Sensitivity important in application of ‘reset’

by Paul Briddock

22 July 2016

The financial reset announced by NHS Improvement and NHS England aims to ‘sharpen the direct accountability’ of trusts and clinical commissioning groups to live within the resources available.

Finance directors are in complete agreement about the need to live within resources.  We have long argued that finance and quality are two sides of the same coin, and when they are out of balance, the service cannot deliver value. Continuing to operate with the current level of provider deficits will inevitably impact on service quality – a point underlined by the falling confidence levels on maintaining quality in our most recent NHS financial temperature check – and is simply not sustainable. It cannot continue.

So the HFMA welcomes the reset as a high profile statement of the fundamental importance of returning to financial balance. The suite of measures that have been announced are billed as supporting the providers with the greatest financial challenges to bring about rapid financial recovery.

Replacing national fines with trust-specific incentives is a sensible step as is the move to a two-year planning and contracting round. And targeted support should in general be welcomed, but this needs to be accompanied by a deep understanding of the significant pressures facing all providers and the unique circumstances surrounding some specific providers.

Financial recovery will not be achieved by shouting louder and raising performance requirements beyond what is realistically achievable.

The vast majority of providers have agreed control totals for 2016/17 – the achievement of which is linked to the release of sustainability and transformation. But finance directors have told us that the risk level associated with delivering these financial plans is high.

Where providers can learn from each other – they should do so. Where services can be re-engineered across whole health economies – so they are both better for patients and more sustainable – we should pursue with as much speed as possible. And we should ensure that existing processes are as efficient as possible – taking full account of the opportunities highlighted by Lord Carter in his review of provider productivity.

But we also have concerns about some of the measures unveiled in the reset. For example, there has been a focus on 63 providers with ‘significant pay bill growth’. This needs to be handled sensitively. Assuming this growth is excessive is too simplistic. Using it as a prompt to investigate, ask questions and understand causes and context is absolutely the right thing to do. But it should not be used as an unquestionable indicator of excessive spending – taking no account of local demand and the starting place in terms of staffing levels.

Similarly we need to understand more about the push on shared back office services. Shared financial services are clearly a part of this and the finance function cannot simply object on ideological grounds. But we need to see examples of where this has delivered financial and service benefits at scale in the specific context of the NHS.

Finance directors often raise objections to shared services on the basis of losing direct control of key services. This may be a false perception and based on anecdote rather than fact or experience. But we need to make sure that, at a time when financial control is more vital than it has ever been, we do not head down a road that would add to the challenges.

Some of the problems providers face cannot be fixed locally on their own. For example, some of the high pay costs are driven by high use of agency staff, which itself is linked to a mismatch in supply and demand for staff. The solution is getting the workforce planning right – although this obviously cannot be fixed overnight.

Some of the solutions also lie with new models of care – and there is excellent work being taken forward in national vanguards currently. But again these models will take time to deliver and, if appropriate, rolled out more widely.

In the meantime we have to ensure the public ​is fully involved in discussions about the NHS. The danger of the ‘reset’ is that it could give the impression that the problem is all down to financial management. But if this can’t close the gap, we need to have an open and frank discussion about what we can afford to deliver at the right quality within the resources available.