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Challenges for Robust Financial Management The King’s Fund 12th January 2010 Dr John Bullivant, Director, Good Governance Institute 1 good-governance.org.uk
Challenges for Robust Financial Management
The King’s Fund 12th January 2010
Dr John Bullivant, Director, Good Governance Institute
1 good-governance.org.uk
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Presenter
Dr John Bullivant, FCQI • Director, Good Governance Institute (GGI) • Governance & Quality Improvement expertise • Advisor to NHS, DH, Wales Assembly, NHS Confederation • Author, Integrated Governance Handbook • Visiting Fellow, Open University Business School, U. of
Glamorgan. Fellow of RSM, CQI, Benchmarking Institute • Formally
– Senior positions in Probation, Social Services, NHS (incl. VFM Unit and Clinical Governance Support Team, Central Govt, Audit Commission
– Executive Board Director – Researcher, Consultant (OPM, Auditors, HSCQC, Humana), Writer
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GGI Introduction
Some old publications and work programmes • Integrated Governance Handbook (DH) and HFMA publication • Governance Between Organisations (GBO) debate paper • Board Assurance Prompts (BAPS) & Etiquettes • Governance Reviews (eg Cardiff & Vale NHS, Met Office/MRWFC) • Wolverhampton NHS R&D Review • Tayside Health Board & U. of Dundee Academic Health Science Centre
Governance Guide • Probation Trusts Governance Guide • Simple Rules Guides for Dynamic Change
– Board Assurance Frameworks – Compliance – Provider Services
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GGI New
Some recent publications and work programmes • Principles for disinvestment: NHS Tayside & NHS SE Essex • Building Independent Assurance for the BAF: HQIP Guide for Boards on
using Clinical Audit • Partnerships Decision Tree for NHS Kensington & Chelsea and Durham &Tees
Audit Consortium • Board Clinical Priorities: Board Assurance Prompts (BAPs)- Diabetes, HAI,
Pneumonia, End of Life • Boards Annual Review: NHS SE Essex • WCC Mock panels: NHS Kensington & Chelsea • NHS Governance Pocket Guide: Welsh NHS Confederation • BMJ/OU: Junior Docs/Nurses on line governance and commissioning guides • Good Governance Guide, help the Hospices
IGII GBO
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Governance
“Good corporate governance is about ‘intellectual honesty’ and not just sticking to rules and regulations”. Mervyn King, The SA King Report
• It’s the managers job to manage. But it’s the Board’s job to ask the questions
to both scrutinize and support management
• Boards have some inherent limitations in their ability to govern, including lack of time, lack of familiarity with the field, and lack of investment in the enterprise.
• The GGI mission is to develop, share and promote the Good Governance Body of Knowledge.
• The running gag is bringing more clinical issues to the Board
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Programme
Performance’It is difficult to measure the efficiency of healthcare systems. The NHS, like other healthcare systems, has never consistently and systematically measured changes in its patients’ health. As a result, it’s impossible to say exactly how much the nation's health improves for each pound spent by the NHS.’
NHS Choices
• Integrity of the annual accounts
• Asking the right questions…getting the right answers
• Learning the lessons from others
• Principles for disinvestment
• Clear Line of Sight
• How do we do this
• Integrity of accounts
• ‘Avoiding the affordability trap
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Integrity of the annual accounts
What are our accounts for? Annual… Monthly…
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Integrity of the annual accounts
What are our accounts for? Annual… Monthly… To provide assurance that internal governance arrangements provide a clear
line of sight through the organisation and that individual accountabilities and responsibilities are clear. NHS H&F
‘Build a line of sight for the entire Board to the PBC and service redesign’ NHS Warwickshire 2009 WCC recommendations
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Integrity of the annual accounts
What are our accounts for? Annual Monthly Integrity 1. adherence to moral and ethical principles; soundness of moral character; honesty. 2. the state of being whole, entire, or undiminished: to preserve the integrity of the empire. 3. a sound, unimpaired, or perfect condition: the integrity of a ship's hull. The etymology of the word "integrity" can suggest insight into its use and meaning. It stems from the Latin
adjective integer (whole, complete)
Incidentally what is the role of the finance director these days?
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CIPFA Statement on the role of the Chief Financial Officer
in public service organisations, 2009
The Chief Financial Officer in a public service organisation: • is a key member of the Leadership Team, helping it to develop and
implement strategy and to resource and deliver the organisation’s strategic objectives sustainably and in the public interest;
• must be actively involved in, and able to bring influence to bear on, all material business decisions to ensure immediate and longer term implications, opportunities and risks are fully considered, and alignment with the organisation’s financial strategy;
• and must lead the promotion and delivery by the whole organisation of good financial management so that public money is safeguarded at all times and used appropriately, economically, efficiently and effectively.
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Asking the right questions
• Have we aligned our quality and financial accounts?
• How much does governance cost?
• How much do our programmes of care cost?
• Do I understand the medicine?
• What is our joint spend on this service area?
