Financial governance in the NHS

With an overall deficit of £2.45bn the state and profile of the NHS sectors’ finances is at its highest level for a generation. It is critical that all NHS organisations maintain tight financial control and that they do everything possible to stop a ‘deficit blind’ organisational cultural malaise from developing.

The number of instances where NHS provider financial performance has deteriorated rapidly and dramatically has increased significantly. Whilst everyone would recognise the multifactorial nature of many of the causes of this, there remains, from our experience, criticisms of the robustness and focus locally on how NHS providers manage their finances.

We have conducted a number of independent reviews into the causes of adverse financial performance in the NHS sector, and have, on each occasion found many of the causes to be known national drivers, such as the cost of temporary staffing, delayed discharges and impacts of national tariff constraints. However, we have also found that organisations themselves are increasingly tolerant of growing deficits, too readily accepting that ‘everyone is running in the pack’, and as deficits grow, are becoming less focused on core financial management controls and choosing to externalise the issue without ensuring that their own organisation effectively manages its own finances.

Whilst undoubtedly there are significant system wide and national level issues to tackle, in this document we discuss a number of simple quick wins and improvements that can be made at an organisation level to recover local control of your organisation’s finances. Whilst these alone will not eradicate the NHS’ financial problem, they will contribute to stemming the flow and help instill effective financial control into NHS providers. Otherwise we run the very real risk of losing financial discipline and creating a financial culture which will be even harder to turnaround.

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