Comment / Financial recovery: support in difficult times

The NHS across all four nations of the UK is facing financial and operational pressures that have been described in some circles as unprecedented.

The National Audit Office this week published NHS financial management and sustainability highlighting the stark realities. The 42 integrated care systems in England landed a £1.4bn deficit in 2023/24 (subject to final audit), double the planned deficit of £720m. The report also highlights that measurable activity is higher than it has ever been and increasing year-on-year; waiting times and waiting lists for elective care are increasing, impacting on the complexity of patients when they do receive care and having knock on effects for urgent and emergency care.

All this is exacerbated by ongoing industrial action, high inflation, challenges with workforce recruitment and retention and many other cost pressures.

There is a lot of talk about productivity of the NHS and improving NHS productivity is certainly high on the agenda for NHS England and the Department of Health and Social Care, as well as equivalent bodies overseeing health and care in the devolved nations. 

While productivity understandably fell off a cliff edge during 2020/21 and 2021/22 due to the Covid-19 pandemic, official statistics published by the Office for National Statistics (ONS) indicate that it remains below pre-pandemic levels. Measuring productivity of NHS services is not straightforward. For example, the calculations may not sufficiently recognise the imperative for and investment in prevention and reducing health inequalities. 

Looking forward, the financial position does not look to be improving anytime soon without significant intervention and transformation, either nationally and/or within local systems and organisations. At the July NHS England board meeting, NHS chief financial officer Julian Kelly informed the board that 31 out of 42 ICSs are planning for a total deficit of £2.2bn this year – and this takes no account of any additional costs that would be incurred by further industrial action or a pay settlement beyond the level allowed for in allocations.

None of this comes as news to chief finance officers or their teams and none of it is likely to be resolved quickly by the change of government. There are fundamental issues to resolve in order for the NHS to tackle financial recovery and begin to move to a position of long-term financial sustainability. And it should be stressed that delivering financial plans is a board responsibility, not the sole concern of the chief finance officer.

However, the HFMA recently updated its briefing on The role of the NHS chief finance officer highlighting how challenging and demanding this role can be in the current climate. Furthermore, financial recovery and sustainability is a golden thread that currently runs through all of the 10 national committees and six special interest groups run by the HFMA policy and technical team. These committees provide a source of expert knowledge on healthcare finance and governance matters that can be used to develop and represent the association’s professional interests. 

With usually quite disparate agendas and work programmes, it has been interesting to talk to my colleagues in the policy team over the past few months and see the increasing sense of déjà vu as the same topics crop up across all meetings.

Responding to this, the work programme for the policy and technical team in 2024/25 will have a distinct focus on financial recovery and sustainability, delivered as usual through our briefings, webinars, roundtables, comments and other various forms.

We also recently created a new national committee, the Financial Recovery Group, specifically to provide a dedicated space for senior finance leaders to come together and discuss these challenges, to share good practice and to promote a collective and consistent approach to financial recovery where appropriate. 

Unsurprisingly the group was oversubscribed, with over 60 expressions of interest for the 30 places available. However, this does mean that we’ve been able to get cross-sector representation from all four nations, leading to rich and varied discussion in the meetings.

Our intention is to produce a series of short discussion papers highlighting the topics covered by the Financial Recovery Group, which will sit alongside our other briefings and outputs.

To find out more about the HFMA’s work to support members in this area, contact [email protected]