• What is the ROI/return on our commissioning?
• Where is the wastage c.f. others?
• How do I operate the benchmarking clause in the contract?
• Are we taking the right decisions?
• What does the 2010/11 Operating Framework say we should be focusing on?
• What are the right things to be investing in?
• Have we established our principles for disinvestment
• What on this basis would I expect from an integrated Agenda/Accounts/BAF?
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Learning from others
• ‘Weak scrutiny by the board’: – Taylor report on Brent PCT
• ‘Agencies acting in isolation from one another
without effective co-ordination’ & ‘Poor gathering, recording and sharing of information’
– Baby Peter report
• ‘the main lesson I take from the problems experienced at mid-Staffs – that in future, we must never separate quality and financial data. They are always two sides of the same coin.’
– Andy Burnham, SoS
• ‘Boards must ensure that their strategic aims and objectives are clearly defined and few in number and that their strategic risks are identified and aligned to their strategic objectives’; and ‘Boards must make more strategic use of independent assurance such as clinical audit’
– Taking it on Trust, Audit Commission, 2009
• Strategic yes, but also drilling down to gain assurance of sound finances and patent safety. Clinical Board Assurance Prompts BAPs)
• Governance between Organisations & clarity on continuity of care and governance in partnerships/joint working (GBO)
• Integration of reports & role of Audit
Committee
• Board Assurance Framework (BAF) & clinical audit
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Learning from others
‘Focus by board must be on key objective of the organisation’
A review of corporate governance in UK banks and other financial industry entities, David Walker 009
1. Board Ready, able and encouraged to challenge and test proposals on strategy
2. Decision taking on risk based on intelligent information, analysis and input
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Proper challenge – ‘Taking It on trust’
The report found that: • board assurance processes are generally in place but must be rigorously
applied; • board members are not always challenging enough; and • the data received by boards is not always relevant, timely or fit for
purpose. Boards must ensure that their strategic aims and objectives are clearly defined and
few in number and that their strategic risks are identified and aligned to their strategic objectives;
Boards must make more strategic use of independent assurance such as clinical audit
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Proper challenge – ‘Taking It on trust’
‘The NHS has, in many cases, been run on trust. But those who are charged with running our hospitals must be more challenging of the information they are given and more skeptical in their approach. ‘
Steve Bundred, Chief Executive of the Audit Commission, press release 29 4 09
Clinical Audit
1. Use clinical audit as a tool in strategic management; & assurance
2. Put in place a programme of work which gives direction and focus on how and which clinical audit activity will be supported in the organisation.
3. Put in place appropriate processes for instigating clinical audit as a direct result of adverse clinical events, critical incidents, and breaches in patient safety.
4. Ensure the clinical audit programme is checked for relevance to board strategic interests and any specific areas of concern. Ensure that results are turned into action plans, followed through and re-audit completed.
5. Ensure there is a lead clinician who manages clinical audit within the trust and with partners/suppliers outside, and who is clearly accountable at board level.
6 Ensure patient involvement is considered in all elements of clinical audit including priority setting, communication of participation in clinical audit, and results; and evidence of sustainable improvement.
7 Build clinical audit into commissioning, performance management and reporting as these apply.
8 Ensure with others that clinical audit crosses care boundaries and encompasses the full patient pathway.
9 Agree the criteria of prioritisation of clinical audits, balancing national and local interests, and the need to address specific local risks, strategic interests and concerns; and the views of commissioners.
10 Check if clinical audit results evidence previous complaints and if so, develop a system whereby complaints act as a stimulus to review and improvement through clinical audit.
QIPP: Boards and Clinical Audit Report, 2009
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DRAFT Principles of disinvestment / prioritisation
• The organisation is committed to improving the health of the community and the quality, responsiveness and effectiveness of services
• The organisation has limited budgets but will work with others to lever resources from within and outside the community
• The organisation will always seek to do the right thing first, and then take resourcing decisions
• We will regularly assess our organisation's position in terms of financial management, service delivery and strategic change.
• We will seek to speed up system reform and re-engineering. • We will scenario plan for the future, exploring the impact of decreasing amounts of
growth. • We will critically review our organisation's priorities and develop plan Bs for those
we cannot put off. • We will engage with our stakeholders and communities in decision- making and
share our decisions taken • We will be positive and optimistic.
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Clear Line of Sight
Clear Line of Sight – the Alignment Project • In the July 2007 Green Paper The Governance of Britain, the Prime Minister
announced that the Government would simplify its financial reporting to Parliament by ensuring that it reports in a more consistent fashion, in line with the fiscal rules, at three stages in the process – on plans, estimates and expenditure outturns. The Clear Line of Sight Project has been set up to meet this objective.
The aims of the project are to: • Align budgets, Estimates and accounts in a way that allows Treasury to control
what is needed to deliver the fiscal rules, incentivise value for money and reduces burdens on government departments;
• Combine and/or align the timing of publication of government financial reporting documents in order to avoid duplication and make them more coherent.
