples sufficient levers to make changes include strengthening the programme they believe are necessary in their management office in their health economies. organisation, to help achieve savings plans, including through reducing In addition, many finance directors management costs. do not consider they have sufficient resources for their organisation’s Allied to this are finance directors’ long-term financial plans. The plans to make savings through government has made it clear it is improved procurement. Other extremely unlikely that there will be measures suggested are to develop additional money beyond the £8bn innovative contracts and better previously announced to support the deployment of staff. Five-year forward view in England, but finance directors feel increasingly Finance directors also mentioned impeded by barriers to joint working some plans to improve or safeguard and making changes at health income streams. For instance, one economy level. finance director intends to only tender for contracts that are appropriately Faster progress is needed to achieve funded, while another plans to the changes outlined in the Five-year increase non-health income such as forward view in England, but some from car-parking, retail opportunities areas will need financial support to and commercial deals such as make this happen. bedside TV screens. Finance directors have ambitious Conclusion plans to achieve savings through The 2014/15 financial year was more improving their organisations’ challenging than finance directors efficiency, from procurement savings expected at the beginning of the year. to supporting staff to work in different Draft accounts show the provider ways. These savings will help to trust sector overspent significantly protect and maintain services but and the local NHS organisations in finance directors will not be able to England in overall deficit. rely on these measures alone to solve the longer term financial Finance directors have told us problems due to increasing demand 2015/16 is looking even worse, for services and an ageing with increasing numbers of population. organisations forecasting deficits. Many organisations with plans to achieve financial balance report significant risks to their plans and that the financial risk is not being shared equally with commissioners. Across the UK, in spite of the The authors of this briefing were Richard Edwards financial challenges, the quality of (consultant) and Paul Williams (HFMA research services is largely being protected manager), under the direction of Emma Knowles and prioritised. But there are already (HFMA head of policy and research) signs of pressure, particularly in waiting times. Although the vast © Healthcare Financial Management majority of finance directors believe Association 2015. All rights reserved quality will not deteriorate, they have concerns that patient safety and Any enquiries should be sent to the publishers at patient outcomes are vulnerable. email@example.com or posted to the HFMA at: 1 Temple Way, Bristol BS2 0BU Finance directors understand well t: 0117 929 4789 f: 0117 929 4844 the challenges they face and can e: firstname.lastname@example.org make changes in their organisations, w: www.hfma.org.uk
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