Improving local system leadership

Over a year after the abolition of the main commissioning and oversight bodies in the English NHS, which saw the creation of a new system of commissioning healthcare and GPs given greater decision-making powers as part of clinical commissioning groups (CCGs), the Health Finance Management Association (HFMA) has surveyed almost 200 NHS finance directors in order to understand the challenges local health economies currently face.
   
The results showed that 107 out of 129 provider trust finance directors and 43 out of 63 CCG chief financial officers (CFOs) flagged ‘system leadership’ as something that was giving them cause for concern within their local health economies. But what exactly is ‘system leadership’?
   
Though it seems difficult to define, fundamentally it is about the people and organisations in an area using their influence to get consensus about a way forward and how to positively support change.
   
HFMA has been working with senior NHS finance directors to consider the role of system leadership, the aspects that are missing or not working well in the current system and what practical steps finance directors can take locally.

Lack of System Leadership
The company are all aware that the NHS faces a challenging future, and organisations need to adapt and support transformation to ensure that the health and care system is fit for the future. There have been several reorganisations in recent years and experienced several layers of system leadership, from regional offices to SHAs.
   
The survey, however, pointed to an overall lack of system leadership to coordinate transformation schemes across a number of organisations, which we believe, should be of significant concern as these are considered to be where the biggest cost savings will now be found.
   
Changes to regional and local management in the NHS are considered by some finance directors to be contributing to the challenge to provide high-quality care with the money available through service transformation and integration.

In the same survey, in some instances respondents ‘felt the reasons for slippage in cost savings plans were out of their control because planned system reconfiguration by commissioners or other providers had not taken place’.
   
The abolition of SHAs has not been followed by a single strong source of system leadership. But some finance directors questioned whether the problem is that the current system is just too new and it needs longer to make it work.
   
Local NHS organisations have previously been used to centralise planned decisions around large transformations of care pathways, reconfigurations of hospitals and how to deal with financial deficits.

Relationship management
This kind of top-down management has removed, to some extent, the need for a key aspect of system leadership – relationship management. Relationships need to have a chance to mature and develop to the point where all parties trust each other to have each other’s organisations’ best interests at the front of their minds.
   
In what are times of severe financial pressure, many organisations may seek to protect their own financial position before working in partnership with others. But finance directors are clear that service transformation and dealing with financial difficulty can be managed locally and do not need to include national organisations.

Responsibility
System leadership also needs clear areas of responsibility and lines of accountability. The English NHS remains, after the recent reorganisation, a complicated mix of organisations that need to work together.

The Scottish, Welsh and Northern Irish systems arguably remove one of the main barriers to change as integrated systems of commissioning, provision and social care, in some cases, mean the people with decision-making responsibility either work for the same organisation or there is only one person.

System leaders understand the need to put patients first and this priority comes ahead of individuals loyalty to their own organisations. But to allow this there needs to be clear understanding about responsibility for services and money and where it lies. Leadership flows from this and needs to be localised wherever possible in the new system but with a clear escalation policy, recognising that some problems are regional, so cannot be handled locally.

Improving patient service
There was also a perception among surveyed finance directors that change is often only driven by a ‘burning platform’ rather than evidence-led and part of a defined strategy. Finance directors discussed the dangers of unclear leadership, concluding it can lead to uninformed decision-making or avoiding difficult decisions. For instance, they highlighted that tendering out services is often seen as the solution where the problem is a lack of leadership or ability to identify or bring together local service leaders.

While this approach may reduce the unit price of a service through economies of scale, the real goal should be collaboration to review and improve patient services.

Changing parts of the service
To fix this, it is crucial that there is joint work between commissioners, managers and clinicians to change parts of the service that are no longer working properly. It may also involve sharing financial risk and requires all the key people to be willing to trust and talk to each other.
   
Some respondents also felt the NHS market concept is contributing to the lack of system leadership and joint working – providers are looking for revenue growth and commissioners are seeking to reduce unit costs without a joint consideration of how to improve services for patients.
   
This aspect of system leadership needs commissioners to consider the healthcare value-for-money equation (health outcomes per pound spent), something that was raised in the recent joint briefing ‘Two Sides of the Same Coin’. It argues that services need to be operationally, clinically and financially sustainable and notes that ‘NHS boards need to work in partnership to agree how to spend the resources available to best effect, rather than individual organisations making cost savings in isolation’.

Local accountability
The HMFA believe that finance staff need to be at the forefront of local change, supporting clinical transformation through costing the different options available and appraising their merits, rather than taking leadership decisions based on prioritising costs ahead of quality, capacity concerns or the overall benefit to patients and the local health economy.
   
Their members highlighted a number of barriers to effective system leadership, such as the difficulty of CCGs working together in the current legal framework to make joint decisions; the effectiveness or influence of health and wellbeing boards; and how to keep multiple partners signed up to delivering shared objectives, especially in a tough financial environment.

A clear system of local accountability and responsibility would ensure local leaders are rewarded for the right things and are not punished for things that run counter to the objective of high-quality healthcare.
   
Ultimately, finance directors felt that although many organisations work together extremely successfully, the individual sovereignty of organisations can sometimes be the overriding factor in partnership working.

Stronger together
In conclusion, in order to improve local system leadership, a number of things need to be addressed. Firstly, revising pricing for services through locally agreed prices and payment mechanisms. Additionally, examining the totality of healthcare spending in an area, rather than individual organisations, and allocating resources in the optimal way can greatly improve local system leadership.

Strengthening CCG commissioning leadership and making sure the legal structures and CCGs’ powers are sufficient, can also provide improvements.
   
However, the strongest message is that there needs to be collective responsibility across all organisations to incentivise every manager and clinician, so that if one organisation fails then every organisation fails. Simply put, organisations are stronger together.

Further information
www.hfma.org.uk

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