THE ROLE OF THE FINANCE DIRECTOR IN A PATIENT-LED NHSA GUIDE FOR NHS BOARDS

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THE NATIONAL NHS FINANCE DEVELOPMENT BOARD

ÞCONTENTS

02 The context

05 What this guide covers

06 What is the role of the Finance Director?

07 Financial governanceand assurance

08 Executive Director of a Board

09 Business and commercialadvice to the Board

10 What does this mean fordifferent parts of the NHS?

10 SHAs

11 PCTs

12 NHS Trusts and NHS Foundation Trusts

13 What personal attributesare required?

16 Summary

17 References

18 Recommended web sites

19 Contributors

00:01

THE ROLE OF THE FINANCE DIRECTOR IN A PATIENT-LED NHSA GUIDE FOR NHS BOARDS

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ÞTHE CONTEXT

In March 2005 the Department of Healthpublished ‘Creating a Patient-led NHS’which set out the vision of healthcareservices free for all and personal to each.

The NHS is halfway through a ten year programme, which has evolved fromthe NHS Plan and the Wanless Report. During this period, there has beenunparalleled investment in the NHS which, in 2005-06, will be some £76.4billion. By 2007-08, the investment in health and healthcare will increase toaround £92.6 billion and will be in line with other European countries.

Patients are seeing shorter waitingtimes, with more clinical staff, andbetter services including improvementsin coronary heart disease and cancerservices.

There has also been major investmentin new hospitals, mainly through thePublic Finance Initiative (PFI), and innew primary care facilities, mainlythrough the LIFT programme.

Working with the private andindependent sectors has beenextended through the provision ofIndependent Sector TreatmentCentres, and joint working underPublic Private Partnership (PPP)arrangements such as a joint ventureor a managed service.

The challenge for the NHS is tomaintain this progress with services

designed, and provided, around theneeds of patients and not theorganisation.

The Health Reforms in England arecomplex changes in a complex system(Figure 1).

Achieving the best patient experiencesand outcomes of care, and deliveringvalue for money underpin the HealthReforms in England, where there isan imperative to:

n achieve high national standards for

care - including prevention ofill-health and promotion of ‘well-being’ (e.g. patient safety, qualityof care and fair access), with full accountability for the delivery of these standards;

n develop more locally responsive services which allow diversity and innovation to improve patient experiences and outcomes of care,

Better careBetter patient

experienceBetter valuefor money

A framework of system management,regulation and decision making whichguarantees safety and quality, fairness,

equity and value for money(system management reforms)

Money following the patients,rewarding the best and most efficientproviders, giving others the incentive

to improve(transactional reforms)

More choiceand a much

stronger voicefor patients

(demand-sidereforms)

More diverseproviders, with morefreedom to innovateand improve services

(supply-sidereforms)

Figure 1:

The Health Reformsfor England

with care being provided as close tothe patient’s home as possible;

n introduce flexible working for ‘frontline’ staff to support modern publicservices; and

n offer greater choice for patients (carers and families) and enable alternative providers to operate (e.g. independent sector and some family doctors under the enhanced new GMS contract and under PMS)and so introducing contestability (‘managed competition’).

The ‘transactional reforms’ involve theintroduction of Payment by Resultswhere NHS organisations havefinancial incentives to be the best, andmost efficient, provider of healthcareservices. There are incentives toprovide more clinically and cost-effective alternatives to hospital care.

The ‘system management reforms’see a shift to self-improving healthand healthcare services, which aremore flexible, innovative andconstantly changing, with appropriate‘market management’ and regulationto ensure safety, quality, localresponsiveness and contestability.

The ‘supply-side and demand-sidereforms’ have been described earlierand are about patient choice andalternative providers.

NHS organisations continue to worktowards National Standards: access toservices (e.g. 18 week maximum waitfrom GP referral to hospital treatment),increased life expectancy (e.g. tacklehealth inequalities), supporting peoplewith long term conditions, andpatient/user experience (e.g. improvequality of life and independence ofvulnerable older people). NHSAmbulance Services are alsodeveloping and, in future, will delivertrauma services and urgent caresupport for people with long termconditions and on-scene diagnosticsand health promotion services.

The recent White Paper for communityservices sees a shift in resources fromhospital care to prevention services,improvements in access to communityservices and care at home, and totackling health inequalities. Theemphasis is on prevention and earlyintervention in order to continueimproving the nation’s health.

ÞRisks and ChallengesThe move to a health system which isflexible and focused on the individualpatient is not without risks andchallenges for NHS organisations.

The financial incentives, which rewardthose NHS organisations respondingappropriately to delivering the reforms,bring inherent risks and potentialfinancial volatility to those that do not.

The full impact of the Health Reformsmay not yet be evident. For example,the impact of patient choice onreferral patterns which may result inNHS organisations with excess orinadequate capacity in the short term.

The impact of patient choice and theexpansion in alternative providers ofcare, means that NHS providers needto continually improve to attractpatients and remain financially viable.

Those commissioning services, onbehalf of NHS patients, will need toimprove the way resources are used tomaximise the health gain of their localpopulations.

The introduction of Practice BasedCommissioning gives more freedom,support and incentives to GP Practicesto purchase, on behalf of their patients,a range of services agreed with theirPrimary Care Trusts (PCTs). This willimprove the way services are deliveredboth inside, and outside of, hospitals.

The NHS faces other challenges -demographic, social, environmental,economic, and technological. Themodernisation of patient care for theageing population is a challenge. TheNHS has to design clinically andfinancially viable improved pathways

of care for patients which enablethem to remain in their own home foras long as it is safe and possible.

The challenge is to provide the requiredquality of care and safety of patients ina sustainable and economic way, whichaddresses health inequalities andmaximises benefits to patients.

Faced with these challenges, all NHSorganisations must have sound financialsystems and NHS Boards need topromote a strong financial managementculture throughout their organisations.

As well as delivering financialgovernance and assurance, there isrenewed focus for Finance Directorson the longer-term financialsustainability of NHS organisationsand obtaining value for money.

NHS Boards continue to be responsiblefor operating within prescribed limitsfor public spending:

n for NHS trusts: a statutory requirement to achieve financial break even taking one financial year with another, together with Department of Health requirements(e.g. making a return on capital employed of 3.5 per cent);

n for NHS Foundation Trusts: a statutory requirement to be legally constituted and compliant withtheir terms of ‘Authorisation’including the requirement to befinancially sustainable (although itneed not break even); and

n for PCTs and Strategic Health Authorities (SHAs): a statutory requirement not to exceed their resource and cash limits.

Accountability for public spendingwithin the NHS in England is shownon the next page (Figure 2).

02:03

ÞRecognised ImprovementsPerformance management andassessment for NHS organisations isvery real and highly visible – NHSFoundation Trusts operate under astrict financial regime with positiveregulation, and all NHS Trusts andPCTs are subject to a self-assessmentprocess covering governance andassurance, financial planning andservice development.

Deficits are not acceptable. The focusfor the NHS is on achieving robustfinancial health. This means planningfor financial surplus, to supportstrategic service developmentsand provide a contingency forunforeseen events.

The Audit Commission and theNational Audit Office published ajoint report (June 2005), whichconcluded that improvements tofinancial management will be neededto meet the requirements of the newfinancial regime for the NHS. Toachieve this, NHS organisations willneed to:

n improve Board effectiveness, including the appointment of Non-Executives with financial acumen;

n improve financial forecasting, including budget setting and control;

n ensure financial reporting during the year better reflects the standards and range of informationrequired for Annual Accounts; and

n be explicit around the use of non-recurring support.

