Feature / Shared value

Although doubts about shared services linger in parts of the NHS, Bromley Primary Care Trust is a satisfied customer – not least because outsourcing helped the trust win an HFMA award and saved it almost £12m in a year.

The changes in Bromley Primary Care Trust’s finance department in recent years could be seen as a microcosm for the finance function as a whole. The department has shifted its focus away from transactional processing to a more business-like, analytical role that has allowed it and the wider PCT to become more efficient and to redesign services.

The shift of emphasis has helped the trust deliver an £11.8m cost improvement programme and won it the HFMA PCT Financial Management Award, sponsored by the Audit Commission. It was achieved through outsourcing all its financial transaction processing, including the payment of invoices and (more recently) payroll, to NHS Shared Business Services (SBS).

While the PCT had historically broken even, it had found this increasingly difficult in recent years. Increases in the cost of acute services had meant limited funds were available to invest in primary and community services. In 2005, the PCT decided the answer was to make its back office finance function more efficient, to free up resources for the front line and facilitate a more strategic approach to financial planning.

‘We had staff in the finance department who had no professional qualifications and were predominantly focused on transaction processing,’ says Marie Farrell, the PCT’s director of finance. ‘It was taking more than 20 days every month to get through the reporting cycle, and we knew the year-end accounts would present a major challenge in accessing information. We wanted to focus on more strategic elements such as financial planning.’

The financial reporting cycle has now been reduced to seven days, she adds.

A restructuring of the department had been proposed, with the aim of strengthening the skill mix by employing professionally qualified accountants. At the same time, the PCT would grow its own finance professionals by supporting staff through training programmes. The initiative was launched in July 2005 at the same time as the SBS outsourcing.

The move to the SBS Oracle-based system was attractive not only because it generated a significant net saving but also because the trust’s legacy APTOS finance system – from its predecessor community trust – would not support higher-level planning and analysis, Ms Farrell says.

The PCT also wanted to use its new system to reinforce the message that financial management had to be carried out across the organisation.

‘We wanted to establish a culture across the organisation of financial ownership, so finance was not seen solely as the responsibility of the finance department, she says. ‘My budget is small compared to [that of] our commissioning or provider arms. They make the operational decisions and they are the ones who should have the financial accountability.’

The SBS system has helped budget-holders exercise that accountability by bringing the latest financial information to their fingertips.

Better reporting and forecasting has improved the awareness of costs and allowed managers to identify areas in which efficiencies could be made. Greater knowledge of costs and improved forecasting has led to better budgeting, with budgets in place and approved before the start of the financial year.

‘The deal with SBS brought financial ownership to the budget-holders’ desktop,’ says Ms Farrell. ‘We no longer have a situation where invoices turn up months later; they are online with SBS within three days.’


Figures at their fingertips

The benefits of having key financial information readily available were seen in the financial year following the outsourcing.

Like all London PCTs in 2006/07, the PCT’s allocation was top-sliced. In Bromley’s case it was by £11.5m, but it was only notified of this after it had set its budgets. This meant it had to find savings of £11.5m in year. In fact, it delivered £11.8m – a saving Ms Farrell directly attributes to the new culture of financial ownership throughout the PCT that had been brought about by the switch to SBS.

The cost improvement programme was achieved without service cuts. Improved provider services efficiency and skill mix delivered significant savings, while significant amounts were generated through better data analysis. This enabled the PCT to use productivity benchmarks in acute contracts to promote more efficient clinical practice.

‘There had been a real change in the finance department,’ says Ms Farrell. ‘Instead of sitting at their desks preparing reports they were out and about, talking to budget holders and helping them manage their budgets and make decisions.’

SBS says Bromley’s experience demonstrated the benefits of shared services in the health service.

‘This award exemplifies the efforts of Bromley PCT,’ says Jim Vincent, managing director of SBS.

‘Since implementation, Bromley has made use of every reporting and analysis tool at its disposal to understand its financial position and unlock the benefits from the data. This has given it the capability to make informed business decisions and develop a sustainable environment in which its financial professionals can deliver a winning financial strategy.’

