Published: 24/03/2005, Volume II5, No. 5947 Page 28

Do acute trusts have the management capacity and capability to achieve financial turnaround?

Our research into the recovery plans of 15 acute trusts produced little cause for optimism - by their own admission, 13 had failed to deliver any sustainable improvement.

The failed plans included most of the following features, the sevens deadly sins of financial recovery:

Developed in isolation from mainstream business planning or modernisation processes.

Cash-releasing efficiency savings as a standard percentage applied across all departments rather than to specific target areas.

Re-centralised decision making, recruitment freezes, even to replace staff who have left, and other petty cost-reduction measures that often demoralise staff.

A focus on zero-sum games with commissioners who will have to claw back money elsewhere.

Action plans with more than 100 projects rather than a small number of high-impact changes.

Valued services cut and treating patients close to waiting-list deadlines - wasting capacity and deferring the problem.

Brainstorming sessions where the only output is to increase patient parking charges.

The right way

The more successful turnaround schemes, embodying the seven virtues, have learnt from private sector best practice. They improve finances, patient experience and staff morale by adopting a different mindset:

Maintain a strategic context.

Identify impact on patients of service cuts. Decide which services offer income growth options and which may be best left to primary care or the private sector.

Integrate financial balance into overall business planning.

Work with commissioners to get the most out of their spend.

Understand which services are in surplus or deficit. Payment by results makes this easier.

Recognise that financial performance is largely a consequence of operational efficiency. Most acute spending goes on clinicians, drugs and facilities. Costs can only be reduced by improving care pathways.

Focus on delivering a few highimpact changes, such as those identified by the Modernisation Agency.

Create an environment in which staff at all levels change their behaviour. Sustained balance is achieved only if staff are motivated to streamline continuously and improve processes from a patient perspective. The common factor among trusts sustaining financial balance is having the courage to fully empower sub-directorates.

Hugh Risebrow is associate director of the NHS Modernisation Agency's performance development team.

hugh. risebrow@ncgst. nhs. uk