Comment / The true value of metrics

If there were a competition for light-touch, hands-off regulation, NHS finance would be an unlikely contender. Financial metrics and returns are legion and even the smallest deviation is likely to lead to phone calls, visits and more significant interventions.

But it does seem the interest in local financial performance has just gone up a notch from its already high base. In June, the Care Quality Commission announced plans to develop a ‘common, comparable measure of the use of resources in the NHS’. And Monitor has just concluded consultation on new financial efficiency metrics, to be incorporated with the continuity of service assessment metrics to create a broader sustainability and financial risk rating.

You can probably add into the mix Lord Carter’s proposed new efficiency metric – the adjusted treatment index. However, it should be acknowledged that the recommendation is for this to be used by local providers to understand their relative performance, rather than fashioning it into a new regulatory stick.

On the one hand, the increased scrutiny is completely understandable. Stable, sustainable finances are the basic building block for improved services and better outcomes. And so understanding financial performance – and spotting problems as early as possible – makes sense.

We know very little about the proposed use of resources assessment. It seems unlikely it will bear much resemblance to the former Audit Commission use of resources system (and its associated auditors’ local evaluation). But CQC chief executive David Behan’s recognition of effective use of resources as a ‘key element of quality’ is an argument the HFMA has made for years.

Value has to be the guiding principle for
the NHS and means looking at quality (measured in outcomes and patient experience) alongside cost.

But there are concerns too. First and foremost is how the new metrics will be used. They are unlikely to tell local organisations things they don’t already know. And if they simply lead to more organisations being placed on the naughty stair, then they are of little practical value.

Monitor says its new metrics are part of a package of changes to ‘help foundation trusts live within their means and support improvements in financial efficiency across the sector’. And if ‘earlier regulatory action’ means the potential improvement support (delivered by its new provider sustainability directorate) that can be triggered by a 1, 2 or 3 rating, that could be good news for providers. But we know very little yet about what form this support could take.

This support, and then targeting it at
places where it is most needed, has to be the point of the proposals. Simply shouting louder about the increasing numbers of organisations in financial difficulty will not solve the real problems facing the sector.

We also need to ensure the new metrics don’t create perverse incentives – encouraging organisations to fix aspects of performance that will improve their rating rather than seeing the bigger picture and tackling more pressing issues. And they must take account of different local circumstances and not add to bureaucracy.

Assurances that the use of resources work will draw on ‘existing efficiency metrics’ are encouraging, but they should also build on the existing value-for-money conclusions made by local auditors.

At this point, the NHS needs all hands of all disciplines on deck supporting the actual delivery of improved efficiency and the transformation agenda. So any new scrutiny arrangements must avoid duplication and pass their own value-for-money test.