Hfma transforming healthcare summary december 2013

Editor's Notes

1. This presentation is designed to give a summary of the HFMA’s research briefing Transforming Healthcare. It has been developed to meet the needs of finance staff wishing to see the key messages of the briefing. It can also be used by finance staff as a presentation to others wishing to understand the role of the finance team in transformation projects, in conjunction with the full briefing.The presentation is based on the HFMA’s briefing Transforming Healthcare, published in December 2013 and reflects the organisations and structure of the NHS in place at the time of the research.Please note that the slides cannot be edited but you can make changes to the speaker’s notes or insert your own slides, without an HFMA logo.
2. This briefing highlights the variety of important ways that finance teams contribute to improving healthcare. It draws on interviews with key finance and clinical staff at seven organisations to present a comprehensive picture of the role that finance staff can play.The organisations were chosen to represent different sectors of the NHS and with different stories about how their transformation works in practice. Through this research we hope to show how finance teams can shape and challenge transformation projects while improving their own skills and building relationships with non-finance colleagues.  The HFMA is the representative body for NHS finance professionals and through our network of committees and branches we have unique access to NHS finance staff throughout the UK. The intended audience for this briefing is therefore primarily CFOs, senior finance managers and boards but also all staff with an interest in understanding how finance staff can make a positive and lasting contribution. Although the majority of the research took place in English NHS organisations, many of the main findings are applicable across the UK.We undertook the research to help the HFMA’s members meet the challenge of transforming healthcare, both to improve quality of services and secure a sustainable financial position. The briefing provides guidance and shared learning about the role of finance staff in transformation. The briefing does not offer high level predictions about what needs to change in NHS organisations and health policy to ensure it is safe and sustainable. It also does not seek to address the kind of strategic questions facing chief executives and their boards. It is, however, about how chief financial officers (CFOs) and their teams are going about effecting transformational change now, to meet the immediate challenges around quality and finance. We highlight the positive contribution of the CFO in transforming services and show how they and their teams can be seen as enablers rather than gatekeepers.
3. Transformation is commonly talked about by NHS leaders as the best way to meet the challenges of improving the quality of services for patients and getting better value from budgets. It is already clear that budgets are unlikely to grow during this decade, meaning no organisation can afford not to act.The existing literature on transformation talks about many things including the timing – (infrequent, rapid, large scale), punctuated equilibrium, non-routine, sharp and simultaneous shifts in strategy, power, structures and control along with leadership vision and culture change.Transformation means major change, a departure from previous programmes of efficiency savings, which have tended to focus on doing things the same way for less money. Real transformation makes a permanent and widespread difference to strategy and culture, which in turn drives the necessary change to the systems or processes of an organisation. It could apply to the organisation, or even the entire health economy but it is equally as valid to describe a change at ward level as transformational. Some examples could include merger or acquisition of whole organisations, schemes that improve patient flow through a hospital or schemes that change the care pathway patients experience to improve the quality of care. But the most appropriate transformation will always need to be determined according to local circumstances and it is not always possible for one organisation to copy a successful method from another without some local changes.The current defining goal of transformation remains the same throughout the NHS – achieving change that improves services without a significant increase in costs.It is of course extremely difficult to do this in individual organisations. This is because it could involve working within national policy constraints and winning over local unions, public/ patients and local politicians to name but a few.Our briefing refers to the current efforts in the NHS of transforming for improved quality of services and efficiency to deal with today’s problems of money and care rather than the factors that might hit 10 years hence.