Monitor the Independent Regulator ofNHS Foundation Trusts has identifiedthat all NHS Boards need the:

n right systems: setting in place the structure to manage risks, includingearly warning systems;

n right people: Executive and Non- Executive Directors who collectively have the necessary skills, knowledge and experience; and

n right culture: business orientationwith a focus on strategic issues and action centred papers to allow Boards to fulfil their role.

It is a requirement that every NHSBoard establishes an AuditCommittee. A key role of the AuditCommittee is to review, agree andrecommend to the Board for approvalthe Annual Report and Accounts.

The NHS Audit Committee Handbook(2005), suggests NHS Boards andtheir Audit Committees reconsidertheir approach given the needs oftoday’s NHS:

n NHS Boards and their Audit Committees should review theirrelative terms of reference;

n Audit Committees need to broadentheir remit and change their way ofworking to be more effective; and

n Audit committees need to maintaina focus on strong financial management, which involvesreviewing and ensuring themaintenance of effective systemsand assurance processes, includingrisk management.

MONITOR DEPARTMENT OF HEALTH

FUNDING ACCOUNTABILITY

SHAs

PCTs

PRACTICES

NHS FTs NHS TRUSTS

The Financial Structure of the NHS in England

Figure 2:

ÞWHAT THIS GUIDE COVERS

This guide describes the role of theFinance Director in a patient-led NHS,and the skills, knowledge, technical‘know-how’ and personal qualitiesrequired for the role.

In terms of role, the genericresponsibilities of the Finance Directorfor financial governance and assurance,for business and commercial advice,and as an Executive Director of theBoard are not new although thecontext and emphasis has changed. We explore how the job will changeas complex changes are made to acomplex healthcare system.

It is important that all members ofNHS Boards understand the role of theFinance Director in the NHS.

Financial management is the corporateresponsibility of the Board, and theindividual responsibility of the ChiefExecutive as the Accountable Officer.As an Executive Director of the Board,the Finance Director has both aprofessional and corporate role.

At the heart of the issue, therefore, isclarity about the professional andcorporate role of the Finance Director.

This guide is intended for everyoneon NHS Boards: Chairmen, ChiefExecutives, Non-Executives andExecutive Directors, and, in the case ofFoundation Trusts, Governors. Theterm Board is used throughout thisguide to cover all NHS structures.

Appointments to Boards havesignificant impact on the success orfailure of an organisation. In the lightof a few, but significant, high profilefailures of financial management inthe NHS, the spotlight is firmly andclearly on NHS Boards.

We describe the role of the FinanceDirector in the NHS in England,although this guide has widerrelevance across the whole NHS.

The different emphasis in rolebetween SHAs, PCTs, NHS Trusts andNHS Foundation Trusts is alsodescribed. This includes NHSAmbulance Services.

We also emphasise the importance ofhaving capability and capacity in NHSorganisations for financial turnaroundand deficit recovery.

Much of what is included in this guideis transferable to other parts of theNHS including Special HealthAuthorities (eg. the Health and SocialCare Information Centre, and the NHSInstitute for Innovation andImprovement). We have notspecifically considered Care Trusts(organisations working both in healthand social care), although the role willbe similar. This guide is also ofrelevance to other parts of the publicand the private sectors.

The challenges in the NHS are notdissimilar to those of largeorganisations or groups in the privatesector such as represented by workingin a listed company, a managementbuy-out team, an exit team prior topublic offering or sale, or turnaroundsituation. Some of the present NHSFoundation Trusts rival FTSE 250companies in size and complexity.

We do not examine the roles of thosewho report to the Finance Director,other than recognising the increasingimportance of the capability andcapacity of staff within the FinanceDepartment and the emergence ofnew roles such as Financial Controllerreporting to the Finance Director.

Recommended reading to accompanythis guide includes the recentlypublished Integrated GovernanceHandbook which has been developedby the Department of Health with theNHS Clinical Governance SupportTeam, and is available from:http://www.dh.gov.uk/governance.

This guide builds on the earlierpublication by the National NHSFinance Development Board,‘Shaping the Future: FromNumbers to Knowledge’(November 2003):http://www.fsdnetwork.com.

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ÞWHAT IS THE ROLE OFTHE FINANCE DIRECTOR?

As a professional accountantand financial adviser to the Board, theFinance Director has a ‘public interest’duty to create sustainable value.

Whilst it is usually expected thatFinance Directors focus on systemsand numbers, the real imperative of aFinance Director’s contribution is alsoto ensure sound decision-making oncapital and revenue investments, bestuse of scarce clinical and non-clinicalresources, proper assessment andrealisation of benefits - resulting inmaximum health gain and best value

for money. The diagram below(Figure 3) illustrates where FinanceDirectors add value.

The generic responsibilities of FinanceDirectors are shown in Figure 4.

The emphasis will be differentdepending on the context, and therole may be different depending onthe scale and complexity of theorganisation.

We have identified the differentemphasis in responsibilities for FinanceDirectors depending on whether theyare working for an SHA, PCT or NHSand NHS Foundation Trust. The keyareas of focus are shown in Figure 5.

THREE KEYRESPONSIBILITIESFOR FINANCEDIRECTORS:

n to provide financial governance

and assurance

n to provide business and

commercial advice for the Board

n corporate responsibilities as an

Executive Director of the Board

Partners

Clinical and Non-ClinicalManagers

Direction Setting, Entrepreneurial

Leadership, PerformanceManagement,

Financial Strategy,Business and

Commercial Advice

Costing,Financial Planning,Financial Reporting,

Financial Performance,Informed Decisions

Integrated ServiceProgramme,

Joint Ventures,Due Dilligence,Pooled Budgets

Planning andResource Deployment,Return on Investment,

Commissioning,Financial RiskManagement

InvestmentAppraisal, Business

Development, FinancialRisk Management,Funding Sources

Benefits Realisation,Value for Money,

Productivity, ManagedMarkets, Economic

Assessment

Staff Development,

Professional Ethics and Standards,

Leadership, Mentoring and

Coaching

FinancialGovernance,

Transaction Processing,Operating CashManagement,Procurement

Commissioners

Private and PublicInvestors

Society

Public

Employeesand Suppliers

FinanceStaff

The Board

AssuranceProcesses,

Transparency ofInformation,

Compliance withStandards andFinancial Duties

Finance Directors Supporting ContinuousLearning, Innovation and Improvement

Source: updated from Shaping the Future: From Numbers to Knowledge, http://www.fsdnetwork.com

Better careBetter patient

experienceBetter valuefor money

Figure 4:

Figure 3:

The Finance Director is responsible for the financial governance andassurance: ‘the system by which thefinancial aspects of a public body’sbusiness are directed and controlled to support the delivery of theorganisation’s goals’ (CIPFA/CadburyReport).

The Finance Director ensures thatsystems are in place so that theorganisation is properly governed interms of financial transactions,financial reporting, financialperformance, financial planning andin securing value for money. TheFinance Director must also maintainassurance processes to ensure thatinternal controls and checks areworking properly (e.g. engagementwith clinical and non-clinical staffholding delegated financial budgets).

These systems also include ensuringthat ‘treasury management’ systemsare in place to manage cash flowand liquidity (Monitor has publisheda best practice guide on managingoperating cash).

This also includes the need for systemsto identify current, emerging andanticipated financial risks, classified byprobability, impact, ownership andeffect on the organisation and countermeasures. A key requirement for NHSBoards is sustainable financial viability.The Finance Director has to involveand inform the Board and seniorstakeholders in assessing all theoptions in terms of strategic financialrisk, including a ‘worst case’ scenario.

NHS Foundation Trusts have a keyduty under the terms of theAuthorisation to remain a ‘goingconcern’ at all times. For an NHSFoundation Trust, ‘significant’ financialfailure may result in intervention byMonitor and could lead ultimately todissolution.

