The Harsh Reality Of Tackling Financial Performance Issues In The NHS

Healthcare Finance, the Healthcare Financial Management Association (HFMA) magazine carried the results of the latest financial temperature check.

It does not make pleasant reading.  At the same time the position as it stands is not really that surprising.

With more people accessing services and reduced levels of funding in real terms, sooner or later a strain is going to appear.

In a commercial organisation, if a company could not generate a return in a specific market they would stop operating in that market unless they could find a new way of making it profitable.

In the NHS it is not that simple.  There are likely to be services that cannot generate a sufficient return but organisations are mandated to provide.

Another big factor is that the demand is not likely to disappear.  A&E is once again in the spotlight, as it has been many times over the years.

If we look at the real emergency type patients as opposed to those who are better described as minor injuries, what you notice is that:

  1. The biggest proportion of patients are the elderly.  Not surprising given longer life expectancy.
  2. Elderly patients are often more complex to deal with.
  3. There is a lot less flexibility on your options.  It’s difficult to send these patients home out of hours.  Not just because of the lack of care package but also from a safety perspective.
  4. As funding is squeezed in other parts of the system, it becomes more difficult to get patients discharged, especially if they are dependent on some sort of community based care package.

So what are some of the harsh realities of tackling financial performance issues in the NHS?

Staff Expenditure Is A Significant Part Of The Total

The biggest areas of staff spend is doctors and nurses.  They are the people who deliver the services on the frontline.  Reducing agency spend is highlighted as being a key priority.  It was a key priority when I was an NHS FD.  Tackling this requires a much more strategic approach from HR and often is not given anything like the attention it should.

Another bigger concern is that if you start aggressively reducing staff expenditure, you start to put too much strain on staff and ultimately put patient safety at risk.

All The Quick Fixes Have Been Done

Finance have always done a great job at finding what I will call quick fixes.  Things like changing an accounting policy to get a one off benefit.  However, the scope for these one off fixes is diminishing dramatically.

The Benefits Of Change Take Time To Be Realised

There really is no overnight solution.  You might make a change now that takes months if not years to start showing real benefits.

Every Board Member and Employee Needs To Play Their Part

Finance never could and never will be able to do it all on their own.  Each and every board member, manager, clinician and employee has a part to play.  A significant number of marginal gains can make a big difference.

The Lack Of Cash Is What Really Causes Problems

Talking about deficits and surpluses is one thing.  The real struggle comes when there is a lack of cash to meet day obligations to suppliers and employees.  Put simply, you can’t keep spending more than you are generating in income month after month without it impacting on service provision.

There Comes A Point When The Difficult Issues Need To Be Openly Discussed

It’s all good and well for political leaders to talk about how important the NHS is and how proud everyone should be of it.  At the same time there comes a point where you need to have an open debate about what can be provided for a given level of funding.

The Bottom Line

Choices and decisions about Finance impact on all aspects of the delivery of services.  At the end of the day, tackling financial performance challenges is going to require openness, honesty and a contribution from everyone.


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