Show me the money

by Steve Brown

22 June 2022

It is not all about the money – finance and service information should be shown side-by-side in board reports, with finances put into the context of operational performance. But how the figures are presented is important.

Financial reports to boards are vital for the successful management of NHS bodies. How else can non-executives and non-financial board members see how the organisation is performing against its key financial metrics and course-correct where necessary?

They can also perform a useful role in accountability, showing the public and key stakeholders how funds are being spent and the financial health of the organisation.

But NHS reports don’t always deliver on these goals. And at times they are far from an easy read. There can be a tendency to use technical jargon, some of which – run rate for example – has different definitions in different organisations. And it is easy to get confused whether a deficit is the actual overspend against income for the year, a deficit compared to the planned position (which might itself be a deficit) or the underlying position, stripping out non-recurrent contributions.

And while reports are often full of figures and charts, the reader isn’t always helped to understand what they are looking at or the numbers they should be concerned about.

There are areas where the NHS has picked up good practice in recent years. Many NHS bodies produce integrated board reports, for example, that report on operational and financial metrics in one place. But just how integrated are they? An integrated report should not simply have two halves – one for operational matters and one for finance. It should instead make it clear how these two  issues are connected. So don’t just report on the most recent use of agency staff, for example, but on the same page highlight the financial implications or context.

If there is room for improvement, there are also good examples of how to do financial board reporting well and the HFMA has now pulled some of this good practice into a new report. Board financial reports – getting the basics right has been produced in conjunction with NHS Shared Business Services and builds on a roundtable last year and reported in the September 2021 issue of Healthcare Finance.

The roundtable highlighted many of the areas that finance teams should address – clear language, easy-to-understand tables and graphics, the right balance between enough information and providing too much detail, and the importance of context. The new briefing reinforces these messages and signposts some examples of where NHS bodies seem to be getting this right.

There are some big – and perhaps obvious – messages. It is not all about the surplus/deficit, even if this does sometimes appear to be the over-riding priority for regulators. Summaries should also look at balance sheet metrics and the cash position. Narrative is important – and should be as jargon free as possible. The aim is to explain in as clear a way as possible, not to write something that only those versed in the dark arts of accountancy can understand.

Forecasts and comparisons with previous years, national standards and similar organisations should also feature. And trend information, using statistical process control charts, is also a good idea that finance teams could use more often.

There is no model report for organisations to populate. Some organisations used to follow the template set by Monitor and NHS Improvement quarterly reports, which provided good detail and background to all the key figures on income and expenditure. However, the current NHS England and NHS Improvement board finance reports have backed away from this context-and-detail approach in favour of far more minimal content.

So, the HFMA guide really fills a gap.

There can be a tendency for finance reports to follow the same format each month with no assessment of whether they are providing the right information, presented in the right way, to underpin good decision making. The challenge in the HFMA briefing is for finance teams and boards to review their own finance reports against a checklist of questions.

Even where NHS body reports are getting most things right, there are always opportunities to improve and the new HFMA publication may just provide the inspiration.

Board financial reports – getting the basics right