Analysis – NHS finance faces surgery.

Shared services, the introduction of strategic changes and a reconfiguration of the way clinical services are provided will leave the NHS finance function virtually unrecognisable to the way it looks today – both in size and the way it is organised.

The shared services initiative is the main agent of change. And while last year the initiative, which could see basic financial services being run from between 10 and 25 shared services centres, was still a theoretical exercise, the creation of two pilot projects is the clearest indication shared services have moved off the drawing board.

An estimated two-thirds of the health service’s 14,500 finance staff may be affected and if the private sector’s experience of shared services is anything to go by, staffing reductions could be as high as 25%, meaning 2,500 jobs could be at risk.

It is this issue that is causing the NHS Executive most problems. Many savings – between £130m and £180m a year – will come from cutting staff.

The last thing it wants is for swathes of finance staff to find new jobs for fear of having no job in a few years time.

And although the executive has been criticised for keeping finance staff in the dark about the initiative, it has made efforts to reassure staff, whose jobs could be affected by shared services.

A new national financial framework on shared services, published recently, puts staffing issues centre stage claiming: ‘Successful redeployment of individuals whose job is impacted by the changes will be the number one priority. Individual job planning will be done early in the project.’

Shared services will not happen overnight. ‘This is going to take a number of years,’ says Philip Hewitson, chief executive of the shared services project. ‘And that gives us a real opportunity to handle the staffing issues.

‘The NHS is an enormous employer and not getting smaller. So while you look at job reductions in a variety of support functions, there are other opportunities in other support services and in front-line activities.’

The pilots, in West Yorkshire and in the South West, have stressed the importance of staff redeployment and retention and raised the possibility of re-training finance staff for frontline care.

If the shared services initiative wasn’t enough, in April health secretary Alan Milburn raised levels of uncertainty for finance staff within health authorities, when he announced a further organisational reconfiguration.

The current 99 health authorities in England are to be replaced by 30 new strategic health authorities by 2004, saving £100m from the £500m running costs of health authorities. What this means for health authority finance staff is change. If shared services won’t affect you, then the reconfiguration probably will.

‘This is a time of significant uncertainty for finance staff, in health authorities,’ says John Flook, FD of County Durham and Darlington Health Authority. ‘It will be important to keep that period as short as possible because no organisation thrives on this level of uncertainty.’

As with shared services there is a danger financial management staff could start looking for new jobs immediately, outside the NHS, rather than wait until health authorities disappear. The suggestion management of new strategic health authorities may be open to bids could exacerbate feelings of job insecurity and the NHS could lose vital financial experience.

While the shared services initiative will lead to cuts in non-accountant numbers, the last thing the NHS needs is fewer qualified finance professionals. Experienced finance staff are desperately needed to lead the new independent primary care trusts, which are responsible both for commissioning hospital services and providing community care.

But the new strategic health authorities will take on major new responsibilities, requiring top-notch finance leaders. Many duties undertaken at regional level will transfer to the new bodies.

This means the new strategic health authorities, which will be financially massive controlling on average budgets of #1bn, will be responsible for performance managing trusts and for maintaining financial balance across their local health economies. The whole area of capital planning and capital allocations will transfer to the new organisations. ‘Experienced finance staff will continue to be in high demand in health authorities, primary care trusts and NHS trusts,’ says Flook.

There is one other major influence on the way the NHS is organised – clinical networks. The concept is becoming established as the right way to provide clinical services. Networks are already compulsory for cancer services and are being established for coronary heart disease.

Some parts of the country are examining setting up networks for the provision of services for older people and children. In Scotland there are already vascular and diabetes networks. The idea is to develop services across organisational boundaries, making the best use of human and financial resources and ensuring more consistency in the quality of care.

In Kent, the cancer network consists of two specialist cancer centres, dealing with the rarer cancers – gynaecological oncology – and four centres providing treatment for breast and colorectal cancer. Patients travel further, but treatment has improved.

In his speech on the new strategic health authorities Milburn talked about the emerging new structures. ‘In cancer care, the country’s best networks are applying to take control of local budgets for services,’ he says. ‘In time I believe we can put the country’s top cancer specialists in charge of new funding for all cancer patients. Other local innovations to put frontline staff in charge of services will be encouraged too.’

There are new roles for finance working alongside clinicians in networks.

And if clinical networks do become established for all the major specialties and funding is targeted directly to the networks, then the role of NHS trusts will change dramatically.

The logical conclusion is that NHS trusts will move to being facilities providers rather than service providers, charging networks rent for using their premises.

Some of these changes will happen in the short-term, a decision on the national roll-out of shared services will be taken next April, others will take several years. But change is inevitable.

As Flook puts it: ‘The finance function will look very different in ten years’ time.’

Healthcare Financial Management Association’s site is at

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