Comment

NHS governance and financial resilience

Paul Hughes, head of NHS Providers at Grant Thornton UK LLP, discusses the challenges for local leaders.

We recently completed our annual review of NHS governance, which considers current governance-related challenges and opportunities facing the NHS. Taking into account the Five Year Forward View report, there is a greater need than ever before for the NHS governance and risk management arrangements to be more agile. It is our belief that agile governance, mature risk management and genuine empowerment can support key Forward View pledges such as innovation, the exploitation of the information revolution and developing a modern workforce. 

Many NHS organisations are making good progress on governance, under very difficult circumstances. Our report highlights examples of good practice on innovation, integration and stakeholder empowerment.

The new well-led framework introduced by Monitor, which is being aligned to other regulators’ governance assessments will test leadership, management and quality governance. Whilst there is recognition that its implementation will strengthen quality governance arrangements, two-thirds of foundation trusts say they are not fully prepared to implement the framework. 

Devolution and new models of care are now truly underway and, with Greater Manchester announced as the first region to be given control of its own NHS budget, we are likely to see more regions and local health economies follow suit. As this continues it is vital that NHS organisations work together, and in partnerships with their stakeholders, to ensure risks and opportunities are managed and underpinned by solid governance practices. 

With all of this in mind the headline findings from our 2015 review are as follows.

The development of a well-planned, trained and empowered workforce represents a huge challenge for local leaders 

Of our survey respondents, 25% say their organisations do not have robust arrangements in place to develop the capacity and capability of employees. These findings highlight the growing concern that NHS organisations have about skills shortages and talent retention. In this period of change and uncertainty it is imperative for NHS organisations to ensure that their people are nurtured and empowered to bolster retention and drive the changes needed. 

Greater clarity on accountability and delegation on integrated health and social care is required   

Integrated health and social care issues remain, as explored in our 2014 publication, ‘Pulling together the Better Care Fund’. The main governance risks associated with increased pooled funds are seen to be unclear lines of accountability (82%) and control over outcomes (71%). Three-fifths of trusts and 30% of clinical commissioning groups (CCGs) were unclear about where accountability and delegation of authority lie between the health and wellbeing boards (HWBs) and respective partners. NHS leaders interviewed for the study felt that the weakest collaborative relationships and partnership governance arrangements exist with Healthwatch, social enterprises, third sector organisations and the private sector, whilst they were stronger with CCGs. Meanwhile, just 12% of HWBs have mental health trust member representation. In the context of the Forward View and emerging care models, it is critical that governance arrangements of all partners are enhanced.

Stakeholder engagement is improving but empowerment, the key aspiration of the Forward View, is not yet in place 

An impressive 95% of all respondents believe the governing body or board provides clear guidance to all staff, patients and stakeholders on the strategic and operational quality outcomes it expects. However, stakeholder empowerment is still far from embedded. More than a third of respondents say they have not engaged with the public on what information they want on the organisation’s quality of services, finance and governance. NHS organisations need to implement more effective strategies if they are to achieve the Forward View vision of empowered patients and communities. Our evidence tells a story of a sector that recognises and embraces the need for sea change, which at the same time presents a number of key governance challenges and opportunities. 

The integrated mental health and learning disability challenge 

Mental health and disability services are rightly getting greater parity of attention, to bring them into line with physical health by 2020. The Model Commissioning Policy could bring GPs, nurses or other community health services, hospital specialists and perhaps mental health and social care together to create integrated out-of-hospital care. Again, performance and governance arrangements will need to be adaptive to ensure this five-year ambition is realised. 

This specialist sector is used to working in partnership with a whole range of stakeholders including commissioners, acute providers, councils, police and third sector. Though (as mentioned previously) just 12% of HWBs have mental health trust member representation, there are examples of innovative collaboration and flexible governance in place. An example of this is the police, mental health and paramedic street triage partnership in Birmingham and Solihull. This triage pilot has had successful outcomes for vulnerable people suffering mental health crises alongside delivering efficiencies. To date, successes include: stronger partnership collaboration; reduced section 136 ‘place of safety’ detentions; wider intelligence and information sharing; better service user experience; improved engagement with black and ethnic minority communities; and funding opportunity costs. 

Across the NHS, effective collaboration must be underpinned by good governance if quality and financial sustainability challenges are to be met. It is still early days for the new arrangements but clearly more needs to be done to ensure NHS organisations are working together effectively to improve local health economy outcomes. 

As we all know, regulators and others are now placing equal emphasis on NHS organisations’ financial and quality balance in the local health economy. Our complementary NHS Financial Resilience review 2015 sets out our insight into how resilient NHS finances are and provides a summary of the key themes and best practice that have emerged from our national programme of financial health reviews. 

In our view, the NHS is at a financial impasse, arising from the ever-increasing demands of an elderly population and long-term complex conditions. Since our last report, in November 2013, much has been written about the state of NHS finances. News media increasingly tells alarmist tales of an NHS in crisis. Reports from the National Audit Office (NAO), Audit Commission and many others describe a sector that is feeling the financial strain of sustained long-term trends in demand, coupled with the cost of addressing access and service quality standards. 

Financial review 

Our second annual financial health review considers key indicators of financial performance, financial governance, strategic financial planning and financial control, to provide a summary update on local NHS bodies’ financial resilience. In many respects, our own analysis supports increasing financial pressure facing the sector: 

• 44% of non-FTs and 25% of FTs recorded a FY14 deficit – a quarter of these unplanned and indicating the strain on many FTs
• 9% of CCGs reported an overspend against allocation in FY14
• 48% of trusts did not meet their cost improvement target, including after reliance on non-recurrent measures
• 72% of trusts required non-recurrent savings in their FY14 cost improvement programmes (50% FY13)
• 40% of CCGs did not meet their savings target (QIPP) with heavy reliance on non-recurrent savings
• 63% of trusts that met their cost improvement target relied on planned or unplanned non-recurrent savings (44% FY13). 

Encouragingly, the Forward View set out a welcome and more upbeat vision for the future of our publicly-funded English health service. It set out a vision based on ideas that were not necessarily new or radical, but were based on common sense and an increasingly accepted view of how public healthcare needs to develop and innovate. 

The key principles include a focus on prevention over cure, breaking down the health and social care divide, encouraging better partnership with communities and voluntary organisations, providing more support to older people living in care homes, incentivising and developing NHS people and embracing 21st century technology in providing healthcare. 

In our view, the NHS will need to grasp the nettle on two more challenging areas which echo our governance review findings: people numbers, skills, values, behaviours and leadership, and making collaboration work. 

The Forward View suggested that continuing with a comprehensive, tax-funded NHS in England was ‘doable’. Achievement of this aim will rely on a number of factors, including national policy, funding and the actions of other players in the wider system. In our view, what is clear is that the NHS will need to play its own very significant part. Doing existing things better, learning from the best, will go some way. However, locally tailored and locally led (rather than nationally determined) transformation to the way patient/user centred care is delivered is the real prize. 

The success of this exciting new phase in the development of our care services will fundamentally depend as much on how local leaders and their teams seize the opportunity to embrace essential change.

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