Comment / Steering the right course on risk

On Bank Holiday Saturday I took my beautiful blue Suzuki Bandit motorcycle for a spin into North Wales.

No more than 20 miles into the journey, a six inch bolt of metal, kindly deposited at a junction, impaled itself into my rear tyre. Thanks to Suzuki’s excellent handling capability no damage to life or limb was sustained but the incident severely curtailed progress.

This type of incident is difficult to plan for and even more difficult to rectify. Nevertheless, sitting stranded is not an option.

Which leads me to my current favourite topic: managing risk under service line management (SLM). As one of Monitors’ SLM pilot trusts, the Countess of Chester NHS Foundation Trust is 15 months into its SLM journey and ready to pass on a series of financial freedoms to its business units/service lines.

Although absolutely the right way to incentivise clinical leaders to perform efficiently and at the highest levels of quality, the SLM financial freedom route is peppered with risk.

- What level of surplus should be retained by the service lines?
- Is surplus a product of good management, overfunding or poor planning?
- Will incorrect costings, contribution analysis or tariffs lead to profligate spending or detrimental cut backs?
- l Will the incentives destabilise corporate financial viability?

What is certain is that the time is right for change. There is an appetite to do things differently. Clinicians and managers understand payment by results, tariffs and the volatility of the system, yet they want to grasp the opportunity to use business principles to make things better for patients.

The system doesn’t help. Tariffs are the culmination of relatively inaccurate costings squashed into an acceptable quantum. Local costings are only slightly better. And so using the comparison of two imprecise numbers to make decisions about services must be treated with the utmost caution – and that’s before the introduction of the new healthcare resource groups HRG4.

So how can this risk be managed in such a way as to drive the ownership of decisions at the front line? The choices to me are straightforward and apply whether the issue is service line management or motorbike rides into North Wales.

- Stick to known territory – 100% clarity on all risks
- Employ minesweepers to clear the way forward
- Don’t venture out in the first place
- Anticipate risks based on robust information; plan for issues and hold a decent contingency

Historically finance directors and boards are risk averse. This may be why progress in the NHS is slow although it is perhaps not unreasonable given the personal, reputational and patient care implications of getting things wrong. But five years into the foundation trust regime, we are getting braver; better at producing robust information, better at engaging with stakeholders to understand their plans; better at understanding a joint clinical /managerial/business language.

This means it’s time to do something different and to take measured risk to leverage better care through SLM principles. So will the trust sit and worry about sharp objects, or will it buy a new tyre? My money’s on the tyre.


Jane Tomkinson is deputy chief executive/director of finance and performance at the Countess of Chester Hospital NHS Foundation Trust. She was named Finance Director of the Year in the HFMA Awards 2007.


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