Feature / Heat mapping

The HFMA has launched a finance director survey as part of a regular financial temperature check to help understand the service and financial challenges facing NHS bodies. Steve Brown reports

Nine out of ten finance directors believe that the quality of services for patients will stay the same or improve, but that service transformation and integration need to happen much more quickly to meet the current financial pressures. There are also significant concerns about the lack of system management, which is seen as vital for taking forward large-scale, health economy-wide transformation projects.

These are some of the key findings from a major survey on NHS finance directors undertaken by the HFMA – the first in a regular series of biannual financial temperature checks by the association.

With nearly 200 directors responding to the survey – representing more than 40% of NHS finance directors and chief finance officers, including half of all provider finance directors – the survey provides a robust assessment of finance leaders’ current views of the finance and service challenges they face.

The survey report – NHS financial temperature check: June 2014 – reviews the financial performance in 2013/14, with a net £194m overspend against plan across clinical commissioning groups, NHS trusts and foundation trusts. Finance directors told the HFMA that they had fallen short of savings targets – CCGs achieving 2.3% savings on operating costs against plans for 2.5% and providers falling short of average 4.8% plans by 0.3 percentage points. Some 14% of CCG savings and 17% of provider savings were also achieved non-recurrently, adding to cost saving pressures this year.

Temperature rising

The association said it was clear that financial pressure was increasing. On average, CCGs have savings targets of 2.8% in both 2014/15 and 2015/16, while trusts have targeted higher levels at 4.8% and 4.7% respectively. However, only just over one in three provider directors were quite or very confident of achieving their financial targets in 2014/15 – while 20% were not very or not at all confident.

There was more confidence in CCGs, with just over half of CFOs confident they would reach their targets. But confidence levels decreased further when they were asked the same question about 2015/16.

For providers, the key cost pressures were the costs of rising demand and those associated with increasing nursing staff numbers, in some cases as a result of quality reviews.

However, there were other pressures too, such as commissioners being stricter about contract penalties and policies such as the marginal rate emergency tariff. For commissioners, the main pressures were identified as emergency care, continuing healthcare and increasing demand.

‘The NHS has done a good job of maintaining a sound financial platform, which is essential for delivering high-quality services,’ says Paul Briddock, HFMA policy and technical director. ‘But it is clear that this pressure is mounting. The efficiency savings needed locally are unrelenting and the small shortfall on cost savings and reliance on non-recurring measures are clear evidence of the increasing challenge facing health economies.’

Despite the rising financial challenges, finance directors are adamant that quality will not suffer. More than 90% said they did not expect the quality of services to deteriorate – in fact nearly four in 10 directors expect quality to improve. However, directors acknowledged that not all aspects of quality were seen as equal. When pushed, both providers and commissioners suggested that access and waiting times were the most vulnerable aspects of quality, with patient safety (providers) and patient choice (commissioners) seen as the least vulnerable.

While NHS bodies recognise they have to balance quality with statutory financial targets, there is clear evidence that quality is widely seen as the overriding must-do. As one FT finance director put it: ‘Patient safety and service quality will be maintained but at a financial cost.’

Another said: ‘The trust will do all it can to ensure that patient safety and outcomes are not compromised, but inevitably there will be an impact on patient access and the range of services provided.’

There were also concerns about the impact on staff morale, as the workforce picks up the strain to deliver more and better with less.

Transformation is seen as the key response to the combined quality and financial challenge. This can mean new ways of working at individual service level or across whole health economies, and NHS bodies are looking across the whole spectrum of opportunities.

Redesigning job roles

Provider finance directors said their main tool for addressing cost pressures would be to redesign jobs to reduce the cost of headcount. Reducing headcount, investing in community services to reduce admissions, reducing clinical variation and redesigning care pathways were also seen as important.

For CCGs, greater integration of community, mental health and acute services and investing in community services were the top priorities, closely followed by reducing clinical variation. The cross-economy nature of many plans was evidenced in additional detail provided by some CFOs. Many of their proposals centred on

reconfiguration or integration.

Many of these proposals related to primary care, with the CCG supporting whole-system planning and identifying areas of spend that were not achieving value for money in the health outcomes they delivered.

Competing demands

‘We can see a complete focus on care quality from finance directors, but there are some tensions,’ said Mr Briddock.

‘Providers are committed to ensuring the right staffing numbers – Monitor recently reported that foundation trusts increased staffing levels by 24,000 last year – in part a response to the Keogh and Francis reviews and the quality agenda.

‘But this has to be viewed against overarching goals to transform services and deliver more services in the primary and community sectors, which implies a corresponding reduction in acute capacity. This highlights the complexity of the transformation that health economies are trying to accomplish.’

The survey asked finance directors to identify their main concerns about the financial positions of their health economies, rating their concern from ‘no concern’ to ‘very concerned’. About 40% of directors were ‘very concerned’ about the lack of detail in CCGs’ plans and the risks of these plans not being delivered. But more than 80% of provider directors (five out of six) and two thirds of CCG CFOs were ‘very concerned’ or ‘concerned’ about the lack of system management across their health economies.

The survey also sought directors’ views on the better care fund (BCF). The fund will come into effect on 1 April 2015 and have a minimum value of £3.8bn, including a £1.9bn transfer from CCG allocations. It aims to support the integration agenda by helping health and social care services to work more closely together. It is hoped that the fund will help to deliver services, particularly for older and disabled people, that reduce demand of hospital admissions and reduce lengths of stay.

However, only 2% of provider finance directors and 11% of CCG CFOs think the fund will help improve their organisations’ services for patients and service users in the first year. This rises to 18% (providers) and 52% (CCGs) if the timescale is extended to one to three years and to 25% and 62% after three years – demonstrating much greater optimism among commissioners.

Provider finance directors were slightly more positive when asked if services would improve in their health economy rather than their organisation, with 32% thinking services will improve after three years. There was a similar response when asked how cost savings might arise as a result of the BCF in the same period.

Just over half the provider finance directors said they had been involved in planning discussions for the BCF. And just 63% of CCG finance directors reported that existing QIPP schemes had been tied into BCF plans.

Action points

Finance directors were also asked to identify their top three actions to help reduce local financial pressures. Transformation was the most frequent suggestion. For some, this meant horizontal integration across secondary care providers, while others believed vertical integration of secondary, primary, community and social care services was needed. But nearly every director said change needed to happen quicker – with further references to the lack of system management to facilitate these changes.

Greater political support for change, transformation funds and better access to capital were all highlighted as requirements.

Several finance directors called for improved partnership working across health economies. This could mean joint planning over a five-year horizon with agreed levels of activity and a focus on care pathways and risk-sharing rather than money.

Earlier notice of winter pressures funding, more control over the pay bill, changes to the payment system and more realistic tariff efficiency requirements were also seen as important by some respondents.

There was also an overarching plea from finance directors for an honest debate with the public about the need for change within the NHS, including clarity about the services that are affordable with the funding available. As one finance director put it: ‘There needs to be an acceptance that there is not enough resource in the overall health economy and an acceptance that we need to do things differently.’