4. Based on the reflections of our research participants, we have identified ten recommendations that CFOs and their teams embarking on transformation schemes may wish to consider. The briefing considers these themes in greater detail, as well as the context in which transformation is taking place. The first five of the ten recommendations are:Lead the culture change and promote the transformation. Change is accompanied by uncertainty and the potential for staff to lose focus on the performance of an organisation. The CFO can support the successful management of the organisation through transition by setting out a rational business plan supported by a clear financial strategy. The CFO who is passionate and enthusiastic will inspire their teams and provide motivation and direction. Leadership requires CFOs to involve their staff at every step and act with integrity.Provide long-term vision. The CFO has a forward looking remit as an executive director and has a responsibility to develop long term strategies supported by financial forecasts. CFOs can set the parameters of transformation by defining the scale of the financial challenge, accurately modelling the options and providing expertise and advice to operational managers responsible for managing financial and business risks. CFOs, especially where they have extended responsibilities, can shape the debate around financial sustainability.Work locally and collectively to create new payment systems and fund transition. CFOs turn the clinical model for services into the language of contracts and revenue budgets. In some cases payment systems have not kept pace with the integrated ways of working and new care pathways that are being established. At local level CFOs can show their commitment to transformation through mature discussions about funding the transition, capital investment and taking or sharing financial risks.Be visible and facilitate debate and constructive challenge. CFOs and their teams who make a positive contribution to transformational change build confidence, credibility and demonstrate an understanding of the clinical strategy that is being implemented. Attending transformation project meetings, getting to know staff and being approachable and receptive to new ideas can help.Train finance staff to think about transformationrather than transactions. Senior finance staff should understand the business and transformation objectives of their organisations. To do so they may need development opportunities that allow them to build relationships with clinicians and partner organisations. Junior staff also benefit from exposure to operational staff, to help them understand the purpose of the transformation and its impact on patient services. Staff are more likely to embrace change if they can see first-hand what needs to change.
5. Make the distinction between clinically-led and clinically-owned. Clinicians are the right people to make decisions about clinical services. However, CFOs need to be involved in the financial aspects of these decisions and need to know when to step in and when to step back. Equally, clinicians need to know when to ask for finance support. CFOs can also use their considerable project management skills to play a key role in delivering project goals without necessarily leading them. Create partnerships between and within organisations. CFOs can make links with their counterparts in other organisations across the local health economy. There is a balance to be struck between competition and collaboration when transforming services. Taking the lead on whole-health economy working will display credibility and generate support. Within organisations the CFO can develop effective relationships to unblock problems and align internal priorities. Emphasise the CFO’s role as a board member. The CFO is a board member with special expertise in finance. As such, while the CFO will bring specialist knowledge to support board decisions they will first and foremost be responsible for, collectively with the other board members, achieving the organisation’s overall transformational objective. Similarly, the board is collectively accountable for financial duties. Make use of evidence. The CFO can help their organisation to see how transformation can result in improved services for patients while saving money. While clinicians use clinical evidence to transform services, the CFO can translate this strategy and raw data into language and models relevant to national financial policy. A good evidence base can help to show where services have improved. Balance finance and quality. The CFO can provide real challenge and add value to transformation through bringing strict governance and financial control to the delivery of projects. Finance analysts, when working closely with clinical transformation leads, can guide discussions around cost centres and budgets to drive consistency across an organisation and highlight where accountability within the transformation plan is not clear. Finance staff should feel able to start conversations about clinical issues and risk management.
6. There is some existing work on transformation in the NHS that makes reference to finance. The motivation for transformation is to create financial sustainability, driven by the funding freeze.In the briefing we set out the findings from a review of some of the existing literature. Firstly, National Audit Office research into CIPs progress and an HFMA/Grant Thornton survey found that service transformation, as well as pay and expenditure control will have the biggest impact on savings. However, these are not expected to have a positive impact on service quality. Hence, a lot of approaches NHS organisations refer to as transformation might not lead to the expected benefits of improving quality and achieving a sustainable financial position.The King’s Fund produced a report on likely trends in healthcare, which could indicate how the NHS needs to plan over the long-term. Some of these trends include:Global context, financial context, demography, determinants of health and disability, healthy behaviours, future patterns of disease and disability, medical advances, information technologies, the workforce and public attitudes and expectations.Most of these are well outside the control of CFO, CEO or even in some cases national governments. Therefore our research focuses on the role of the CFO and finance team in transformation projects currently underway. These are mainly in response to the immediate financial constraints expected over the next few years as well as quality concerns.One piece of research identified that mutual trust is at the heart of organisational and behavioural change. This theme, or culture change, was identified by many of the interviewees in our research too.
