Following the Money: Getting twitchy at Q2

Twitchy regulators

NHS regulators are getting twitchy as we head through the halfway point of 2016-17.

With the Department of Health and Treasury looming over their shoulder, leaders at NHS Improvement will be desperate to keep trust deficits within acceptable limits in their mid-year report next month.

The importance of this was spelled out in a recent PowerPoint presentation to trust finance directors, which said NHSI can support trusts more easily if they can “give confidence” that the sector is on track at Q2.

This was followed by a rather ominous warning in bold: “This will be a very important milestone for us all.”

The problems with this year’s financial reporting have been well documented and Jim Mackey, Bob Alexander and Elizabeth O’Mahoney will be all too aware of the dangers.

But the trouble is there aren’t really any palatable and decent sized tools left in the box with which to hack away at the overspend.

The big tool was used last year, to introduce new controls on agency spending, but this has so far failed to have the impact that was hoped for.

The “reset” in the summer certainly produced some good looking financial plans, but there are some pretty convincing reasons why good looking plans won’t make for good looking outturns.

Another telling line in that NHSI PowerPoint noted how the financial “plan profile is back-loaded!” – with that exclamation mark hinting at a certain degree of alarm.

Crunching time

Yet as Q2 crunching time approaches, NHSI must feel the need to exert some sort of extra pressure on providers. So what tools are left in the box?

Well, one new measure which looks set to be deployed is to ensure that trusts failing meet their agency spending caps get named and shamed in the national media, including lists of their highest earning, and longest serving, temps.

This feels risky and potentially divisive, however, as many of these organisations will not have failed through any lack of trying.

The number one priority for trust execs must always be to keep patients safe, and if they struggle to persuade staff to take a permanent job in their unfashionable and neglected town, what other option do they have but to revert to staffing agencies?

It also risks creating a perception of double standards, unless NHSI and the other arm’s lengths bodies also publish their own lists of high earning temps, and the benefits are likely to be minimal.

NHSI has also pulled out an even shorter rope to tie around trusts’ financial reporting processes.

A new protocol will make it more difficult for trusts to change their year-end forecast, with local leaders required to demonstrate their efforts to implement Lord Carter reforms on efficiency and to accelerate plans for service closures.

Another measure, which I understand is being considered, could see “sustainability” funds not secured by trusts which miss their control total plans offered up to those who can deliver greater improvement in return.

This would have to be thought through pretty carefully, as it would result in money being diverted from struggling trusts and health economies to those which are succeeding.

This would have been fine when deficit bailouts (which will be needed to a greater extent by the struggling trusts) came as free public dividend capital, but now bailout cash comes in the form of a loan that has to be repaid with interest.

Unless separate measures are taken, this could result in even greater imbalances between different trusts and STP areas. I have asked NHSI some questions about this.

Whitehall special measures

Just in case there was any doubt as to who is in charge of the financial recovery, it is now abundantly clear that the Treasury is running the show.

HMT was mentioned four times in a guidance document sent to NHS providers last Friday, which has set out trusts’ financial targets and rules around the “sustainability” fund for the next two years.

The targets, issued to every trust, aim to bring the sector into balance in 2017-18, which appears to be the basis on which HMT agreed to two years of further sustainability funds.

There has been no press release or statement in Parliament, but there’s no doubt the Department of Health and the bodies it oversees are in a Whitehall version of the financial special measures regime.