Comment / Seeing the value, not just the cost
As the NHS looks to minimise running costs and bureaucracy in the new world of GP commissioning consortia, the role and value of good governance arrangements needs to be fully understood
From next year we will see the birth of a large number of healthcare organisations. An estimated 335 GP commissioning consortia, covering 90% of the population, and 52 aspirant social enterprises are working their way through the pipeline. As yet there is no central guidance on the governance that needs to be put in place, but getting the right arrangements will be critical to the system’s success.
While there has as yet been no central prescription, the HFMA has shared its views with the Department of Health and produced its own guidance in the form of a checklist that new social enterprises could use when thinking through governance arrangements.
An overarching theme within the reforms is the need to minimise the level of bureaucracy. Taking this to an extreme, some might question the need for any governance infrastructure – isn’t money better spent on frontline staff? But this would be a false economy. Any organisation, whatever the sector, needs to be clear about its aims and how to achieve them. This requires the right structure and the right people to deliver those aims and objectives.
In the private sector, shareholders are the key concern in accountability terms. But in the public sector, organisations need to build public and stakeholder confidence. Social enterprises are private sector organisations, but will be almost entirely funded from public finances, so will also need to build the same public confidence. The underlying principle is the need to demonstrate that healthcare and public resources are in safe hands.
All corporate failures result from poor governance. Be it BICC, Polly Peck, Enron or, closer to home, Mid Staffordshire, the root of failure can be traced to the governance structure and processes. Healthcare is about to enter a period of upheaval and higher risk. Now is not the time to stress test the value of good governance. Some aspirant leaders of these new organisations may well believe that dynamic, profit-oriented private sector organisations wouldn’t waste money on anything that doesn’t add value to the customer and indeed they don’t. But most do have:
- Defined management structure: separate chair, chief executive officer (who is also the accountable officer) and chief finance officer
- Governance group or board to set the strategy and objectives, including delivery against quality outcomes, and to monitor the achievement of objectives and look for potential problems
- Non-executive directors to avoid concentrating power in a few hands and to widen the breadth of experience brought to the boardAudit committee working with internal and external audit to secure third party/independent assurance and, on that basis, provide assurance to the board about the systems and controls in place.
Social enterprise companies have more choice but would be foolish to ignore the lessons learned over the years by private and public sector organisations. As it says in Managing public money, we need to ‘avoid overdefining detail and imposing undue compliance costs, either on [an organisation’s] own staff or on its customers and stakeholders’. That is not an argument against governance. We need to be clear on the value added by governance as well as the costs. And we need to ensure GPs recognise this too.
- Download the HFMA’s views on governance in GP consortia and the checklist at www.hfma.org.uk
John Yarnold is chair of the HFMA Governance and Audit Committee and deputy chief executive/finance director of NHS Gloucestershire
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