Feature / Clusters at the ready

As primary care trusts are reorganised into clusters this month, Seamus Ward takes a look at the impact of this reorganisation on finance departments.

Subject to the passage of the health and social care bill, primary care trusts have now been through their final restructure. There were more than 300 PCTs when they were formed, a figure that was streamlined to 152 in 2006 (later 151). And while those PCTs still exist as statutory bodies, they have now been merged into 52 clusters, which will eventually give way to GP commissioning consortia.

As finance plays a central role in these clusters, each cluster has one finance director who sits on the cluster board alongside a chief executive, chair, non-executive directors, together with commissioning, medical and nursing directors.

As Healthcare Finance went to press, the full list of finance directors had not been confirmed (see page opposite). All chief executive and finance director appointments have been subject to approval by the Department of Health. These appointments are generally secondments from one of the PCTs in the cluster as clusters cannot hold employment contracts – they are not statutory bodies.

North-eastern promise

Clusters are already well established in the North East. There, groups of PCTs have been managed by single executive boards since 2006. In many areas, new clusters have been established along county lines, though there are also eight single PCT clusters, including NHS Somerset, NHS North Yorkshire and York, NHS Cumbria and NHS Surrey.

Two PCTs have moved across strategic health authority boundaries – NHS East Midlands has lost NHS Bassetlaw to the South Yorkshire cluster, and gained Milton Keynes, which has joined NHS Northamptonshire in a cluster.

Generally, clusters have opted for governance model 1 or 2 out of the four models in the Department’s cluster implementation guidance. In model 1, the cluster board includes a chair from one of the constituent PCT boards and non-executives nominated by each PCT, as well as the executive members. In model 2, the single cluster executive team is coupled with a single group of non-executives covering the cluster and the PCTs.

In the West Midlands, for example, all but one of the five clusters have adopted model 1. The fifth, the Arden cluster, has adopted model 4, whereby PCTs operate with their own chair and non-executives but share a single executive team. Meanwhile, in the North West, two clusters – Greater Manchester and Cheshire, Warrington and Wirral – are using model 2.

Finance directors are the accounting officers for the PCTs in their cluster. In some clusters, they have chosen to centralise all finance functions, while others have decided to retain the existing structure and to have finance departments based in each constituent PCT.

The Humber cluster has chosen the latter option. Director of finance Tim Savage says the intention is to work with the established teams within the PCTs. But he adds that if the cluster identifies a need to have its own finance staff, appointments would be made on the basis of secondments and individuals would retain their PCT role.

 ‘With the NHS Humber cluster serving a population of around 900,000, all four PCTs, including the finance teams, are working together to manage financial risk, share best practice and address any gaps identified through implementing recent guidance,’ he says.

 ‘Our intention is to make the best use of the financial expertise within the existing PCTs as they remain the accountable bodies during the transition to a new GP-led commissioning arrangements.’

While some clusters are retaining the existing structure, others have opted to centralise their finance departments. NHS Birmingham and Solihull director of finance Rachel Hardy says the cluster currently has four finance teams but may restructure.

She adds: ‘It is likely we will pull this together as in a close geographical area it will be difficult to work with four different teams. Other clusters that are far more geographically dispersed will probably work differently.’

Southern structure

Southampton, Hampshire, Isle of Wight and Portsmouth cluster finance director Steve Bolam says the cluster will have its own structure, bringing together the staff in the four constituent PCTs. But he adds: ‘In some circumstances, such as financial accounting for each PCT, I expect very little to change.’

NHS London opted to accelerate the national requirement for management cost savings over three years to two years to allow focus on operational objectives. Clusters were therefore proposed in London ahead of the national timetable to deliver these savings. There are six clusters in London and structures have been determined in consultation with local stakeholders. There are therefore variations in arrangements based on local need.

In South East London most finance functions have been centralised with one statutory finance director. However, the SEL cluster decided to create six borough-level resources, known as business support units (BSUs), to recognise the developing role of GP commissioning consortia and develop engagement, service improvement and partnership at a local level. These have senior finance support and will be charged with managing and delivering the local QIPP programme.

SEL director of finance Marie Farrell says: ‘All our financial reporting, financial management, statutory accounting and planning is done centrally, but in South East London we have senior finance resource in the BSUs. Each BSU has a head of finance who reports to the BSU’s managing director, with a professional line of accountability to the cluster FD. The interface between the cluster and BSU teams will be strong and the cluster will have to work closely with them.’

The cluster controls just over £3bn of NHS expenditure. ‘The issue we have at the moment is that each PCT has a statutory resource limit, which is allocated for the care of its population Whilst we are seeking to maximise the opportunities of this level of purchasing power, we are managing each PCT’s resource limit in addition to  the overall aggregate cluster position.’

The pressures on finance teams has not gone unnoticed. Kent and Medway cluster chief executive Anne Sutton says it is important not to give the director of finance and estates excessive additional responsibilities because the financial challenge is so great.

In a letter to staff outlining how the cluster would work, she said turnaround type skills would be needed.

The cluster’s three PCTs will continue to receive their allocations and each will have senior finance staff. But the cluster director of finance will have overall accountability.

As well as financial strategy, performance and delivery of QIPP savings, the finance director will also be responsible for ensuring that commissioning consortia receive local finance expertise, estates rationalisation and the development and implementation of a running cost savings plan.

Facts and figures

• There are 52 PCT clusters
• Eight of the clusters are made up of a single PCT
• The budgets range from less than £800m to £4.7bn
• Cluster populations range from a little over 500,000 to about 2.5 million people
• The East of England has the most clusters, with eight