Feature / Measured performance

The NHS will not be immune from the effects of the deepest recession for decades and even if the UK moves back into growth in the next two quarters, public sector borrowing is certain to remain high and impact upon public spending, including health, for many years.

How well is the NHS positioned to cope without the unprecedented levels of funding increases it has enjoyed over the last 10 years? Have NHS bodies sufficiently improved their financial management and the way they manage their resources to cope with a funding squeeze? And has the NHS modernised itself as envisaged by the NHS Plan?

These are not easy questions to answer, but some clues may be found in the results of the Audit Commission’s assessments of how well NHS bodies manage their resources and deliver value for money.

Since 2005/06, the Audit Commission has assessed all NHS trusts and primary care trusts (PCTs) using its auditors’ local evaluation (ALE) assessments. These have again been used to assess NHS trusts in 2008/09. 

However, in 2008/09, for the first time PCTs have been assessed using the new use of resources (UOR) methodology. UOR has been developed to support a new way of assessing local public services, known as the comprehensive area assessment (CAA), which examines how well councils and other public sector bodies work together to meet the needs of the people they serve. The UOR assessment has been carried out at all PCTs, local authorities, police authorities and fire and rescue authorities. But more of that later.

The rules of ALE will be familiar by now. Its five themes are: financial reporting; financial management; financial standing; internal control; and value for money, with a score of 1 being inadequate performance and one of 4 performing strongly. The overall score will be used by the Care Quality Commission as part of its annual health check.

ALE scores have got steadily better over the past three years and in 2008/09 improved further, as the chart above demonstrates.

The progress is even more impressive when you take into account the fact that during that period the best performing NHS trusts have become foundation trusts and are no longer assessed under ALE. In 2008/09 a further 22 NHS trusts became foundation trusts.

But, even so, almost 70% of the remainder scored at levels 3 or 4 compared to only 50% last year. Only nine NHS trusts failed to meet minimum standards (level 2) overall, down from 14 last year. Eleven NHS trusts were judged to be performing strongly overall, as shown in the table (right).

And it was good to see that one or two trusts, like Hinchingbrooke, that had been at the bottom of the league since 2005/06, scored at level 2 this year.

Scores improved in four of the five themes. The only theme where performance did not improve was financial reporting, where the demands of faster closing took their toll and the scores were very similar to those of the previous year.

We recognise the progress made and the good position reached by most NHS trusts. So, in 2009/10 the commission will not require trusts that have scored at or above level 3 in any theme to be assessed in that theme unless there are signs of an obvious deterioration in performance.

PCT scores

Use of resources is a very different assessment from ALE. It is more focused on how well PCTs are delivering outcomes. UOR covers three themes: managing finances; governing the business; and managing resources. Like ALE, scores are awarded for each theme, but unlike ALE no overall score is calculated. The managing finances theme score is used by the Care Quality Commission to inform its annual health check.

The UOR assessment will also be used as part of the CAA. In December 2009, the Audit Commission will be unveiling a new website, which is designed to be the first choice site for independent information on the performance of local public services throughout England.

The new Oneplace website will feature the results of the CAA based on the collective assessment of six independent inspectorates. It will show how organisations and service providers are doing on the issues that matter most in their local area. It will highlight where things are going well, where there may be problems and how councils and their partners, including PCTs, are working together to improve quality of life for residents.

Stretching assessment

UOR is a more stretching assessment than ALE. Despite this, few PCTs did not meet minimum standards. Just two failed to meet minimum standards in the managing finances theme, one in the governing the business theme and seven in the managing resources theme. The results of the UOR assessments are shown in the chart (right).

No PCTs were judged to be performing excellently, the highest score, in any of the themes. But the table (right) shows the 11 that scored at level 3 in each of the three themes. This is a very good performance given it was the first year of a more demanding test.

Overall the scores represent solid performance in the first year of the new assessment. Good practice was identified by auditors at a number of PCTs. One PCT had made significant improvements to the way it managed its fixed assets and had refurbished its health centres and built four new primary care centres, working in partnership with the private sector and local councils.

Not all of the areas or key lines of enquiry were assessed this year. Commissioning and procurement was not assessed because world class commissioning reviews had taken place. PCTs’ management of their natural resources was also not assessed, but will be in 2010.

We have also agreed with the Department of Health how UOR assessments and world class commissioning will be better aligned. Gary Belfield, the Department’s acting director general of commissioning and system management, and I have sent a letter to all PCTs about this.

Taken together, the ALE and UOR scores suggest that most NHS trusts and PCTs manage their money well. And, when viewed alongside the £1.7bn surplus for the NHS in 2008/09, this suggests that the NHS is well positioned to weather the expected financial squeeze.

However, lurking within the detail of ALE and UOR are signs of areas that need brushing up if trusts and PCTs are to meet the challenges of financial pressure and increased productivity. For trusts, the detailed scores show that the real strengths lie in managing and hitting the annual budget, less so in longer-term financial planning and asset management. But it is these two areas that will be more tested as money gets tighter, pressures to increase efficiency mount and quality has to be maintained or improved.

The scores for internal controls also need to be viewed against Taking it on trust, our report on how boards get their assurance published earlier in the year, that painted a less rosy picture. We will be revising the 2009/10 assessment approach to reflect the findings in that report.

For PCTs, the relative weakness of workforce planning and understanding of how community services could increase their productivity was evident. There were also relative weaknesses in PCTs’ understanding of their costs and in arrangements to ensure the quality of data used for decision making and performance management.

So, the scores are in and they are good. But as sports fans know, it gets tougher as the competition progresses, and you are only as good as your last game.

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