Long-term plan: a financial perspective

by Steve Brown

08 February 2019

Finance teams face major challenges in supporting the delivery of the long-term plan

We’ve now had a month to digest the NHS long-term plan. For most people this has led to a realisation of just how big a challenge it represents for all functions in the NHS. Finance teams have a major part to play – both in supporting the required service transformation and in re-engineering themselves to operate in different structures, across whole systems and with revised roles.

In reality, it will take a lot longer to understand the full implications of the vision and the wide-ranging commitments set out in the plan. The direction of travel has been widely welcomed – greater focus on prevention, primary and community care, better use of technology and integrated care systems (ICSs) covering the whole of England.

But there is understandable anxiety about the sheer size of the to do list with concerns about the leadership capacity and funding available to do everything in the plan.

One thing is clear. The plan raises the level of expectation – an issue discussed by finance directors attending this week’s HFMA policy summit. The funding increase – £20.5bn in real terms by 2023/24 – is significant and the special case being made for the NHS compared with other spending areas means there is a huge expectation – from politicians, system leaders, key partners such as local government and the public – that the service will deliver on the vision.

This would be demanding given the very real challenges of an ageing population, increases in long-term illness and technological advances. But there are also significant forces that are outside the NHS’s control. We don’t yet know the extent of the wider health settlement in key areas such as education and training and capital. We don’t know the level of funding going forward for public health or social care. Both of these are central to constraining and reducing demand and helping to make the NHS more sustainable.

Workforce is a further major risk largely outside of NHS bodies’ control. The more than 100,000 vacancies – leading to an over-reliance on temporary staff – need to be addressed. Yet we don’t yet have the detailed workforce implementation plan, although it is being worked on. Other parts of the jigsaw are also missing – including the outcome of the review of access targets. And we have the continued uncertainty of a deal/no-deal Brexit threatening to compound the problem.

These uncertainties are a particular concern for finance teams. One of the highest profile measurables within the plan will be the return to financial balance – for the provider sector by 2020/21 and all NHS bodies individually by 2023/24. This may not be the sole responsibility of finance directors or finance teams, but they will be in the frontline of any recriminations.

Alongside the focus on financial control, finance teams will need to ensure they are able to support the wide-ranging transformation programmes envisaged by the plan. New models of working will need business cases based on solid forecasts for financial flows and costs. Continuing the move to a data-rich NHS, supporting a value-based healthcare approach to the development of services, is likely to have huge implications for finance professionals. They will need to deliver increasing amounts of costed information in accessible formats for budget holders and service teams to take value-based decisions.  And they will need to look across whole pathways rather than within the confines of their organisational boundaries.

There are still major areas of the financial framework that need to be put in place to support the move to a more collaborative model based on system working. New payment systems will be important to underpin new models of delivery once they reach steady state – and transitional funding flows will be needed to get them there. The blended payment system for urgent and emergency care is a step in the right direction – although it is not a major departure from the marginal rate system it replaces and has yet to convince many in the finance community (although it arguably has more value for mental health).

The finance function will also face changes of its own. The plan envisages a single clinical commissioning group for each integrated care system. While financial modelling and looking across whole systems will remain vital skills, those working in CCG finance must wonder what commissioning under this model will look like and what it means for them. On a similar note, promised changes to the contracting process and automated invoice processing are likely to mean a refocusing of financial support on more value-adding activities.

The HFMA policy summit agreed that finance staff would need continued and specific support in meeting the challenging agenda set out in the long-term plan. The association is already planning a briefing on the data required to support population value. The plan envisages population health management being adopted by ICSs as they look to understand the areas of greatest health need in their populations and match services to them. And it also plans to examine the legislative changes that could help the NHS to meet the long-term vision.

The plan will inevitably shape the association’s support offering to members for the years ahead. As a first step the HFMA is developing a briefing summarising the key issues for finance teams emerging from the plan and will be offering its support to the system leaders as the plan moves into the crucial implementation phase.