Feature / Clinical finishing

One of my most pleasurable experiences recently has been to be involved in judging awards for the Health Service Journal and the HFMA. It is not because I like the feeling of power or handing out ‘constructive criticism’ like the judges on Strictly Come Dancing. It is a very uplifting experience for two reasons.

The first is the seemingly boundless enthusiasm and commitment of all the entrants, which always rubs off on me. The second is the service transformations they have achieved. And it is evident that finance staff have played an important part in each and every one of them.

Wirral PCT, which won the HSJ Primary Care Trust of the year award, and Devon Partnership NHS Trust, which won the trust section of the HFMA award for finance and efficiency, sponsored by the Audit Commission, have a surprising amount in common apart from their enthusiasm and ability to transform services.

Both have built their success on sound finance and sound financial management after a period of financial problems and deficits. It is a story some, perhaps many, of you will recognise. The latest forecast for 2007/08 financial outturn clearly shows this. It is also the story told by the latest set of auditors’ local evaluation (ALE) results.

The second factor that Wirral and Devon have in common is the depth of their clinical engagement and the relationship between their finance and clinical staff. This is the issue we have to get right if services are to be significantly improved and best value got for taxpayers’ money. Where there isn’t proper engagement, decision-making can be poor and progress very slow. The result is that services for patients suffer. But where they can come together, services and finances can be radically improved.

This is the theme of the Audit Commission report, published in early December. A prescription for partnership: engaging clinicians in financial management takes a close look at how clinical and finance staff can forge better working relationships for the benefit of patients. Its 19 case studies show just what can be done and how.

Our research found that there was often mutual respect and positive relationships between the two professions. But there were also some commonly held stereotypes and prejudices. And, like all stereotypes, they didn’t apply to the individuals with whom the person worked, but more to the amorphous and anonymous ‘they’.

So, among clinicians we encountered a view that NHS managers were committed and were trying hard, but were poorly trained and not always of high intellectual calibre. In some cases they were regarded as disempowered individuals working within a system that did not value them or offer them true responsibility.

I am glad to say that clinicians’ views of finance staff were better. Many expressed a great deal of respect for NHS finance professionals. But there was also frustration at the perceived lack of rigour within NHS financial management systems. Clinicians expressed a degree of scepticism about the ability of individuals or organisations to introduce financial fixes, or not, without a clear framework of accountability. In return, some finance staff seemed to believe cost improvement savings and financial recovery plans were being achieved by accountants rather than by clinicians or managers.

There are issues here that need to be addressed. Finance and clinical staff do need to come together. Yes, it is all about relationships and communication. But we need to get beyond such platitudes if we are to make progress. So here are some points that try to do that.

The first is the nature of the finance function itself. Bromley Primary Care Trust won the PCT section of the HFMA award on financial management and efficiency. It is one of only five PCTs to get an overall use of resources score of 4 and the only one to get a 4 in the value-for-money theme. So it must be doing something right.

It has done it, in part, through transforming its finance function off the back of a very successful move to NHS Shared Business Services. I know this hasn’t been everyone’s experience, but it has worked for Bromley. In 2005, the finance department had 22 staff, of whom only two were qualified. It focused on transaction processing, but even so took 21 days or more to produce month-end reports. Financial management in Bromley was seen as the responsibility of the finance department and no one else.

Bromley now has 15 staff, of whom seven are qualified and three are progressing towards qualification. Month-end reports take only six working days and staff focus on the more strategic aspects of financial management, such as planning and forecasting, as well as supporting budget holders. As a result, there is now a culture of financial ownership across the organisation.

There are important points here about the nature of the finance function, what it does and how it does it. There is also an important point that we should no longer speak of an excellent finance function, but of an excellent finance organisation.

Clinical engagement has to be built on mutual trust. And trust has to be built on solid foundations. The solid foundations here are technical proficiency, robust data and a clear organisational structure in which management and clinical responsibility are aligned with financial accountability. All organisations should be assessing their degree of clinical engagement. Our report provides a handy checklist for you to do that.

But clinical engagement isn’t the only challenge facing finance staff. I believe there are three others. The first of these is governance. The challenges are different for PCTs and trusts. PCTs face a challenge from the move to develop more services in the community and from the growth of practice-based commissioning. As we noted in our report Practice-based commissioning: putting commissioning into practice both require that PCTs have the capability to assess rigorously the cost effectiveness of any proposals and to deal with any potential conflicts of interest that may arise. The arrangements for the first of these are underdeveloped. The arrangements for the second have yet to be greatly tested but must not be found wanting when they are.

The challenge for trusts has been graphically illustrated by events at Maidstone and Tunbridge Wells. Every organisation should be looking at its systems of internal control to ensure that its key business risks are being identified and dealt with effectively. More too could be made of the link between quality and safety, on the one hand, and cost and efficiency on the other. It should be no surprise that the examples I have quoted above and those that are also set out in A prescription for partnership show that quality and efficiency are not, in fact, mutually exclusive but two sides of the same coin. Regrettably, it is still necessary to make that case.

The second challenge relates to surpluses and planning. The NHS now has an opportunity to use its hard-won surplus wisely in redesigning services. This will be essential if Lord Darzi’s review results in a demand for major service change.

We are also about to enter into another planning round. But as the results from ALE show, this is still an area of weakness rather than strength. I do not underestimate the difficulties; allocations will come in two tranches and top-slicing cuts across the best laid plans. But this is a key area, particularly for PCTs, which have more to do following reorganisation. The commission will be issuing a briefing on medium term financial planning in the New Year.

My third challenge concerns the accounts. Moving to international financial reporting standards will be a major challenge, and not just potentially for those with private finance initiative (PFI) schemes. But the challenge goes beyond this and involves achieving faster closing of the accounts.

The deadline for audited accounts is being progressively brought forward. More needs to be done on in-year reporting if we are to achieve faster closure. It is time we stopped making incremental ad hoc changes and instead planned for the different ways of working that this will require and then took action to achieve them over the next two to three years.

These are all significant challenges and you may feel that you are constantly pushing a boulder uphill. But our aim must be world-class financial management. For it is only with this that world-class commissioning and world-class service provision will be achieved.

Andy McKeon is managing director for health at the Audit Commission