Seriously weak NHS systems spark concerns

5 Jun 08
Too many NHS trusts still have weak financial management systems that fail to produce the data required to underpin effective performance across the health service, a senior health regulator has warned.

06 June 2008

Too many NHS trusts still have weak financial management systems that fail to produce the data required to underpin effective performance across the health service, a senior health regulator has warned.

Stephen Hay, the chief operating officer at Monitor, the foundation trust watchdog, issued his warning during the Public Finance/Oracle round table debate on the future role of the finance director, held on June 2.

Hay said his regulatory body had assessed 240 hospitals that had applied for foundation trust status, and had found that the same shortcomings kept reappearing. 'Too often I would say we have seen very weak forecasting and projecting of financial information, often seriously weak, where the forecasts have borne no reality to what has happened,' Hay revealed.

'[We've also found] very poor management information, particularly very, very little information on cash flow and cash flow forecasting – which, when you're operating in an environment where cash really matters, as it does for foundation trusts, is of fundamental importance.'

Monitor's assessments had also brought to the fore concerns about trusts' approach to investment appraisal, particularly in relation to Private Finance Initiative projects, Hay told participants.

'[We] have real concerns about the affordability of some PFI schemes that have been in the offing as foundation trusts have come through the assessment process. Simply, the affordability has not been rigorously looked at in the way you'd have expected.'

These deficiencies demonstrated the need for directors of finance to move beyond their traditional role as 'scorekeepers', Hay said. Instead, they needed to take a more 'strategic role', providing leadership within their organisations and working closely with the chief executive, as is often the case in the private sector.

In order to ensure that finance directors are properly held to account as they assume this broader, more demanding role, trust boards would need to include non-executive directors with the ability to challenge them.

'There is a need to have non-exec directors with appropriate financial and commercial skills to understand what the finance director is doing and saying, and that has often been lacking in the past,' Hay said.

He also called for greater efforts to attract finance staff from outside the NHS – or it would not benefit from 'the crossover of ideas and skills that you see in other sectors of the economy'.

PFjun2008

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