For PCTs, failure to keep expenditurewithin resource limits leads toautomatic qualification of ‘regularityopinion’ of the accounts by theexternal auditors. The auditors are

required to confirm whether in theirview ‘in all material respects, theexpenditure and income has beenapplied for the purposes intended byParliament’. This also requires theSHA and the Department of Health totake appropriate action.

The appointed auditor for all NHSorganisations can issue a publicinterest report on any significantmatter, including financial failure.

The Finance Director should presentand communicate information on thefinancial implications of strategic andoperational decisions to the Board,sub-committees of the Board (Audit,Finance and Risk), Governors (forFoundation Trusts), the internal andexternal auditors, and the regulators.

Achieving and demonstrating value formoney needs to cover all the resourcesused to meet the organisation’sobjectives:

n Economic - lowest price obtained which meets the need;

n Efficient - reduced waste and increased productivity; and

n Effective - benefits for patients (better survival rates, reduced disabilities, prevention of illness), communities benefit (people back at work, less emotional and physical crises) and staff benefit (working smarter).

Internal and external auditors routinelyreview financial governance andperformance through their AnnualAudit Plans and through the new KeyLines of Enquiry for Auditors LocalEvaluation Assessments, which informsthe Healthcare Commission’s annualHealth Check. The National NHSFinance Development Board has alsodeveloped 12 standards of goodpractice to promote improvements infinancial governance against whichperformance can be assessed andimprovements identified.

KEY AREASOF FOCUSFOR FINANCEDIRECTORS:

n SHAs

the approval process for

investment and strategic

change, ‘managing markets’,

managing financial risks,

and informing the economic

overview.

n PCTs

return on investment (benefits

for patients and maximising

health gain), deciding and

planning the deployment of

resources for care inside, and

outside of, hospitals, and

working with GP Practices to

redeploy resources freed by

service redesign and more cost

effective treatments.

n NHSTs and FTs

promoting sustainable financial

viability, generating growth,

countering strategic risk and

value for money.

Figure 5:

ÞFinancial Governanceand AssuranceThe two key responsibilities are to:

n deliver effective systems of internal controls and assurance processes to ensure probity and transparency inthe spending of public funds,including monitoring the financialperformance of the organisation,financial reporting and minimisingfinancial risk; and

n promote value for money in theuse of resources (e.g. workforce, buildings and medical technologies)acquired through public spending to maximise benefits for patients, families and carers.

06:07

ÞExecutive Director of a BoardThe Finance Director has corporateresponsibilities as an Executive Directorof an NHS Board. The Board is basedon the ‘unitary’ model of Executiveand Non-Executive Directors sharingresponsibility for direction and controlof the organisation. Boards need toevaluate continually the effectivenessof performance of the Board, sub-committees and individuals who sit onthem. The Audit Committee of theBoard has a key role in ensuring theintegrity of financial reporting. Therole of the Board in the NHS isdescribed below and is adapted froma suggested Code of Practice from theprivate sector (Higgs):

n collectively responsible for promoting the success of the organisation by directing and supervising the organisation’s affairs;

n provides the entrepreneurial leadership of the organisation within a framework of prudent andeffective controls which enable risk to be assessed and managed;

n sets the organisation’s strategic aims, ensures necessary resourcesare in place for the organisation tomeet its objectives and reviewsmanagement performance; and

n sets the organisation’s values and standards and ensures obligations to its patients, staff, public and other stakeholders are understood and met.

The Chairman is responsible forleadership of the Board, and the ChiefExecutive is responsible for leadershipof the organisation.

NHS Boards also have statutory dutiesincluding duty of ‘care’ to patients,and a requirement for partnershipworking with local authorities andpublic involvement.

The Higgs Code of Practice can alsobe applied to NHS Foundation Trusts,where there is a Board of Directorswhich has to include the Chairman,

Non-Executives, Chief Executive,Finance Director and Clinicians.

This Board of Directors has the mainresponsibility for ensuring the NHSFoundation Trust is compliant with itsAuthorisation. Executive Directors havefiduciary responsibilities (‘holding ontrust’), and they are accountable to theBoard of Governors (patients, staff,public and other stakeholders), whichfocuses on local health and healthcareneeds. The Chairman is the linkbetween the Directors and Governors.

During 2006, Monitor is also planningto publish an NHS Foundation TrustCode of Governance.

PCTs have a Professional ExecutiveCommittee (PEC) as a formal Committeeof the Board with a focus on clinicalmatters, and usually a responsibility tothe Board for clinical governance andclinical risk. The PEC Chairman is also amember of the PCT Board.

As an Executive Director of the Board,the Finance Director has wideresponsibilities to ensure theorganisation is properly governed in anintegrated way, covering corporate,clinical, information, research andfinancial governance. For example, adecision by a Board to invest indeveloping services outside ofhospitals needs to be fully informed,including the risks for patient safety ofcare at home, the risk of increasedinappropriate referrals to A&EDepartments, and the impact fortraining and development of staff.

As an Executive Director of the Board,the Finance Director also has wideresponsibilities to ensure compliancewith the Department of Health’srequirements, those of a wide rangeof statutory bodies, with and withoutenforcement powers, and bodies withlegitimate interests. For example, theHealth and Safety Executive, theGeneral Medical Council, Monitor(for an NHS Foundation Trust), theHealthcare Commission, NationalSpecialist Commissioning AdvisoryGroup, National Institute for Clinical

Excellence, and the NHS Institute forInnovation and Improvement.

Whilst the Board is collectivelyresponsible for compliance with financialduties, the Chief Executive Officer isindividually responsible as theAccountable Officer.

As a member of the Board, the FinanceDirector is required to self-assess andmake a declaration of compliance for‘Standards for Better Health’, theHealthcare Commission’s assessmentprocess. There are 24 core standardswhich represent a level of service that allpatients should be able to expect fromthe NHS, including core standard 7under Governance to ensure thatfinancial management achieveseconomy, effectiveness, efficiency,probity and accountability in the use ofresources. These standards apply to allorganisations, which provide NHS caredirectly, manage the health service, orcommission healthcare. These standardsapply to NHS Foundation Trusts,independent contractors (familydoctors), and services provided throughpartnerships and other contractualarrangements. SHAs are not required tomake declarations although areexpected to know their NHS Trusts andPCTs well enough to be able to give aview on their declarations.

A strong business orientation and strongcompliance leads to higher return oninvestment, where compliance is not justticking boxes, but actually creatinggrowth and long term resilience. It isequally important to give regulatorsfeedback on how well their regulationsfulfill the purpose and are notinadvertently causing poor productivity.

The Finance Director must continue tochallenge assertions and assumptionsand not take things at face value. TheBoard may be taking excessive risks orunknowingly taking risks based onincomplete or unreliable information.On the other hand, early reporting ofthe worst case scenario without a clearand transparent risk assessment maylead to inappropriate decisions. As anExecutive Director of the Board, theFinance Director’s contribution is not,

and should not be, limited to finance asa specialist area.

Effective stakeholder management is avital role of the Board. As a Boardmember, the Finance Director mustgive attention to the external issuesand implications of healthcare serviceson public health, the environment,public safety, the local economy andemployment, and the impact on otherpublic sector services. This is aboutcreating sustainable communities – apositive shift in emphasis from servicedelivery to social responsibility.

Many decisions to invest have a socialdimension and organisations have tobehave responsibly and be publiclyaccountable for the consequences.This is explicit for an NHS FoundationTrust where the Board of Directors isaccountable to the Board of Governorsfor locally responsive services.

As an Executive Director of the Board,the Finance Director supportspartnership working with otherorganisations where this is in the publicinterest, such as clinical networks whichcross several organisational boundaries(e.g. cancer services), social enterprisesand the voluntary sector, retail sectors(e.g. retail trading and chemists) andcommercial organisations (e.g.Independent Sector Treatment Centres).

