Ever wondered why financial years begin in April? It’s the crop cycle.
Much of our financial management practice stems from medieval Italy, where modern accounting methods were first formulated.
Banks lend in spring to farmers wanting to buy on credit, and reclaim the loan plus interest after the harvest. A March year end has some logic: by then the success or failure of the previous year’s harvest should be plain.
But no wise Florentine banker or Venetian merchant waited until March to find out. Prudent information gathering from autumn onwards, perhaps reinforced by some primitive performance management, cut the risk of losing one’s money.
So, with the daffodils in bloom and 2010-11 nearly over, how has the NHS fared financially? What do our spies report?
Well, the latest consolidated Department of Health information forecasts an overall £1.3bn surplus in strategic health authorities and primary care trusts, plus £177m among NHS trusts.
Four PCTs were forecasting deficits totalling £56m; seven NHS trusts were “challenged” on finance.
Not bad, considering the turmoil of 2010-11.
Unfortunately that was at the end of September. Its compilers could make no allowance for an icy December, nor for the growing dislocation of health service structures.
The DH published its quarter 2 report on 20 December. That was a long time ago, and the true NHS position may not be so rosy.
These probably won’t even feature in the imminent Quarter 3 report.
Imminent? In 2010 the quarter 3 report appeared on 25 March, whereas the two previous years had been published on 3 and 4 March. Finance departments across the NHS are producing their position statements ever quicker.
Yet the national position is taking weeks longer to assemble, and will already be stale.
Ripeness is all. Why does the Department of Health, with all its resources, seem so shy about producing timely financials?