Comment / Multi-focal finance

The current agenda facing the NHS is huge. Maintaining quality, minimising use of agency staff where appropriate, reducing costs generally – all these need to be immediate priorities. But it also needs to make fast progress with the long-term sustainability project of transforming the way services are delivered.

One thing is clear. Finance practitioners have crucial roles in all these work strands and need to find ways of contributing to all of them.

Finances are everyone’s responsibility – but they are clearly the core domain of finance directors and their teams. And while it is true that it is frontline clinicians who commit resources, understanding the opportunities to reduce costs or improve value is likely to need the support and analysis that finance practitioners provide.

Commissioners and providers both face financial challenges, but the provider difficulties are currently more visible. Last year’s provider deficit of more than £800m could be as much as £2bn this year according to some estimates, although the centre appears determined to limit this to around half that figure.

In August, the centre called on organisations to look again at their financial plans to identify how much more they might be able to achieve through better procurement and better use of agency staff, while filling only ‘essential’ vacancies and adopting safe staffing guidance in a ‘proportionate and appropriate way’.

Finance will have been key in reviewing these plans, but they will also need to stay fully involved in ensuring any additional savings are actually realised. They will need to continue to work with clinical teams through the remainder of the year to understand expenditure and manage within budgets, picking up any problems as early as possible.

The challenge is unlikely to be any easier in 2016/17 and finance teams were given the first insight last month into how those finances might pan out with the start of its new look tariff engagement.

The publication of relative prices may sidestep the crucial issues of the cost uplift and efficiency requirement, but it does start to shape how things could look.

However understanding the implications of a change in currency (HRG4+), different best practice tariffs and revised approaches on some high-cost drugs and devices is likely to have kept finance teams busy through the end of August. And these forecasts will need to be kept up to date as more information emerges.

The immediate finances, and how they can be improved in the short-term while maintaining services, are inevitably at the forefront of everyone’s minds. But finance practitioners have another major role to play in supporting the transformation agenda. Revised pathways may in some cases provide short-term answers to some of the current challenges, but they are definitely the medium- and long-term solutions.

Finance input to these programmes is crucial, both in helping to identify opportunities for improvement and in understanding the financial implications of service changes (as well as devising payment solutions to support new ways of working).

Underpinning all this is the costing agenda. Better costing is a foundation to all of the above. Without robust service line and patient-level cost data, organisations are unlikely to be able to pinpoint where this year’s and next year’s financial pressures are arising. Benchmarking comparable costs should present opportunities to spread efficient practice and improve value.

Better cost data is also intrinsic to better tariffs, whether based on existing currencies or underpinning new approaches like the three-part urgent and emergency care local payment example published recently by Monitor. And better costing data will help make the business cases for new care models.

The real trick for finance departments is how to keep pushing on all these fronts.