HSJ’s expert briefing on NHS finances, savings and efforts to get the health service back in the black. This week by finance correspondent Tom Norton.
Looking at the headlines of the NHS’ response to coronavirus, you might notice something missing.
Understandably, the supply of personal protective equipment, testing, critical care capacity and staffing shortages have been occupying most people’s minds.
The cash flows behind the rapid reorganisation have so far received little attention.
Within weeks, budgets have climbed by billions of pounds with providers promised a limitless pot of cash to tackle covid-19.
The financial architecture pinning the NHS together has also been stripped to pieces, it is hoped, to make the wheel spin quicker.
Gone are the control totals, tariffs and multiple incentive payments that scaffolded NHS cash flows. Block contracts with a national top-up have been employed instead to help money move more easily through the system.
Furthermore, NHS Improvement announced last week a string of deadline extensions, including the delay of the new public sector accounting standard, IFRS 16, by a year and the option for draft accounts due on 27 April to be submitted on 11 May.
Audited accounts will now be due on 25 June.
This all cushions a unique challenge; where and how trust finance teams work during the coronavirus outbreak. They will need to do so quickly, effectively and within the boundaries of Managing Public Money, the Treasury’s guide to delivering value for money budgets.
Many finance teams are now working remotely, while being handed new funding streams, priorities, and unfamiliar budget regimes. There are also some still working on site, whether it be through choice, pressure from their employer, or poor IT. Both scenarios are testing.
In addition, as outlined in a recent Healthcare Financial Management Association briefing for finance teams, responsibilities are changing rapidly too. Its nine-page briefing outlines the decisions finance teams will need to discuss as they adjust to their new objectives.
Remote signatures may be needed for sign offs, while banking arrangements have changed, and tendering is off the table. Responsibilities around the organisation and authorisation of payments are changing too.
Teams will need to be able to detail their organisation’s response to covid-19 or otherwise. Some spending, like ventilators, will be easy to evidence while others, such as staffing, may be less clear cut.
And there’s not a uniform policy on these changes either. Much of what’s been advised is just that — advice — and each team will need to figure out what works best.
Therefore, the need for good financial governance is paramount now. Emma Knowles, director of policy and research at HFMA, warned that while the NHS had been given a freer rein, there would be a “financial reckoning once the crisis is over”.
Teams will need to ensure money is spent quickly, but on the right things and in the right places. And while accounts deadlines have been delayed, they will still need to be prepared and audited.
At a time when finance teams are getting smaller due to sickness, and most are having to adapt to remote working, that will be a huge challenge.
The NHS’ front-line response to the coronavirus will be the overriding priority for many weeks and months, but back office functions must not be neglected.
Risk of mismanagement or worse, fraud, must be in the peripheral vision of finance teams.
Public support for the NHS is at its highest levels but when the “reckoning” comes, no one will forgive the misuse of public money as we all stare down the long-term economic consequences of the pandemic.