Comment / Team approach

Clinical leadership with good managerial support is the way to transform pathways and tackle historic and future financial challenges

A highlight of the past month for me was giving evidence on behalf the HFMA to the Commons health select committee (see news, page 3). For the association, the invitation – as part of the committee’s ongoing inquiry into commissioning – is a sure sign of progress. The HFMA may not play the media game and court headlines, but providing input into one of the country’s key scrutiny mechanisms for government policy is exactly where the HFMA sees its professional role. For me personally, I admit it was a somewhat daunting experience.

In particular the session focused on the existence of structural deficits within health economies and their elimination to give new GP consortia the best chance of success. The term ‘structural deficit’ is itself interesting. Official figures show us there are only a handful of PCTs and trusts forecasting year-end deficits – four PCTs and five trusts to be exact, according to Q3 figures released after the session. Compared with a forecast net surplus for the

service of £1.4bn, the gross deficits £34m (PCTs) and £94m (trusts) is modest. FT figures show a similarly healthy base.

This surplus, building on previous surpluses, and a good recent history in improving financial management puts us in a relatively stable position to tackle the Nicholson challenge of £20bn productivity savings. But of course structural deficits hint at more than just the final reported positions. A wider group of health economies will have ‘structural’ challenges – perhaps achieving break-even or surplus as a result of one-off sources of income or by making non-recurrent savings.

There are likely to be multiple causes for these in-built challenges. Some health economies have not yet reached their fair share target for resource allocation. Capital bases and costs also vary, driven by rural geographies or private finance initiative-funded hospitals, for example.

Different referral patterns and the provision of local social services will also play a part. And yes some health economies might simply be more efficient. It should also be noted that, once we have the new allocation formula for consortia, the map of financial challenges could well be redrawn.

There is an additional risk: that the loss of strategic health authorities and their funding management role could make structural deficits more difficult to cope with. I’m not ringing a major alarm bell. Coping with these challenges and variations is part of the day job of a skilled NHS finance function. But as a community we would all agree that the challenges are going to get harder. And for those already facing structural difficulties, it will be particularly tough.

The key ingredient for success has to be the involvement of clinicians in mapping the way forward. Improved pathways are at the core of meeting the challenges. Any changes need to be grounded in maintaining or enhancing patient safety and service quality. And where we can deliver this at reduced cost, perhaps we can start to address some health economies’ long-standing historical issues.

So, clinicians have to play the lead. But to be effective, they need a supporting cast of talented managers, good data and strong financial control. There is already significant expertise in these areas within PCTs and we must take advantage of this. Getting structures established quickly will be vital. We don’t want to turn to look for this support, only to find the staff have disappeared.