7. Through our research we categorised the role of finance into five themes.In the following slides we will go through each of these five areas and outline the role the CFO and the finance team plays in each.Throughout all of them it is worth remembering the importance of developing trust between staff and organisations to make the transformational change permanent and effective.Most of what we found is straightforward but is a reflection of what is happening in local organisations. While it is not ground-breaking innovation it adds evidence to the way the CFO acts as an enabler rather than gatekeeper and that transformation should be a collaboration between clinicians, managers and finance staff.
8. Culture change is the main starting point for successful transformation. The chief financial officer (CFO) plays a critical role in changing not only the culture of the finance team but also the way that finance is viewed by the rest of an organisation.CFOs need to talk about quality and finance rather than finance and quality to successfully engage clinicians in conversations about service change. The CFO’s role is to ensure finance staff and clinicians are knowledgeable, trained and prepared for the finance aspects of service transformation. CFOs we spoke to felt that finance staff at all levels need to understand their organisation from an operational point of view and understand the need for transformation that is clinically-led.NHS finance staff believe that clinical transformation needs to be clinically led. But it is not always clear that across the NHS the balance between quality and finance considerations is being achieved.Finance staff can play an active role in demonstrating to clinicians and transformation leads the contribution that finance teams can make. Some transformation leads, perhaps through a lack of finance knowledge, may not involve finance staff in their strategic and operational discussions at an early enough stage. CFOs and clinical staff will need to continue to work closely so that each other’s skills are used effectively and at the right time. The CFO can do much to ‘close the gap’, perhaps through reducing the remoteness of the finance function but also by making sure finance staff at all levels have opportunities for joint working. Benefits can accrue from creating a culture of closer working relationships and greater understanding of each other’s work. The most successful way of bringing this about comes through cultivating good relationships, listening and being visible to staff. The role of the CFO is to help create a culture where staff feel empowered to make changes without feeling change is being imposed.
9. The CFO’s ability to provide a long-term financial plan is a critical role for any transformation project. Financial planning can shape the way transformation evolves, maximising the chance of its success, by setting the parameters of the resources available and modelling the transformation plans. It covers both revenue and capital spending and draws on the CFO’s training and long-term vision but also their ability to understand the finance data in the context of other performance indicators. Clinicians are not normally required to think about how their services will look in ten years’ time but CFOs can bring finance vision to planning conversations about clinical services.Thinking long-term means that revenue and capital plans need to be modelled using accurate activity, demand and finance assumptions. But the key to improving the chances of transforming services successfully lies in linking the financial plans to well-thought out clinical and quality strategies. A clinically-led approach to service quality and outcomes should drive financial planning, rather than financial targets. Planning involves long-term financial modelling skills, bringing in activity forecasting and knowledge of public health and likely trends in drugs and technology, for instance. Finance teams, can, in conjunction with clinical colleagues develop sophisticated models. Planning requires access to all of the available evidence to produce accurate, reliable models. This requires good data and good analysis and participants felt that where it can be done, finance teams will then be able to demonstrate the likely impact of the transformation and where it could be improved.CFOs of providers and commissioners alike can provide long-term financial planning support. The role of the finance team should be to focus planning on the 95% on the budget used for delivering services, rather than planning to achieve 5% savings. This approach can deliver improvement and save money where the effort is focussed on transforming activity for which there is evidence to show an organisation is an outlier on quality and finance measures.
10. Leadership is an ability all board level officers demonstrate but there is a distinction between the role of the CFO as a board member and as finance lead. When transforming services boards make decisions that need to balance quality, finance and other concerns. Boards have a collective responsibility for quality and finance, as well as the other business of the organisation. So, the CFO should act as a board member but one with a special expertise in finance. Boards need operational leads to be fully bought into delivering safe and high quality care but CFOs need them to have their eyes and ears open to finance. Leadership also requires the CFO to be a project director. This requires the ability to inspire and influence people, as well as the relationship building, motivational and organisational skills required to support delivery of a major transformation project. Operational leads must know that the CFO and board stand behind them, or are clear when they do not, as well as challenging plans. CFOs must create a stable financial envelope for transformation leads to work within. Where the board is confident it has identified the right approach this can create an ethos of success and improve the chance of savings arising. Finally, CFOs need to take on a collective leadership role to debate the problems and challenges of national and local financial strategy and policy. Working in partnership, CFOs can have a stronger voice with national policy makers and regulators capable of making changes.