ÞBusiness and CommercialAdvice to the BoardIn understanding the businessof the organisation, the FinanceDirector has to understand how togenerate increased sustainable value.By this we mean extra capacity to treatmore patients, and provide betterpatient experience and outcomes. Thismay require investment in research anddevelopment, in information systemsand in new clinical technologies (e.g.genetics, improved drug efficacy,telemedicine to support home care, orMRI screening to improve diagnoses).

This may involve investment in newservices to care for patients at homeor closer to home, (e.g. strengtheningrespite care for those with long term

conditions and palliative care), orinvesting in prevention, or new waysof working for clinical staff.

As a Finance Director it is important toengage with clinicians as when theymake decisions about what is bestpractice care, they make decisionsabout resource use.

The Finance Director contributesbusiness and commercial expertise tothe formulation of strategy and thedevelopment of implementation plans,in a way which enables the Board toexplore intelligently a range of optionsfor the future of the organisation, andbe aware of the financial risks andcontingencies.

This should be underpinned byfinancial planning which is focused onachieving financial surplus to investin new developments and as acontingency to achieve recurringfinancial balance.

The Finance Director should contributeto a programme to transform the wayclinical and non-clinical services aredelivered for the local healthcommunity and change the wayorganisations work. The NHS hasrecently launched the NHS IntegratedService Improvement Programme(ISIPs), which is the next stage of thereforms encouraging health and socialcare organisations to work togetherwithin their local health communities.This is about redefining, in anintegrated way, how healthcare isdelivered, with the aim of improvingquality for patients and value formoney.

NHS Boards have a role in assessingwhether the developments plannedtoday will reflect the future needs ofpatients. This will require anunderstanding of the benefits forpatients from the investment, as well asthe needs of local population and viewsof staff, patients and stakeholders.

The Finance Director will providebusiness and commercial advice fornew developments that may involveacquisition of buildings and

construction, purchase of informationand communications technology,research and development, or othermajor procurements.

These situations benefit from astructured approach with fullengagement of all stakeholders. One such approach is the GatewayProcess of the Office of GovernmentCommerce (independent Office of theTreasury), which systematically reviewsprogrammes and projects at criticalstages to provide assurance that thesecan progress successfully to the next stage:

n strategic assessment: assess affordability and financial risks and identify sources of funding;

n business justification: undertake feasibility studies including market soundings and benefits, identify ‘whole life’ costs for each option and test robustness using sensitivityanalysis (including worst case), financial assessment of all risks (reputation, strategic, political, legislature, implementation, and operational) and estimate costs of managing risks, identify financial budget provision, assess costs of implementation team and external specialists;

n procurement strategy: revisit above,financial return projections, assess ‘whole life’ value for money, evaluate commercial intelligence onsuppliers (single, multiple, Public Private Partnership, collaboration, PFI or LIFT), determine financial aspects of bid evaluations looking for value for money;

n investment decision: complete financial and economic (cost of capital) assessment of the business case, produce cost/benefit/risk analysis, reaffirm affordability, revisitcosts, benefits realisation planning, produce a business continuity and contingency plan, confirm fundsin place;

08:09

n readiness for service: reassess affordability and value for money and undertake post implementationreviews; and

n benefits evaluation: deliver forward resource plans, analyse value for money achieved to date, analyse efficiency gains expected and achieved, benchmark cost and value, and identify continuousimprovement year on year.

Business and commercial awarenessand experience is essential where theorganisation is involved in commercialnegotiations and financial closure (e.g.PFI schemes), in the management ofthe assets on the balance sheet,setting up joint ventures under PPParrangements, strengthening liquidityand borrowing, and an understandingof taxation, corporate finance, andrefinancing where these affect theorganisation.

ÞWHAT DOES THIS MEANFOR DIFFERENT PARTS OFTHE NHS?

We now look at the differentemphasis and specific challenges fora Finance Director in different parts ofthe NHS.

ÞSHAsEarlier we identified the key areas offocus for a Finance Director in an SHA as:

n informing the approval process for investment (business cases from thelocal health community);

n ‘managing markets’ and risks, particularly financial risks; and

n informing the economic overview.

Within any regional economy, the NHSrepresents a significant employer,purchaser of goods and services andinvestor in facilities and infrastructure.The multiplier effects of health sectorspending on economic growth andopportunities are enormous.

Providing the spectrum of health andsocial care through public, privateindependent and voluntary sectororganisations, and improving the healthof the population, has a profound effecton the well-being of the population,both for individuals and the community.

There are also other environmentaland social factors such as housing,education and employment, whichimpact on health.

Within this framework, the SHAs willhave an important role in creatingsustainable and healthy communities,promoting better health and reducinghealth inequalities.

Finance Directors should include theimpact of these factors whenproviding the economic and financialappraisal for the evaluation ofbusiness cases for major investment in facilities or the reconfiguration of services.

The Finance Director in an SHA is alsoinvolved in emergency planning interms of major incidents affecting thehealth and well being of theirpopulations.

The Finance Director must also providea business and commercial assessmentof the SHA’s role of ‘managing themarket’. By this we mean ensuringthat the aspirations of individualorganisations, public or private, PCT orNHS Trust, do not adversely affect thepatient’s experience and outcomesunder a patient-led service. This maybe to protect the more vulnerablegroups of patients or to supportmanaged clinical networks for highrisk services where critical mass is anissue for clinical sustainability. SHAsalso have a role in considering thestrategic fit of proposed mergersinvolving NHS Trusts.

As the reforms are implemented therewill be more financial volatility as moneyflows to reflect patient experience andthe quality of services provided by NHSand other organisations. SHAs have aresponsibility for assessing all categories

of risk including financial. Workingwith the local PCTs, Department ofHealth, and the NHS Bank, SHAs willplan for financial surplus to providereserves to mitigate these risks andachieve financial balance across the NHS.

SHAs have a key role in informingand applying national policy andholding local organisations to account.This includes improving research and development, and education and training.

SHAs are responsible for theperformance management of PCTs.A PCT is responsible for ensuring itscommissioning plans are affordable.PCTs are accountable to SHAs for allfunds allocated, for their governancearrangements, and for achievement oftheir financial duties, including thestatutory duty to keep within theirresource limits. GP Practices holdingfinancial budgets under practice basedcommissioning, are not accountableto the SHA. The PCTs retainaccountability for all funds allocatedby the Secretary of Sate.

The SHAs are responsible for theperformance management of NHSTrusts, with Monitor similarlyresponsible for NHS Foundation Trusts.NHS Trusts are accountable to the SHAfor maintaining financial viability andachieving financial duties, includingstatutory break even.

The Finance Director in an SHAassesses the financial standing of localNHS organisations, and providesassurance on their strategic financialplans, as well as evaluatingperformance in delivering efficiencies,value for money and benefits forpatients from the reforms.

The Finance Director in an SHA has akey role in co-ordinating andsupporting local NHS Trusts in the self-assessment ‘fit for purpose’ processfor Foundation Trust applicationworking with the Department ofHealth and Monitor. Similarly, the

Finance Director has a role in theassessment of PCTs and their ‘fitnessfor purpose’.

SHAs also assess the managementcapability of PCTs and NHS Trusts todeliver turnaround and recoverdeficits, and that all reasonable actionhas been taken. The Finance Directorof an SHA oversees the seniorexecutive career development ofFinance Staff within NHS organisationsin their locality.

