HFMA 2020: NHS board reports need major overhaul

Speaking about best practice in reporting as part of this year’s virtual HFMA annual conference, finance development consultant David Bailey (pictured) said the alternative title of his presentation was ‘why is financial reporting to NHS boards so awful?’.

‘It is not through lack of guidance,’ he said, highlighting wide ranging publications on the issue. ‘But the problem is, it is all principles and no practice. I want an exemplar – something that shows the best that is out there and how we might take our own reports and try to improve them.’

He analysed some real examples of NHS board reports, comparing them with the published guidance. For a start he suggested there was a problem with length. One monthly integrated performance board report he showcased, which was not untypical, came in at 72 pages – compared to guidance suggesting between 10 and 20 pages. And this was part of a full board report that stretched to 217 pages in just the publicly available sections.

‘Maybe we haven’t taken on the best practice from nearly a decade ago,’ he concluded. On further analysis he found his example report was littered with overly long sentences and pretentious language and reflected a ‘1950s’ bureaucratic style’. It was also full of jargon, acronyms and required readers to do calculations and analysis that should have been done for them. ‘We should aim for reports to be understandable by the public and not just directors,’ he added.

He stressed the need for plain English and for words that people would use if they were talking rather than writing a report. Every part of the system had created its own jargon and written their own reports in a non-standard way. But the phrase ‘run rate’ was a particular bug bear of his.

‘It is extremely fashionable at the moment, but what does it actually mean?’ he asked, highlighting 12 different definitions commonly used. ‘It means the rate at which it is running, but what is “it”?’

Mr Bailey also cast a critical eye over the use of tables. While he suggested improvements in presentation and format, he said finance practitioners should talk to their directors about how they wanted data presented. But he was critical of the use of RAG (red, amber, green) ratings, suggesting a red rating was the equivalent of an air bag going off after a crash. ‘Surely you should have been looking where you were going and stopping the crash rather than noticing it a month after it has happened. We need to know if it is improving or deteriorating,’ he said.

Graphs should also not be presented in a form that requires directors to undertake major analysis. ‘You should only present something which you’ve already analysed and where you know what questions would be asked,’ he said.

He recommended the use of statistical process control as a more meaningful way of presenting information and ‘taking financial reporting into a new decade’.

In general, he said that reports should be more condensed and much ‘punchier’. And he emphasised the importance of market research – talk to board members and other report users about what they need in terms of financial information to make decisions about strategic action.

However, he stressed that achieving best practice was a process, not a single event. ‘You can never meet everyone’s needs, but it is easy to improve reports month by month, a little bit at a time,’ he said.