Feature / Class act

The NHS finance function is already working to high standards across the UK, having improved performance significantly in recent years. But new HFMA chairman Bill Shields is setting his sights on an NHS finance function that is world class

‘Let’s get things straight. We have seen some dramatic improvements in the NHS in recent years and the finance function has played a major – and at times leading – role in that success,’ says Bill Shields, new chairman of the HFMA. ‘But we now need to bank this performance and move on. We need to reset our sights higher and push performance on again.’ Not one to set soft targets, Mr Shields believes the goal for NHS finance departments is nothing short of delivering financial performance that is world class.

Straight talking – some might say blunt – is a distinct characteristic of the new HFMA chairman, who took over from Chris Calkin at this month’s HFMA annual conference in London. Mr Shields, director of finance and performance at the South West Strategic Health Authority (or NHS South West in the new terminology) admits he prefers a direct approach – he always looks for action points and deliverables and to move the agenda on.

However, while he is keen to get the finance function focused on building world class finance – his theme for his year as HFMA chairman – he says the improvements in recent years should be recognised. And he believes NHS finance is already operating at a very high standard that compares to the best in the private sector and wider public sector.

‘It is not that long ago that we had organisations submitting accounts up to a year late,’ he says. ‘But we have now brought the whole timetable forward and are working towards a position where next year the Department of Health will be able to submit summarised accounts [to Parliament] before the summer recess. The quality of the accounts is also good – we’ve had no qualifications for over a decade.’

Impressive ALE scores

He adds that the Auditors’ Local Evaluation scores also make impressive reading. Some 93% of NHS bodies (not including foundation trusts) are now achieving level 2 or higher, indicating that performance met or exceeded minimum standards. This represents a third year of improvement under ALE. Half of all bodies were assessed at level 3 (performing well) or level 4 (performing strongly) in the 2007/08 assessment.

Average scores over the last three years have risen from 1.73 in 2005/06 to 2.48 last year. ‘This is a testament to some really strong financial performance,’ says Mr Shields.

During the same period, the NHS has moved from deficit to surplus – effecting the turnaround in one year – and is now sustaining that surplus. He is well aware of the financial turmoil in the wider economy and knows that the health service may not be immune from some of the consequences. But he believes it is relatively well placed. ‘We’ve known that we are moving towards reduced growth compared to recent years – but we have planned for it. And as a consequence, I don’t think we’ll come down with the same bump [as the private sector].’

He suggests that finance directors and their departments have raised their game. For instance on the provider side of the health service, the foundation trust movement (and the mirroring of these arrangements for NHS trusts) has driven the commercial development of finance managers – in areas such as costing, planning and forecasting.

‘We’ve already got a significant part of NHS expenditure under a similar regulatory regime to the private sector, which gives us a good case for arguing we are at least matching their performance,’ he says.

But this is no time to sit back and be complacent. ‘NHS finance has done a fantastic job,’ he says. ‘But if we are not going to get caught out in a fast moving environment, we have got to stay one step ahead.’

PCT support

Commissioning is a key area. ‘We need to provide support to primary care trusts as they strive to take the lead role in the NHS and this includes finance,’ Mr Shields says. ‘So that is still a significant task going forward.’

The World Class Commissioning agenda will drive development in PCTs. Mr Shields believes that the initiative will require PCTs to ‘demonstrate a level of performance, both operationally and strategically, far removed from that which we have seen in the past’.

He says the development areas for PCT finance will include long-term financial planning, economic appraisal of investment programmes and completion of five-year cash plans and balance sheets.

But it is not just in commissioning that NHS finance needs to keep pushing forward. There are immediate challenges for the whole NHS in meeting the faster closure timetable and in switching to international financial reporting standards (IFRS).

And there is a more general issue about continuing to deliver in a period of restricted growth. The financial turnaround in many parts of England during 2005/06 was spectacular, with many organisations adopting robust, commercial style turnaround techniques.

But while impressive, the step change was achieved during periods of sustained overall growth in funding. ‘We now need to deliver in a period of restricted growth – the macro economic conditions are different now – and the skills of finance professionals will need to come to the fore and we have to be assured that we have a world class finance function.’

Nationwide call

Mr Shields is also conscious that the call for world class finance must reach the four corners of the UK. ‘Across Scotland, Wales and Northern Ireland, the challenge is no less burdensome,’ he says. The fact that market-style reforms have been rejected is irrelevant, he suggests. But he does believe that the recent and on-going organisational and governance reform in these systems makes the context even more challenging.

The push for world class finance will need to extend beyond the finance department. Building on one of immediate past chairman Chris Calkin’s priorities – greater clinical engagement in financial management – Mr Shields says that ‘getting a real understanding of finance into the DNA of our organisations’ is now of ‘crucial importance’.

Taking this further will involve building on existing projects such as the HFMA’s e-learning-based Introductory Certificate in NHS Finance and its work with the RCN to deliver financial training to nurses.

True to character, Mr Shields has an action plan to start the journey towards world class finance. This plan has been put together following a meeting of a specially convened HFMA world class finance group, which will continue to meet over the next 12 months to refine and add to the programme. The group has identified four areas for progress.

The first is getting the basics right. It has been over a decade since the Building on framework for the future finance strategy was published and seven years since its NHS Plan makeover, Building on success. Mr Shields believes it is now time to refocus on the basic requirements of a fit-for-purpose finance function. This could involve redefining the basic elements and standards of the finance role in the new NHS environment and the competencies needed to deliver them.

Second, Mr Shields wants to focus on talent management and the development of finance leaders. ‘We need to find ways to encourage finance managers to work on both sides of the commissioning/provision divide,’ he says, although secondments and job shadowing may also offer ways for managers to get broader experience. Preparing deputies for the step up to finance director will also be on the agenda.

In a third strand of work Mr Shields is keen to undertake some comparative work, putting the NHS finance function alongside those from the wider public services, the commercial sector and even international bodies. ‘This will require research to be undertaken to establish how we compare with these sectors, investigating the development of an international exchange programme and using site visits to UK organisations to look at particular projects or finance department arrangements.’

The final area is supporting HFMA members through change. Mr Shields believes one possible project could see a UK exchange programme enabling finance managers to partner with counterparts in other organisations across the UK to get a closer look at different areas of the healthcare business. He also plans to push for a re-launch of the HFMA mentoring scheme and believes branches could have a role in forging closer links with their local economies as part of a broader development agenda for members.

Mr Shields makes no apologies for the world class banner. He acknowledges that there are already NHS finance teams working to world class standards in aspects of their work and there are opportunities to learn from other sectors. ‘My aim this year is to identify these examples, to find ways to spread this best practice across the service and to support individuals and finance teams to realise their potential,’ he says.