Under the present capital regime, theFinance Director has a key role in theSHA Board’s approval (with ratificationfrom the Department of Health asrequired) for business cases for majorcapital investment by PCTs and NHSTrusts. Similarly, the Finance Directorhas a key role in the SHA’s approval ofmajor service reconfigurations. Thisincludes considering the longer termaffordability, financial risks and valuefor money.

ÞPCTsEarlier, we identified the key areas of focus for a Finance Director in a PCT as:

n deciding and planning the deployment of resources for careinside and outside of hospitals,including unscheduled (emergency) and planned care,specialist care, prescribing, andpublic health;

n working with GP Practices to redeploy resources freed up through service redesign and more cost effective treatments, from practice held budgets; and

n ‘driving’ the return on the investment in services - realising benefits for patients and maximising health gain.

In many respects, it is PCTs, workingwith the GP Practices, who will haveto address some of the key issues andchallenges for transforming the NHS.Delivering and implementing changein NHS Trusts and NHS Foundation

Trusts is yet to be completed, and isnot to be underestimated. However,the mechanics and framework for thetransformation have already been setout and proven in the applicationprocess for Foundation Trust status,and more recently and widely in theself-assessment process presentlyunderway by Monitor, the Departmentof Health and the SHAs.

The key issue for PCTs is to ensurethat the commissioning processreflects a level of sophistication inmodelling and monitoring demand forservices and resource use at both GPpractice and PCT level and across apotentially wide range of providers. PCTs are legally accountable forcommissioning services, and thisremains the position when coverageof practice based commissioningextends.

The Finance Director supports thecommissioning process, providingassurance to inform the selection ofthe best providers.

As well as commissioning, PCTspresently provide primary healthcareservices, employ community teams ofnurses and allied health professionals,and in some cases, have substantialprovider functions includingcommunity hospitals.

Therefore, the span of responsibilityfor a Finance Director in a PCT maycover a provider function, althoughthis may be a transitional issue. Thisprovides a role similar to that of aFinance Director in an NHS Trust orNHS Foundation Trust.

However, the Finance Director mustensure proper segregation of theprovider function and transparencywhen commissioning own services.

PCTs are expected to work jointly withlocal authorities. This involves poolingbudgets and frontline staff in healthand social care, creating integratedteams with single patient assessmentand care management. Whilstcommissioning these services will

remain ‘in accountability terms’ mainlywith the PCT, the provision may wellbe through other public, private andvoluntary sector agencies workingwith the local authority. Many PCTboundaries are, or will be,coterminous with local authorities topromote joint working.

In terms of the annual resourcesavailable, there is a huge variation inthe size of PCTs. Many PCTs alsooperate ‘commissioning hubs’ where anumber of PCTs have joined togetherfor transaction processing. Therefore,the job descriptions of FinanceDirectors may be very different.

The move to practice basedcommissioning will require the FinanceDirector to be involved in developingand monitoring accountabilityagreements, assessing risks andapproval of business cases for theredeployment of resources freed upfrom practice based budgets.

The Finance Director supports strategiccommissioning, informed by publichealth, and provides ecomomic,financial and risk analyses of theplans, and the monitoring andreporting as to how resources arebeing used against the objectives ofthe PCT. The PCTs need to anticipateneeds in their resource planning andreflect local issues such as significantexpansion in new housing andemployment.

Financial plans will need to reflect thepatient pathways of care for thefuture, including care for thechronically ill and the profound impactof new technology in medicine.The Finance Director needs to informinvestment decisions to enable theintroduction of ‘best practice’ carepathways, with out of hospital careinvolving several organisationsworking in an integrated way to care for the patient.

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Inevitably with the drive for quality,value, and contestability, the PCTs willneed to move to zero basedcommissioning, rather than perpetuatehistorical patterns of care.

Effective commissioning is aboutdriving through increased value forpatients from the same resources.

The Board needs to have fullknowledge of how their PCT compareswith other commissioners in terms ofthe services provided for the resourcesavailable per head of population, withacceptable access times and in settingsappropriate to the patients’ needs.

The Finance Director has a key role inevaluating how well resources aredeployed across different programmesto maximise health gain (e.g. highlyspecialised tertiary care, mental health,coronary care, other hospital care,primary and community care, publichealth and prevention, teaching,research and development).

The Finance Director also has a keyrole in evaluating how well thoseresources have been used withinindividual programmes to meetobjectives (e.g. for coronary care thismeans evaluating cardiac surgery,non-invasive procedures, and otherinterventions for those with heartdisease). This requires continuous yearon year improvements in productivity,efficiency and value added.

This extends to evaluating theefficiencies gained and/or value addedof commissioning interventions suchas developing extended primary careservices (‘one stop shop’ to assess,diagnose and treat), investing in staffto provide case management for thosewith chronic conditions to avoidhospital admission, earlier dischargefrom hospital, and GP Practicesextending their role as providers ofcare and promoting entry ofalternative medical providers (such ascommercial ‘out of hours’ services).

This also involves assessing risks andbeing explicit within contracts as tothe reimbursement for unexpectedincreases in demand for services.

ÞNHS Trusts and NHSFoundation TrustsEarlier we identified the key areas offocus for a Finance Director in an NHSTrust or NHS Foundation Trust as:

n promoting sustainable financial viability;

n generating growth;

n countering strategic risk; and

n promoting value for money.

The Government has committed to allNHS Trusts having the opportunity toapply to be an NHS Foundation Trustby the end of 2008 (i.e public benefitcorporations). Therefore, in the nearfuture, all NHS Trusts could potentiallymove to a more flexible financialregime, but a more exactingregulatory business environment.

This will see a move away from aculture of ‘break even’ to generatingsurpluses. It also brings freedoms toborrow from private sector banks forlong-term funding of capitalinvestment, subject to fairly cautiouslimits (although, as credit ratings forTrusts are still evolving, at presentFoundation Trusts borrow from a

‘Foundation Trust Financing Facility’set up by the Department of Healthand pay a National Loan Fund rate).There is freedom to form partnershipsacross all sectors of the economy,although disposal of assets of an NHSFoundation Trust is subject to‘protection’ procedures.

In this sense, for all NHS Trusts andNHS Foundation Trusts the emphasismoves from being driven to meettargets (access and national serviceframeworks), to meeting corestandards in services and todeveloping business strategies anddelivering sustainable growth. Ineffect, running a business with socialresponsibilities and accountability.

This involves business developmentand a greater understanding ofstrategic risk and counter measures.The Finance Director must be totallyfamiliar with business developmentwhich is very much linked withstrategic planning.

Examples of potential strategic risksmay include where new entrants tothe market change referral patternsleading to inadequate or excesscapacity in the short term in NHShospitals, or where medicaltechnology is having a profoundimpact on care or where governmentpolicy is shifting care to outside ofhospitals. Responses may be toencourage new types of staff such asnurse practitioners and GPs with aspecialist interest, where there areshortages of clinical skills.

The Board makes decisions in fullknowledge of the financial marginsand in effect is managing a ‘portfolio’of services. To support the Board,Finance Directors must understandfully the cost drivers of theorganisation, the relationship withtariffs (national and local prices), andthe fixed, semi-fixed and variablecomponents of cost in relation tochanges in the number of patientsand case mix.

This also requires a more robustapproach to financial planning andmodelling, which looks at theconsequences of today’s decisions infive years time and beyond.

The Board needs to develop marketintelligence to understand how theTrust compares in terms of patientexperiences, patient outcomes andcost with other NHS Trusts andproviders, and in terms of the currentand projected ‘market share’. Beingresponsive to local needs anddeveloping a client relationship withpatients, carers and GPs, will establishthe NHS Trust as the ‘hospital of firstchoice’ with high quality care providedin a modern environment using thelatest medical technology and withthe appropriately skilled andexperienced staff.

