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The treatment of financial imbalances following the Francis Report

As published in Health Business, February 2013.

It is no exaggeration to say that the Francis Report represents one of the most significant events for patients since the NHS was created in 1948. At the heart of its 290 recommendations is the principle that patients’ interests should take priority over all other factors. Although arguments can be made that this principle is already enshrined within public sector healthcare (and is likely to be strengthened in the new NHS Constitution), many would say that too many in the NHS have only been paying lip service to patients’ interests and that it has become a less observed value than patients are entitled to expect.

While the Francis Report identifies a number of contributory factors, Michael Boyd, head of healthcare at business law firm, DWF, considers how an emphasis on finances within the NHS has helped force patients’ interests into the back seat.

Stafford Hospital

Though a forensic analysis of the issues that arose at Stafford Hospital highlights many deep rooted problems, it is apparent that the drive towards NHS Foundation Trust status - by delivering financial balance - was a main cause of the shift in focus away from the needs of patients. In short, as Francis pointed out: “[It’s] a culture focused on doing the system’s business - not that of the patients.”

Although the scale of the consequences of the problems experienced at Stafford is, hopefully, unique, the problems themselves are not. When the Health Secretary acknowledges that there are “pockets of Staffordshire-like neglect” across the NHS, there needs to be a fundamental assessment of these two key underlying problems and a consideration of radical solutions which could mitigate their impact.

Financial recovery

Providing high-quality healthcare is not always consistent with balancing the books. The flip side of this is that attempts to recover from financial imbalance (which invariably involves staff cuts) often impact on patient care. The extent and timing of this will, of course, be influenced by a number of factors, including: the nature of the cuts being made; the staff-types affected; and whether they amount to an initial wave of savings or form part of a series of cost-saving measures.

The drive to deliver cost-savings is not restricted to Trusts seeking to deliver financial balance as part of a Foundation Trust application. The NHS as a whole has been tasked with delivering savings of £20 billion by 2015 as its contribution to reducing the Government’s deficit. Although some organisations are able to achieve savings without impacting on patient care, this is not the case across the NHS and, in the light of a cost reduction programme that extends to 2015, NHS finance directors have already registered their concerns about the impact on the quality of care of long-term austerity measures.

All the low hanging fruit has now been picked and one of the main casualties of this challenging process will be care quality.

Balancing the books

In any publicly funded health system, there are bound to be tensions between treatment, patients’ interests, finances and delivering on centrally-set targets. However, it is clear from Francis that so much focus was placed on financial and policy priorities that there was an obvious conflict with patients’ legitimate interests. Mid Staffordshire is not unique. Many other NHS providers face a daily struggle to achieve the same conflicting system-wide priorities.

The real concern is that the drive for financial balance and savings could lead to a downward spiral in care quality across the board, and increase the size of the pockets of Staffordshire-like neglect that exist in various places across the system. While a general amnesty on outstanding debts that fall outside of acceptable levels is probably not the best way of proceeding (Francis acknowledged that there does need to be some degree of financial discipline), it is perhaps time to revisit recovery programmes. These would need to be amended to make them more realistic and, as part of this process, ensure there has been an exhaustive assessment of likely impacts on patient care which can be revisited as circumstances change.

It is also perhaps time to review the place of the NHS as a source of deficit reducing savings and either ring-fence it from this exercise completely or establish more realistic targets.

Moving forwards

It will take the NHS a significant amount of time to absorb the findings and recommendations from the 1,919 page Francis Report. There will be no quick fixes to solve the problems identified, and it won’t be practical to take all of the recommendations on board immediately. The interests of patients need to be foremost in the mind of everyone within the service, but the Government may need to think long and hard about how this can be balanced with deficit recovery. While financial viability of the service as a whole is important, on a local level questions are being raised as to whether this should be in preference to patient interests.