Technical / What will financial reporting look like in new integrated care systems?

The timescales are tight because, if all goes to plan, the new bodies will come into being on 1 April 2022.

Less than a year is no time at all to get the complex new governance arrangements in place. The temptation will be to roll over existing arrangements from either clinical commissioning groups or the shadow arrangements that the ICSs are putting in place. But that should be resisted.

In terms of financial reporting, the new organisations will continue to use the Integrated Single Financial Environment (ISFE) that is used by NHS England and NHS Improvement, as well as all CCGs.

The annual accounts may well look very similar to the ones currently produced by those bodies. However, this is the time to ask whether there is room for improvement.

Note 4 of the NHS England consolidated annual accounts for 2019/20, reports that of £122bn spent on supplies and services, more than 60% has been spent on services from NHS foundation trusts and NHS trusts.

It may be helpful to at least understand what type of services they were spent on, so it is possible to see how much has gone on acute, mental health and community care.

In the longer term, this audited analysis could be used to assess whether the NHS long-term plan aim to move care out of hospital into the community has been achieved or not.

When it comes to financial reporting, it is tempting to start with the familiar. But is this the opportunity to start with a blank piece of paper and think radically? And if so, what are the questions that should be asked when filling in that paper?

The white paper and the NHS long-term plan both focus on the aim of making planning and delivery of services more straightforward across organisational boundaries, as well as focusing on population health needs to improve lives and life chances.

To support this shift in focus, financial information will be needed to help boards understand where the money is being spent and what the outcomes of that investment are.

Does this mean that financial reports should be structured to provide information on the resources spent on initiatives to improve population health, the cost of health inequality and the savings made by changing patient pathways? And, if so, how will that information be collected in the ledger?

Initiatives such as programme budgeting or NHS RightCare provided some of that information – is this an opportunity to hard-wire the financial data collection into the ledger?

There has been a growing recognition of the importance of patient-level costing in recent years. But, while there are notable exceptions, the bulk of the progress has been within acute organisations.

There is still some distance to go before we get a handle on the costs of complete patient pathways, which is vital to the whole integration and transformation programme.

The proposal to move cost collections from an annual exercise to a quarterly one makes sense from the point of view of starting to use this information in something more like real-time. But the national collection is resource-intensive and currently requires data to be submitted in a different format to that used locally by many trusts. With a blank piece of paper, it would seem sensible to harmonise the way costs are reported to reduce the administrative burden for provider bodies. The NHS is not one body but many different bodies with differing aims and objectives. At one end, it is expected that a lot of the detailed planning will take place at place level – so will financial reports be needed for each place? If, as the white paper suggests, commissioning is delegated to places aligned to local authority boundaries, then how is that information going to be collected and reported?

It is unlikely that all commissioning, particularly for more specialised services, will be at place level. So financial information will need to be cut in different ways depending on the arrangements in place. The proposals are that ICSs will have the flexibility to operate locally in the way that best supports the needs of their population and this is expected to develop and change over time.

Unfortunately, charts of accounts are not hugely flexible and are difficult to change once they have been developed. The pressure is on to devise a financial reporting system that can provide information in different ways to different users without an army of finance staff devising spreadsheet workarounds.

So, there needs to be local flexibility. But most NHS bodies (and non-NHS bodies) will work across more than one ICS – particularly ambulance trusts, mental health providers and tertiary care providers. As each of those ICSs will want financial information, it will be important that the requests are not different for each one so that returns can be completed accurately and on a timely basis.

At the other end of the scale are NHS England and NHS Improvement and the Department of Health and Social Care. The information they need to show that national targets have been met and the financial regime is operating as planned is different again.

So, when thinking about financial reporting for the new way of working, the best place to start may be to understand who needs what information and why.

Debbie Paterson is the HFMA’s policy and technical manager