The Board also needs to ensure ‘year-on-year’ improvement in productivityof the workforce and to improveefficiency. This may also requireinvestment in information technology.This may also require medium termrestructuring of services which mayrequire surpluses to be reinvestedand/or access to working capital.

For developments in services andinnovations in care, the Board willneed to be advised in advance by theFinance Director of the forecastincome through the tariff and theprojected costs of the proposed carepathway and the benefits for patients.

Notwithstanding the different financialregimes under which NHS Trusts andNHS Foundation Trusts operate, allTrusts must adopt a more business-oriented approach to deliveringservices which are responsive topatients’ needs, clinically sustainable,and financially viable.

Within this environment, the FinanceDirector provides the commercialand business expertise to createsustainable value in the organisation,and develop the business.

ÞWHAT PERSONALATTRIBUTES ARE REQUIRED?

NHS organisations should exploreways of nurturing internal talent andattracting new talent as potentialsources of future top management.It is also important that the leadershipof an NHS organisation is notdisconnected with the localpopulation, the demographics andtheir health needs. Minority ethniccommunities will account for morethan half the next decade’s increase inthe working age population.

The role of the Finance Director in theNHS requires total dedication andfocus. The role may be combinedwith other functions (e.g. Information,Estates, Contracting, or jointappointment as Deputy ChiefExecutive). However, the job needscareful design to ensure that the roleof the Finance Director is notdissipated by the broader portfolio.Similarly, this applies to recoveryplanning and turnaround. For NHSorganisations with significant financialfailure it is preferrable to have aspecific Director of Recovery whollycommitted to financial recoveryrather than combine with the roleof Finance Director.

The attributes required of a FinanceDirector can be described in threecategories:

n personal qualities;

n knowledge and skills; and

n technical ‘know-how’ andexperience.

ÞPersonal QualitiesAs a professional accountant, theFinance Director is required(mandatory) to behave with integrity,objectivity, professional competenceand due care, and confidentiality(Code of Ethics, InternationalFederation of Accountants - IFAC).

Finance Directors must comply withprofessional quality standards, the keyones being professional ethics,continuing professional development,and national and internationalexternal reporting requirements. Theconduct and behaviour of a FinanceDirector must be within the law and,as a professional accountant, there isalso a ‘public interest’ role.

Finance Directors should set the tonefor ethical practice and behaviourwithin their organisations. Thebehaviour of the Finance Director is arole model to those who work in thefinance function, to those on theBoard, to all staff in the organisation,and to those who support and work inpartnership with the organisation.

Behaviour will also affect relationshipsand the Finance Director should beaware of personal style andunderstand how this affectsindividuals and groups in coping withpressure, set backs and stress, and indeveloping coping strategies.

There are five personal qualities in theNHS Leadership Qualities Frameworkand these have been summarisedbelow (although we highly recommendreference to the full Framework):

n self belief: positive attitude, which relishes a challenge and speaking up if this is needed; standing your ground on things that are important but compromising onothers – and it is important becauseFinance Directors will be makingtough decisions;

n self awareness: aware of own emotions and how personal style and behaviour affects theway colleagues cope under pressureand deliver results; willing to improve with support of mentoror coach;

n self management: has resilienceand ability to cope with anincreasingly complex environment

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and the need to engage a wide range of stakeholders; able to manage own emotions when challenged; and be balanced in terms of watching ‘work life balance’;

n drive for improvement: focus on achieving goals for the greater good, around health improvement and wanting to leave a legacy - an enduring interest in health and healthcare services; and

n personal integrity: having key valuesand beliefs, and insisting on transparency and inclusiveness in getting on with the job.

Finance Directors have responsibilities forthe leadership and development of theirstaff and this will require motivatingindividuals in the team to acquire skills,knowledge and technical know-how tomatch the requirements of their job andto align with their future aspirations.

This is also about ‘creating space’ forthe team to grow in confidence andcapability, which means the FinanceDirector should be able to focus onthe things which really should bedemanding time e.g. longer termfinancial strategy to move from deficitto surplus, or optimising health gainfor the local population.

A close working relationship with theChief Executive is critical, with theFinance Director having an overview ofthe whole organisation to support theChief Executive as an impartialconfidant and sounding board,without losing independence in termsof professional conduct. This is alsotrue of the relationships with theChairman and Non-Executives,particularly through their lead roles inAudit and Risk ManagementCommittees.

Finance Directors must have thestrength of resolve to insist onimprovements when standards areslipping, and hold people to account(whether they directly report or not)for what they agreed to deliver.

ÞSkills and KnowledgeThe Finance Director must be aqualified accountant and member ofan accountancy body which is amember of the CCAB (ConsultativeCommittee of Accountancy Bodies).This means that they have professionalsupport and networks, and are subjectto oversight by a body withdisciplinary powers. It also ensuresthat they have skills, knowledgeand expertise tested initially byexamination and then continuouslydeveloped in a structured andmonitored way.

The NHS Leadership QualitiesFramework describes a further tenqualities for leaders who are able toset direction, make things happenand deliver results for health andhealthcare. These are:

n seizing the future: strategic thinkingand being able to make the most of current opportunities to create sustainable change for future generations – and important to make future services responsive to local needs;

n intellectual flexibility: being able in a complex situation to assess and draw pragmatic conclusions, and switch from detail to the broad picture;

n broad scanning: keeping abreast of developments in healthcare and other sectors, and being worldly wise;

n political astuteness: being attuned to health policy and knowing that the impact of decisions made by your organisation can affect others in the local health and social care community and wider;

n drive for results: setting targets which exceed the minimum and focusing on what will really make adifference;

n leading change through people: inspire others, listen, encourage and coach, and having empathy in

being able to read people’s reactions and see their perspective, and encourage teams to succeed inworking across the local health andsocial care community;

n holding to account: insisting on improved performance if standards are slipping, supporting and also being held to account for what youmay have failed to do;

n empowering others: creating space for your team to take the lead and grow in confidence, sharing the knowledge you have, and ensuring all have an equal opportunity to contribute;

n effective and strategic influencing: having a wide span of influencecan lead to genuine innovation inthe way care is provided, and isabout change being owned byeveryone; and

n collaborative working: supporting multi-disciplinary working whereyou need to be sensitive to diverseview points and be able to sharepower to make decisions.

Linked with intellectual flexibility, theFinance Director needs an analyticalmind-set which demands more thanjust superficial analysis. This requiresthe intelligent use of information froma range of sources both qualitativeand quantitative (e.g. activity, staff andpatient feedback, best practice care,public health indicators, workforce,and standards). Finance Directors willneed to recognise their personal biasesin drawing conclusions from theanalyses and situations. This requiresgreater openness and transparency inhow conclusions are reached.

As well as political astuteness, theFinance Director needs a strongunderstanding of the workings ofgovernment.

Finally, the Finance Director needs abusiness and commercial orientation,which is about knowing how to createvalue (for patients) in their organisation.

For example, linked with broad scanningis the identification of strategic financialrisk, and linked with collaborativeworking is being able to negotiate andreach commercial deals with privatesector partners in healthcare.

ÞTechnical ‘Know-How’ &ExperienceWith more emphasis on businessorientation within the NHS, it is anadvantage to have a breadth ofexperience from working withdifferent organisations across thepublic and private sectors. Forpotential Finance Directors on thecareer ladder in the NHS, there maybe opportunities to be seconded toorganisations outside of the NHSwhich would provide relevant skillsand experience. Another approach isto be appointed as a temporary non-executive type role (avoiding the legalduties of a substantive non-executivedirector) on the Board of anotherorganisation.

Development of networkingopportunities, both within and outsidethe NHS, is one approach todeveloping the breadth and depth ofvision needed to succeed in the role.Both mentoring and coaching alsooffer huge opportunities for personalgrowth and access to a wealth ofknowledge and experience.

