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The latest report from the Healthcare Financial Management Association (HFMA), released in June, details the opinions of 188 NHS finance directors across England about the financial challenges facing the NHS. The report, entitled the NHS Financial Temperature Check, found that despite impending pressures, over one third (39 per cent) of senior directors expect the quality of services in the NHS to improve over the next few years and more than half (53 per cent) expect quality to remain consistent in the same time period.
The news agenda is awash with speculation regarding the future of the NHS and the pessimism surrounding it is indeed warranted.
Current figures have shown that the number of organisations overspending or reporting a deficit has increased since 2012/13 and more organisations are reporting an actual deficit than planned to at the beginning of this financial year. In the last financial year, clinical commissioning groups (CCGs) and provider trusts delivered planned financial savings of 2.3 per cent and 4.5 per cent respectively, but this was not the case everywhere and fell short of the overall planned savings (2.5 per cent and 4.8 per cent respectively). Consequently, over a quarter of NHS providers reported being in deficit during 2013/14.
The current picture
Looking to 2014/15 and 2015/16, the outlook doesn’t look much better: 36 per cent of provider trust finance directors are ‘quite’ or ‘very confident’ of achieving their financial targets in 2014/15, but 20 per cent are ‘not very’ or ‘not confident at all’, and 44 per cent said it was ‘too early to say’. In 2015/16, just over a tenth of provider trusts (12 per cent) are confident that they will achieve their financial targets. CCG finance directors are more positive, with a half (54 per cent) being ‘quite’ or ‘very confident’, one fifth (21 per cent) are either ‘not very’ or ‘not at all’, and a quarter (25 per cent) said it is ‘too early to say’. Cost pressures cited by both groups included the rising demand for services and increasing the number of nursing staff and emergency care.
It is apparent that resources are being stretched throughout the NHS, and although many organisations are just coping for the time being, an increasing number of them report a deficit, and those organisations that have previously been financially stable are now beginning to voice concerns. If continued external pressures remain, it is clear that the outlook for the NHS will be even more challenging. However despite this, it is encouraging to see that finance directors do not expect to see quality deteriorating – in fact, many think quality will improve.
To ensure that NHS organisations remain clinically, financially and operationally sustainable, there are five key areas of focus that HFMA would recommend. Firstly, it is clear that we will need to redesign, and adapt, services in order for quality to not be compromised. We know many finance directors are calling for the pace of service transformation and integration to be increased to help with delivering high quality, safe care in an efficient and appropriate manner. The future success of the NHS depends on the clinically led transformation of services, backed by managerial support, and utilising the expertise and skills of NHS finance staff to help this to happen as effectively as possible.
There will be barriers to transformation along the way, but to help, it is necessary to have strong system management in place to ensure that organisations are supported sufficiently to develop the right solution for their area. These will be based on clinical evidence with support needed across the board, from members of the public, to patients themselves, and politicians. In order for faster transformation to occur, there is also a need for finance directors to share good practice and evidence of cost savings that have arisen from new care models. In some cases, where there is financial instability, organisations may need additional investment for change to happen, particularly where resources are being shifted from one sector to another.
An open discussion
Secondly, for a ‘fit-for-future’ NHS to be made possible, it is crucial that there is an open and honest debate with politicians, the public, and most importantly patients, about the financial challenges facing the NHS, the need for change, and the quality and scope of services that is available. In April this year, the Two Sides of the Same Coin briefing, led by the HFMA and the Academy of Medical Royal Colleges, Faculty of Medical Management and Leaderships, and the NHS Confederation, outlined that an open public discussion is needed and levels of funding for the NHS required must be agreed.
The third key recommendation is to utilise the expertise and broad range of skills of NHS financial staff to support this much‑needed change. These skills should be shared amongst organisations to help meet financial challenges ahead. It is necessary for finance staff to continue to work closely with both clinicians and managers and to provide them with the information they need, along with support to make clinical decisions with a full understanding of the related financial implications. The HFMA, through its member committees and groups, seeks to influence policy so that the payment system, costing methodology and allocation of resources works for NHS organisations across the board.
The Better Care Fund, due to come into play in April 2015, has been of interest to clinicians, the public and politicians recently and therefore it is imperative to have solid foundations to ensure that the benefits are delivered, whilst minimising and managing the associated risks. There are many opportunities that the Fund, and integration more widely, present but a thorough assessment of planned costs and savings – including a sensitivity analysis – are needed to ensure these solid foundations are in place due to the significant impact on financial sustainability that the Fund could bring, and to ensure they are supported across the health economy.
And finally, with funding increases extremely unlikely and tough targets continuing to be demanded from the NHS organisations, it is clear that a united effort is required in order for the NHS to be a sustainable service going forward. Clinicians, managers and finance staff must work together to consider finance and quality as one, to ensure there is a clear focus on obtaining the maximum value from every pound spent on the NHS.
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