While Bromley may act as a beacon for shared services, it is fair to say there is still some scepticism about the value of switching to SBS and shared services in general in the NHS. But Ms Farrell was never in doubt about the merits of the deal. The trust took advice and did its own research before committing to SBS. Though it was early days in the SBS initiative, she and key members of staff visited one PCT and one acute trust that were already working with SBS, as well as speaking to another trust on the phone.

‘I was impressed by the financial control, ownership and flexibility of reporting,’ says Ms Farrell. ‘It was acknowledged there were difficulties, but significant progress had been made.’

She was confident going into the deal, but she adds: ‘The key is preparation. You have to know what you expect from the system. You can’t expect a commercial organisation to deliver what you want without you being aware of what you need in the first place.’

Migration to SBS took 11 weeks in Bromley’s case. Though this is a remarkably quick turnaround, it was achieved because the PCT had completed a lot of the necessary pre-implementation work, such as cleaning the ledgers to ensure all the data was correct and up to date. The PCT brought in a consultant to oversee this work and it was completed before it decided to go with SBS.

Bromley chairs the London shared services user forum, and its close involvement ensures any difficulties are resolved quickly. However, Ms Farrell acknowledges it had some teething problems.

‘There have been a few issues. The system response times at month end close down have not been as fast as we would have liked, but we have found SBS has been quick to respond to any technical difficulties. SBS is focused on delivering high-quality transactional processing. It’s a partnership and you have to deliver your bit. You can’t abdicate your responsibility for managing your finances.’

A recent National Audit Office report backed SBS. The NAO said that while SBS would deliver savings of £250m over 11 years, it had also had to tackle early problems with customer satisfaction. A survey carried out by the NAO found that satisfaction was greater among established customers (those with SBS for more than two years). More than half this group said the supplier payment service was better than it was before outsourcing. More than two-thirds of clients who had outsourced to SBS less than a year earlier, however, said the supplier payment service was worse.

Ms Farrell says Bromley did not fall into the pattern identified by the NAO of being unhappy in the initial phase of shared services followed by a marked increase in satisfaction after two years.

‘We were happy from day one. Of course, there were teething problems. We had not realised the impact in terms of coding, but this was remedied very quickly. There were some performance issues, such as the time it was taking to process invoices, but this was improved very quickly.’


Equal commitment

Ms Farrell says the PCT recently outsourced its payroll to SBS. This was the smoothest payroll implementation she has experienced, although there were the inevitable teething problems that were soon resolved. She reiterates her advice to any NHS body considering shared services: ‘Some people expect the implementation team to come along and do everything for them. But if you take that approach you won’t be successful. You have to have 100% commitment from both partners and also buy in across the whole organisation, which is not an easy thing to do since financial ownership tends to be seen as the responsibility of the finance department.’

Although implementation at Bromley went ‘relatively smoothly’, Ms Farrell says there was one major issue – training. ‘We wanted hands-on training, with people sitting in front of keyboards operating the system. As well as this we produced a handbook and reference documents.’

Finance staff were the first to learn the system and the training was rolled out over four weeks. Although Ms Farrell believes the HFMA award and the success of the cost improvement programme is a recognition of the achievements of all the PCT’s staff, she insists special mention must go to those in the finance department.

‘They delivered above and beyond the call of duty. It was their involvement that made the scheme a success.’

The PCT is now looking at shared services for its e-procurement. Its total budget is around £450m but purchase order procurement is only about £5m. It hopes to save on these transactions by processing them as part of a consortium with other NHS bodies.

Ms Farrell adds that shared services can be important in high-cost areas such as the capital. ‘With Agenda for Change, and particularly in London, it would be difficult for organisations to deliver a quality in-house product at a cheaper price than SBS.’

She believes shared services can benefit all parts of the health service. ‘I see the NHS as a business. We need the ability to focus on our core business and that is not transactional processing. If you have a good-quality provider of shared services, it saves you a lot of aggravation. By contracting out to shared services, we have bought ourselves the ability to focus on improving healthcare.’

This focus on ensuring the business operates properly contributed to Bromley being one of the five PCTs to receive an overall auditors’ local evaluation score of 4 in 2006/07. Yet one more accolade to add to Bromley’s impressive list.