Through continuing professionaldevelopment and personaldevelopment plans, Finance Directorscontinually update their technicalknowledge and skills.

Links to various resources are providedon the web site of the National NHSFinance Development Board:http://www.fsdnetwork.com.

A list of key references used to informthis guide and recommended websites are also included at the end ofthis guide. The references includeareas of policy such as Payment byResults and Practice BasedCommissioning, as well as technicalupdates such as Operating CashManagement, Audit CommitteeHandbook, OGC Gateway Reviews,and National Reference Costs.

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Deficits are not acceptable and theNHS is moving to planning forfinancial surplus. There is moreemphasis on longer term financialplanning, recognising that decisionsmade today impact on the futureclinical and financial sustainability ofhealthcare services.

This guide describes the attributes of asuccessful Finance Director. It isimportant for Finance Directors (andthose on the career path) to have abreadth and depth of experiencegained from both public and privatesectors. This may be achieved,through networking, secondments,mentoring, coaching and outsideappointments as Non-Executives.

As a member of a CCAB recognisedprofessional accountancy body, theFinance Director is required to behavewith integrity, objectivity, professionalcompetence and due care,confidentiality and with behaviour inline with the international code ofethics for accountants.

The qualities described in the NHSLeadership Qualities Framework arevery relevant to the Finance Director’srole and are briefly described in thisguide.

Through continuing professionaldevelopment and personaldevelopment plans, Finance Directorscontinually update their technicalknowledge and skills.

In terms of next steps, the guideconcludes with a list of references andrecommended web sites.

ÞSUMMARY

‘Creating a Patient-led NHS’ sets out avision of healthcare services free for alland personal to each. The HealthReforms in England are complexchanges in a complex system. Thereforms are about better patient care,better patient experience and bettervalue for money. There is a shift inresources from hospitals to care closerto home, to early intervention andprevention services.

The challenge is to maintain progresson the Health Reforms in Englandwith services designed, and provided,around the needs of patients and notthe organisation.

The move to a health system which isflexible and focused on the individual isnot without risks and challenges, andpotential financial volatility. Faced withthese challenges NHS organisationsmust have sound financial systems andBoards must promote a strong financialmanagement culture throughout theirorganisations.

Financial management is the corporateresponsibility of the Board and theindividual responsibility of the ChiefExecutive as the Accountable Officer.In the light of a recent number of highprofile, ‘significant’ failures in financialmanagement, the spotlight is verymuch on NHS Boards.

Monitor, the Independent Regulatorof NHS Foundation Trusts, theAudit Commission and the NationalAudit Office have identified requiredimprovements in financial management.

The Department of Health, SHAs andMonitor are also supporting the use ofof a self-assessment diagnostic toolwhich assesses the ’fitness for purpose’of NHS Trusts as future applicants forFoundation Trust status. A similar toolwill be used to assess PCTs.

The Finance Director is responsible forfinancial governance and assurance, forbusiness and commercial adviceto the Board, and has corporate

responsibilities as an Executive Directorof the Board. The responsibilities arenot new, although the context andemphasis has changed. Securing bestvalue for money is an imperative forNHS Boards.

This guide describes the key areas offocus for Finance Directors working indifferent organisations within the NHS.

For SHAs the areas of focus are toinform the approval process for majorinvestment and strategicreconfigurations, to support the‘management of markets’ andstrategic risk, and to inform theeconomic overview.

For PCTs the areas of focus are todeploy resources effectively, to workwith GPs and primary careprofessionals to free resources throughthe redesign of care both inside andoutside of hospitals, and to ’drive’ thereturn on investment to realisebenefits for patients and maximisehealth gain.

For NHS Trusts and Foundation Trustsareas of focus are to achievesustainable financial viability, generategrowth, counter strategic risks andobtain value for money (efficiency,effectiveness and economy). In thisenvironment the Finance Directorprovides the commercial and businessexpertise to create sustainable value inthe organisation, and develop thebusiness.

Within SHAs there is also a role inassessing the management capabilityof PCTs and NHS Trusts to deliverturnaround and recover deficits.Finance Directors have a key role inperformance management, with SHAsresponsible for performancemanagement of PCTs and NHS Trusts,and Monitor responsible for NHSFoundation Trusts.

The Finance Director of an SHAoversees the senior executive careerdevelopment of Finance Staff in thelocality.

ÞREFERENCES

The following references haveinformed the development of thisguide:

Audit Commission: http://www.audit-commission.gov.uk

Key Lines of Enquiry for AuditorsLocal Evaluation Assessments(November 2005).

Achieving First-Class FinancialManagement in the NHS: A soundbasis for better healthcare (2004).

World Class Financial Management:A discussion paper (November 2005).

Audit Commission and NationalAudit Office: http://www.audit-commission.gov.ukhttp://www.nao.org.uk

Financial Management in the NHS:NHS (England) Summarised Accounts.2003-04: Report by the Comptrollerand Auditor General (2005).

Department of Health:http://www.dh.gov.uk

Creating a Patient-led NHS: Deliveringthe NHS Improvement Plan (March2005).

Health Reform in England: update andnext steps (December 2005).

The NHS Integrated ServiceImprovement Programme: DeliveringQuality and Value: the ISIP guide toStrategy and Benefits (November2005).

NHS Knowledge and Skills framework(NHS KSF) and the DevelopmentReview Process (October 2004).

The NHS in England: the OperatingFramework for 2006-07.

Practice Based Commissioning:Achieving Universal Coverage(January 2006).

Our health, our care, our say: a newdirection for community services.

Department of Health and theHealthcare Financial ManagementAssociation:http://www.dh.gov.uk http://www.hfma.org.uk

The NHS Audit Committee Handbook2005 (October 2005).

NHS Appointments Commission:http://www.dh.gov.ukhttp://www.appointments.org.uk

Governing the NHS: a guide for NHSBoards (June 2003).

King’s Fund:http://www.kingsfund.org.uk/publications

Jennifer Dixon, NHS Market Futures:Regulating Health Care: The wayforward (2005).

Richard Lewis and Jennifer Dixon, NHS Market Futures: The Future ofPrimary Care: Meeting the Challengesof the New NHS Market (2005).

Healthcare Commission:http://www.healthcarecommission.org.uk

Criteria for Assessing Core Standards:Information for Primary Care Trusts(April 2005).

Criteria for Assessing Core Standards:Information for Acute Services (April2005).

Assessment for Improvement: TheAnnual Health Check: Criteria forAssessing Core Standards (April 2005).

Guidance on the Assessment of CoreStandards: The Annual Health Check(July 2005).

Annual Star Ratings of Performancefor NHS Trusts in England 2004-05and methodologies (July 2005).

Department of Trade and Industry:http://www.dti.gov.uk

Derek Higgs: Review of the Role andEffectiveness of Non-ExecutiveDirectors (January 2003).

London Business School andDepartment of Trade and Industry:http://www.london.eduhttp://www.dti.gov.uk

The Tyson Report on Recruitment andDevelopment of Non- ExecutiveDirectors (June 2003).

NHS Institute for Innovation andImprovement:http://www.institute.nhs.ukhttp://www.executive.modern.nhs.uk

Portfolio of DevelopmentOpportunities for Senior Leaders in theNHS, 2005-2006 (2005).

‘In View’ The journal of the SeniorLeaders in the NHS (Issue 6, June2005).

Leadership Qualities Frameworks:http://www.institute.nhs.ukhttp://www.nhsleadershipqualities.nhs.uk

NHS Leadership Qualities Framework:Framework and Good Practice Guide(2004).

Senior Leadership Medical Profiles,including: The Clinical Directors’Development Framework 2005, TheMedical Directors’ DevelopmentFramework 2004, and The PEC Chairs’Development Framework 2004.

