Getting to grips with good governance

by Sarah Bence

11 August 2017

During August, we are taking the opportunity to focus on some key areas of the HFMA’s policy and technical work and remind members about some of the outputs that might be useful.

Each week we are focusing on a different topic.  This week, the focus is governance.

The NHS is publicly funded – the Department of Health receives its money as part of the Treasury’s spending review process. As this is taxpayers’ money it comes with strings attached – namely that there is an absolute requirement to demonstrate that it is used well and for its intended purpose. 

All NHS bodies are responsible for how they spend these funds and the decisions they make and need to demonstrate absolute probity in all that they do.  This means more than producing financial accounts once a year: as public bodies, NHS organisations are required to justify on an ongoing basis that they are using public money wisely and effectively and that they are operating openly and transparently.

The way that this happens - the systems in place that make clear who is responsible for what, and how and by whom decisions are taken - known as the governance framework is rarely a subject that makes newspaper headlines - unless of course something goes wrong. And then there are people queuing up to point fingers and ask questions about why the right procedures weren’t in place and who should have known what and when they should have known it.

Governance is concerned with how an organisation is run – how it structures itself, how it is led, how it is held to account and how it justifies its actions or decisions.  It also means that good governance is the responsibility of all members of staff, not just those in leadership roles. The reality is that good governance is not just about avoiding crises and catastrophes, it is fundamental to the delivery of good patient care. It is at the heart of meeting demanding financial targets in a period of unprecedented financial challenge. And it is essential to the successful transformation of service delivery whether through greater partnership working or introducing new models of care.

Good governance is not something that can be taken for granted either- it takes planning, foresight and co-operation. NHS bodies must set up strong processes and regularly check these processes are fit for purpose.

In The importance of strong financial governance, the HFMA highlights some of the early warning signs that could help organisations spot financial governance problems early, so that they can be corrected – particularly important when finances are so tight.

Perhaps the biggest challenge facing the NHS in England now is to move to system working – partnership working at scale and quite often implemented quickly. Moving away from an organisational focus to looking at how to deliver quality services that are cost effective across whole systems makes sense. But doing it while we retain the existing system architecture and the requirement for individual organisations to meet their statutory duties provides some real governance challenges. While there is guidance for non-executive directors/ lay members when scrutinising the annual report and accounts, the HFMA has also explored governance issues for system-wide working in its Emerging approaches: developing STP plan governance arrangements briefing.

IT is likely to be fundamental to the transformation agenda. But history tells us that major IT projects present their own unique governance challenges. The HFMA has also produced a briefing looking at common pitfalls of IT projects. It includes common examples of the difficulties faced and for each issue covered, there is a brief explanatory note followed by a series of bullet points for wider consideration.

The NHS also receives many millions of pounds in charitable donations each year. The operation of NHS charities and how this money is used – including the meeting of the public benefit requirements, is also tightly governed.  The HFMA has produced guidance for members in its briefing NHS Charities and public benefit (England and Wales) while a more recent publication also covers good practice in the handling of cash donations.

There can be a tendency to equate governance to bureaucracy – which tends to be used these days in a pejorative way. In fact, it is anything but an add-on process, with good governance an integral part of delivering high quality healthcare.

Other HFMA publications, you may be interested in