Magazine article Public Finance

The Health Service Needs You

Magazine article Public Finance

The Health Service Needs You

Article excerpt

The sixth annual CIPFA Health Finance Conference takes place next week in the midst of the most significant changes to affect the NHS for years. The post-election landscape is becoming clear and NHS trusts and primary care trusts will be expecting the finance function to steer the way through.

The Department of Health's consultation document, , Commissioning a patient-led NHS, set off a review of the number of strategic health authorities, PCTs and ambulance trusts, and opened up the possibility that PCTs would move away from providing services.

The Labour Party's manifesto commitment to cut £250m off the cost of administration and management in the NHS is likely to lead to a huge reduction in the number of organisations. SHAs and PCTs are currently drawing up proposals for reconfiguration, which the department will review in October.

Finance teams will need to manage the likely additional financial risk arising from these, as there is narrow scope to absorb more in this financial year, when there is already significant pressure to cut costs.

Reconfiguration must not distract from the strategic financial agenda. This year, the finance function needs to move its focus even further from managing the'bottom line'to managing for investment and from annual budgets to much longer-term financial planning.

This should put the finance director at the heart of organisational strategy development, where shifts in investment will be needed if performance is to improve enough to meet the 2008 NHS targets.

Clinical involvement is vital here, and successful implementation of practice-based commissioning will help to enhance local involvement. There is a real opportunity to recapture some of the clinical energy and enthusiasm generated through the total purchasing pilots of some years ago.

Focus on the 'bottom line1 remains important though. Most NHS organisations ended the past financial year in balance or in surplus but a small number ran up a total national gross deficit of £750m. In a few cases, the deficit was not forecast, the extent of the financial gap becoming clear only through the audit of accounts.

This must be of concern, and it is not surprising therefore that over recent weeks the NHS finance function has faced an unprecedented level of criticism, both implicit and explicit, from the regulatory bodies.

The Audit Commission, National Audit Office, Monitor and the Healthcare Commission have commented variously on the need to improve financial forecasting, budget setting, budgetary control and governance arrangements. …

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