NHS Clinical Governance SupportTeam and NHS Institute forInnovation and Improvement:http://www.cgsupport.nhs.ukhttp://www.monitor-nhsft.gov.uk

NHS Chair and Board PerformanceReview Tool – Pre-diagnostic Tool forFoundation Trust applicants (2005).(This was developed with input fromRobertson Cooper Limited).

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Financial Assurance Standards for NHSFinance Teams (2006).

Office of Government Commerce:http://www.ogc.gov.uk

OGC Gateway Review 1 to 5 (2004).

International Federation ofAccountants:http://www.ifac.org/ethics

Code of Ethics for ProfessionalAccountants (revised June 2005).

Monitor The IndependentRegulator of NHS FoundationTrusts:http://www.monitor-nhsft.gov.uk

Compliance Framework (March 2005).NHS Foundation Trusts Six-MonthReport for the Period to 30 September2005.

Developing an Effective MarketRegulatory Framework in Healthcare(October 2005).

Managing Operating Cash in NHSFoundation Trusts (December 2005).

NHS Foundation Trust Code ofGovernance (December 2005).

ÞRECOMMENDEDWEB SITES

Extensive reference material is alsoavailable from the following web sitesand is highly recommended:

ACCA: The Association ofChartered Certified Accountants:http://www.accaglobal.com

CIMA: The Chartered Institute ofManagement Accountants http://www.cimaglobal.com

Includes ‘Reforming the NHS fromWithin—Target Costing in the NHS’(October 2005).

Institute of Directors and CIMADiploma in Company Direction (2006).

CIPFA: The Chartered Institute ofPublic Finance and Accountancyhttp://www.cipfa.org.uk

Includes, the ‘Good GovernanceStandard for Public Services’ (2004)published by CIPFA and OPM (Officefor Public Management Limitedhttp://www.opm.co.uk).

ICAEW: The Institute of CharteredAccountants in England and Wales:http://www.icaew.co.uk

Includes Presentations at a FacultyConference on ‘Today’s FinanceDirector -the Reality’ (March 2005).

HfMA:Healthcare FinancialManagement Association:htttp://www.hfma.org.uk

NHS Clinical Governance SupportTeam and Department of Health:http://www.cgsupport.nhs.ukhttp://www.dh.gov.uk/governance

Integrated Governance, A Handbookfor Executives and Non-Executives inHealthcare Organisations.

NHS Confederation:http://www.nhsconfed.org

Shaping the future of communityhealth and care for patients – a seriesof Leading Edge Briefings (November2005).

Briefing: Issue 125 (October 2005).Commissioning in Primary Care Trusts:Commissioning a Patient-Led NHS.

Leading Edge: Issue 11 (November2005). Design Principles for Out-of-Hospital Care.

Briefing: Issue 124 (October 2005).The Future of Primary Care Trusts.

Foundation Trust Network, NHSConfederation:http://www.foundationtrustnetwork.org http://www.nhsconfed.org

New Voices New Accountabilities:A Guide to Wider Governance inFoundation Trusts (2005).

Effective Boards in the NHS?, a Studyof their Behaviour and Culture (withNHS Leadership Centre and ClinicalGovernance Support Team, 2005).

National NHS Finance StaffDevelopment Network:http://fsdnetwork.com

NHS Finance Technical Competencies(July 2005).

Knowledge and Skills Framework (KSF)Support materials for Finance Functionand related staff groups (July 2005).

Shaping the Future, from Numbers toKnowledge (November 2003).

ÞCONTRIBUTORSÞEditorial Group:

Ann-Marie MillarChair of the National NHS FinanceDevelopment Board and NationalDeputy Director of Finance.

Kevin OrfordNational Deputy Director of Finance.

Pam DysonNational Head of Finance StaffDevelopment.

Debra BatchelorDirector, Teamwork ManagementServices Limited.(http://www.teamwork-ms.co.uk).

ÞStakeholders:

The National NHS Finance DevelopmentBoard wishes to thank the followingcontributors who informed thedevelopment of this guide:

Zenna AtkinsChairman of Portsmouth CityTeaching PCT and ExecutiveConsultant Social Solutions Limited(http:www.socialsolutions.co.uk).

Mark Britnell Chief Executive, University HospitalBirmingham NHS Foundation Trust.

Chris BurkeChief Executive, Stockport NHSFoundation Trust.

Sir Ian CarruthersChief Executive Dorset and Somerset,and Hampshire and Isle of Wight SHAs.

Heather DunneUnified Assurance Lead Departmentof Health.

Chris DyeDirector of Marketing and Training,Appointments Commission.

Nigel Edwards andJohn FlookThe NHS Confederation.(http://www.nhsconfed.org).

David EllcockFinance Staff Development ProjectManager, National FDBoard, Cheshireand Merseyside SHA.

Beccy FentonManaging Director and Chief FinanceOfficer, Heart of England NHSFoundation Trust.

Colin Gentile Director of Turnaround/ExecutiveDirector of Finance, St George’sHealthcare NHS Trust.

Penny HarrisChief Executive,South Gloucestershire PCT.

Wai-yin HattonChief Executive, NHS Ayrshireand Arran.

Chris JeffriesAssociate Director of Education andLearning Resources, GreaterManchester SHA and Chair of aHousing Association.

Bill JonesMember of the Foundation TrustFacility and Non-Executive DirectorCalderdale & Huddersfield NHS Trust.

Emma Knowles Financial Management Specialist,Health Directorate, Audit Commission.

Sotiris KyriacouFinance Development Manager,North West London SHA.

Paul Lilley Chief Executive, GloucestershireHospitals NHS Foundation Trust.

Karen LynasDirector of Board Level Development,NHS Institute for Innovation andImprovement.

Patrick McGahonActing Chief Executive,North Cumbria PCTs

Alison MylesHead of Training and Development,Healthcare Financial ManagementAssociation (http://www.hfma.org.uk).

David NicholsonChief Executive, Birmingham andBlack Country SHA.

Mark OgdenDirector of Finance, Capital Investmentand IT, Greater Manchester SHA.

Tanuja PanditHead of Financial Policy, MonitorIndependent Regulator of NHSFoundation Trusts.

David PoyntonTransitional Lead Finance, West Midlands Cluster.

David RichardsWhitehead Mann Group Plc-ExecutiveRecruitment, Executive Assessmentand Executive Development andCoaching (http://www.wmann.com).

Dr Ivan RobertsonManaging Director, Robertson CooperLimited - supported the developmentof the NHS Chair and BoardPerformance Review Tool(http:// www.robertcooper.com).

Alison TongeDirector of Finance/Deputy ChiefExecutive, Stockport PCT.

Hardev VirdeeHead of Commissioning Finance andDeputy Finance Director, EasternBirmingham PCT.

Jo-Anne WassWest Yorkshire SHA and National HRWorkstream Team (Ambulance andCPLNHS).

Steve WebsterDirector of Finance & Information,North Bristol NHS Trust.

ÞCCAB’s:

Stephen Bliss and Paul Gillott,CIMA

Terry Brodie,CIPFA

Chris Jackson,ICAEW

Dean Westcott and Sharon Cannaby,ACCA

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ÞFurther Copies and Feedback

Feedback on this guide and requests for additional copies should be sent to:

Mrs Pamela DysonNational Head of Finance Staff Development http://www.fsdnetwork.com

This guide has been developed and produced for the National NHS FinanceDevelopment Board by:Teamwork Management Services Limitedhttp://www.teamwork-ms.co.ukEmail: mail@teamwork-ms.co.ukTelephone: +44 (0)1204 600660

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All materials in this paper are Crown Copyright, June 2006.