Making money work in the health and care system

Exploring how financial flows can be redesigned to find a better way to make money work in the health and care system

Summary

Our research looks at how the current NHS funding system works and delivers recommendations for how to put money entering the system to best use for patients.

We worked with the Healthcare Financial Management Association (HFMA) on this research and spoke to NHS finance professionals, non-executive directors and NHS leaders across the country. With the help of the HFMA, we surveyed over 200 finance professionals to understand what they think about the way money works in the healthcare system and how it could be improved.

An integrated model of care is undoubtedly the right direction for the UK healthcare service. Not only does it benefit patients and NHS staff but we’ve seen that it works overseas. The current direction of travel is promising with the Five Year Forward View.  But there is an overwhelming desire for change from front line NHS finance staff.

 

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"There is a huge opportunity to better optimise resources, better empower patients and better improve health outcomes.  Change is always hard in the NHS but there is a big prize on offer - not just to sustain the system, but to transform it."

Rt Hon Alan Milburn PwC Health Industries Oversight Board Chair

What do finance leaders think: key findings

There was a strong sense that change was necessary but that this needs to be done with care.

76% felt that current funding structures in the NHS were not fit for purpose while only 10% felt they were (the remaining were unsure).
27% thought linking how NHS employees are financially incentivised to desired system outcomes would be an effective way of driving better value.
78% of people felt that there should be a single budget for each local health, social care and publich health economy.
81% The majority of respondents thought they would be working in osme kind of integrated care system or organisation within 5 years
77% felt outcomes would be improved through greater certainty of funding levels over a longer timeframe.
83% feel there is conflict between long term financial sustainability and short term efficiency savings.
91% said unpredictable annual cycles of funding need to be reformed if systems are to be able to engage in sustainable financial planning.

Our recommendations:

We have made several recommendations for short and medium term action, aimed at re-aligning financial flows with the emerging place based architecture of the system, giving systems better long term line of sight over their funding envelope, and ensuring that money is directed towards incentivising better patient outcomes.

"Money talks. The way it is deployed and the objectives it is designed to realise have a huge influence on what individuals and institutions within the care system do."

Immediate changes:

  • Organisational financial targets should be replaced by system-wide targets - this would mean that whole areas are working together to achieve health targets rather than individual organisations.
  • There should be a radical rethink of how cash is lent by the DHSC to hospitals, including removal of onerous interest rates.
  • The way that new infrastructure is funded needs to change. The overwhelming majority of new capital resources should be earmarked for investment in community and primary care services. This means creating a national NHS capital transformation fund, with clear criteria around access and prioritisation. And banning the movement of money from capital investment to day-to-day spending.
  • The roll out of patient personal health budgets must happen faster. A new target needs to be set that goes beyond the current 100k patient target and sees the majority of those that qualify holding personal budgets. 

Medium to longer term changes:

  • Payment for healthcare services should be changed to reward patient health outcomes rather than the number of people treated.
  • Local health, social care and public health budgets should be merged using existing budget pooling legislation.
  • Local health economies should be given long term financial settlements so that they have the ability to plan and invest in the future, mirroring what is likely to happen at a national level.
  • Financial incentives for frontline and management staff should be used to improve how different health and social care providers can work together. In particular, finding ways of engaging and incentivising primary care to enter into joint arrangements with the local health system is key to this working.

Our approach:

Our research took place over nine months, drawing upon a wide range of sources, from academics, to finance directors and NEDs. We:

  • Conducted a desktop review of current research, academic thinking and evidence from the UK and internationally;
  • Held one to one interviews with key influencers, thinkers and decision makers who currently work in the NHS;
  • Undertook a survey of HFMA members, with 203 respondents working in finance roles within the NHS; and
  • Convened round tables with a diverse range of individuals including non executive directors and finance leaders from the NHS and local government.

Our steering group oversaw our research. They were key to providing critical challenge to the thought process. Membership of the Steering Group comprised:

  • Rt Hon Alan Milburn (Chair)
  • Emma Knowles (Head of Policy and Research, HFMA)
  • Ian Moston (Director of Finance and Information, Salford Royal NHS Foundation Trust, Chair of HFMA’s Policy & Research Committee)
  • Lee Outhwaite (Director of Finance and Contracting, Chesterfield Royal Hospital NHS Foundation Trust, Director of Finance, Joined Up Care Derbyshire, Derbyshire STP and HFMA Trustee)
  • Richard Douglas (Former Director-General of Finance, Department of Health and Social Care (DHSC) and NED, NHSI)
  • Anita Charlesworth (Director of Research and Economics, the Health Foundation)
  • Mike Farrar (Chair, Public Sector Health Board, PwC)

We would like to thank all the members of the Steering Group for offering their time, energy and advice and remind readers that the conclusions reached and views expressed in our research are those of the authors only.

 

Contact us

David Morris
Public Sector Health Leader, PwC United Kingdom
Tel: +44 (0)7841 784 180
Email

Jude Simpson
Government and Health Industries, PwC United Kingdom
Tel: +44(0)7725 633392
Email

Josh Walker
Senior Manager, Government and Health Industries, PwC United Kingdom
Tel: +44(0)7808 035 514
Email

Lee Lindley
Government and Health Industries, PwC United Kingdom
Tel: +44(0)7525 281 228
Email

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