11. The CFO’s ability to turn a clinical vision into a business strategy, written in the language of payment systems and policy frameworks, is the starting point for turning ideas for change into concrete proposals. In undertaking this role, the CFO requires the support of the finance team to provide high-quality financial analysis and supporting evidence.Finance analysts can provide a helpful and welcome challenge to clinicians that can improve delivery and consistency of the transformation. Finance staff can give those doing the transformation work the tools to make changes. In turn this can provide greater assurance to the board. Finance staff can help through, for instance, comparing the financial information for all budgetholders to improve consistency and look for savings opportunities, especially around non-pay costs. Finance staff have a high level view across a whole department or division and can see where there are inconsistencies between teams.In delivering the transformation, finance staff can help project leads with their skills in writing business cases and setting up the budgets and coding structures. Through this process finance can challenge and improve the financial management system. Finance should play a supporting, enabling role to clinicians. However, this does not prevent the CFO and finance team from providing this support through challenging the clinical approach where there is the evidence.Finance staff are able to help quantify the potential financial benefits that might arise from a transformation scheme. Transformation should be driven by the impact on the quality of services but it is important to know what investment might be required and what the longer-term savings might be.
12. An area where finance teams can challenge transformation plans and add value, while the transformation takes place, is in setting up governance and accountability arrangements. Applying a consistent approach to the systems of internal control can lead to improvements. In allowing transformation to be clinically-led, finance teams may have in the past taken a step back from being fully involved. In some cases there may be a role for the CFO to set the tone that finance teams can and should challenge financial control and governance arrangements but still allow clinicians to be fully involved in these decisions. Finance teams need to feel able to take control of the finance aspects of transformation, when required and then stepping. As part of the overall governance process, finance teams will focus on building a robust performance management system, including setting up cost centres and budgets. These should reflect the service design decisions made by clinicians and support operational requirements regarding financial accountability and responsibility. The process of clarifying and agreeing financial governance arrangements in itself can facilitate some useful clinical debates to find the best solutions for service redesign. For instance, a discussion about setting up a cost centre can lead to a useful debate among clinicians about which department should host a service and which clinician should take the professional lead role for clinical safety. The financial debate is therefore a vehicle for having a detailed discussion that is ultimately about maintaining clinical safety.The divisional accountant, who is fully embedded in the management team of their division, will often have an extra level of detailed knowledge, not obvious at CFO level, which can be the lever to solve some of the difficult problems that can arise during transformational change programmes. This approach where financial and clinical governance operate together is where the finance team can help turn the clinical vision and strategy into something that is operationally clear and sustainable.
13. Through our research we do not define a formulaic role for the CFO and finance team but we do identify the areas where they can provide the biggest positive contribution. We show that finance teams can actively improve transformation schemes while still allowing clinicians to lead them. The changes taking place under the badge of transformation are different to previous attempts to deliver savings through cost improvement programmes. The most important aspect is to change the culture of the organisation to think about transformational rather than transactional approaches. Once culture and staff perceptions change there will be increased willingness to support a strategy of transformation. But don’t over project manage – give the transformers the tools to get on with it. CFOs and finance can make a positive contribution, which needs to highlighted, celebrated and sustained.It may require additional training and development for finance staff and will require partnerships and relationships to develop. Above all it requires strong and visible leadership. These changes will remain in the organisation after the transformation is complete and will continue to generate positive benefits.Clinically led transformation is unlikely to be enough to save the NHS from its financial troubles – this requires politically led closures and mergers of hospital space and changes to established ways of working, but it will provide a much greater chance of increasing service quality. However, there was much to be positive about from our research and the staff we spoke had much confidence in their plans.