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Clear Line of Sight
The NHS Clear Line of Sight NHS Accountability framework (jb idea) • What are we trying to do described as clinical outcomes/health gains? • What have we (and others invested in this)? • What progress is our investment delivering? Is it on trajectory? • What will/has been our return on investment (ROI) • What adjustment do we/our providers need to make to achieve the clinical
outcomes/health gains required?
How do we do this? • Programme planning and reporting • Service line accountability • Good governance by holding staff (account/programme) holders and
providers to account • Integrity of accounts
Board Assurance Framework (BAF)
• Not a risk register • Record of principal strategic objectives • Controls, assurance, gaps and action plans • Move to independent assurance thru clinical audit • Recognition of boundary & reputational issues • Need to keep succinct and align with board
agendas
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No
Responsible Ex Director/ Director + Link to SfBH
Principal Risks Risk Ref + IBP /WCC risk ref
Key Controls Potential Sources of Assurances
Positive Assurances Assurance Level
Gaps in Control Gaps in Assurance
Action Plan/ Update
Boundary Failure? X
What could prevent this objective being achieved
What controls/systems we have in place to assist in securing delivery of our objective
Where we can gain evidence that our controls/ systems, on which we are placing reliance, are effective
We have evidence that shows we are reasonably managing our risks and objectives are being delivered
Red Amber Green (RAG) rating
Where are we failing to put controls/ systems in place. / Where are we failing in making them effective
Where are we failing to gain evidence that our controls/ systems, on which we place reliance, are effective
*Assurance Level: Effective controls definitely in place and Board satisfied that appropriate assurances are available = GREEN (+ Add review date) Effective controls thought to be in place but assurances are uncertain and/or possibly insufficient = AMBER Effective controls may not be in place and/or appropriate assurances are not available to Board = RED (NB The Board will need to periodically review the GREEN controls/assurances to check that these remain current/satisfactory). Assurance framework/action plan 2008/09 working document
STRATEGIC OBJECTIVE 1
Links to Standards for Better Health: eg C6, C13, C17, C18, C20, C21, C22 Lead Exec Directors: eg Director of Strategy /Chief Operating Officer/Director of Organisational Development
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Board Assurance Framework
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GBO prompts
‘problems often occur at the borders between one organisation
or team and another’ (Learning from investigations, HCC Feb 2008)
‘In the absence of formal governance arrangements,
responsibility for supporting the governance of partnerships falls to partners’ own corporate governance mechanisms’.
(Governing Partnerships, AC, 2005).
Partnership etiquette 1. Are we clear if it’s a contract, SLA,
Grant, Partnership, Network, Community of Practice (COP) Does our governance reflect this?
2. Agree common values, outcomes and measures
3. Define our emerging plans with partners and agree changes in relationship and expectations
4. Agree and appoint an arbitrator to handle and determine partnership disputes
5. Log, share and track agreed decisions and ensure all parties affirm and provide assurance of delivery of actions
6. Agree to share information which provides early warning of variance and completion of agreed actions/commitments
6. Identify and share common risks (and
escalation plans) including risks of partner/supplier failure to deliver
7. Clarify and update first contact point for control of each decision/agreement and escalation contacts for concerns over assurance
8. Share knowledge of potential risks in timely manner
9. Give adequate notice absence of key contact points or intent to withdraw specific commitment or whole partnership
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DRAFT 011009
Pathway Governance Guides No 2: Diabetes care What is this guide? Who is it for? This guide is targeted at NHS Board members and those planning health care improvement. It is intended to support debate around service development in a precise and informed manner. What is diabetes? Affecting around two million people in the UK, diabetes is a condition which results in people having too much glucose in their blood. Type 1 diabetes (insulin dependent diabetes) is cause by the bodyÕs failure to produce insulin, a hormone which controls blood sugar levels. Onset is predominantly at a younger age. Type 2 diabetes occurs when there is a relative, not total, deficiency of insulin. In many cases it is linked to obesity. 90% of people with diabetes have type 2 diabetes. Linked to high blood pressure, adverse levels of circulating flood fats and accelerated narrowing of major blood vessels it can cause premature death. Diabetes is a long-term condition. If not properly controlled it can have devastating effects such as large or small vessel vascular damage leading to heart disease, strokes, visual impairment, kidney failure and can compromise lower limb function in a variety of ways. Effective management of diabetes involves targeting blood glucose and blood fat levels, weight and blood pressure.
What are the benefits of improving the reliability of care for diabetes? 1. Enable people with diabetes to take control of their lives, adopt
healthy behaviours and add life to years, years to life 2. Reduce unnecessary early disability and deaths. 3. Reduce unnecessary admissions. 4. Reduce the risk of dangerous co-morbidities.
Avoiding diabetes, and living with diabetes There is no such thing as Ōmild diabetesÕ. 20% of all patients in hospitals have diabetes. More than half the cases of type 2 diabetes are potentially preventable. By adopting healthy living strategies, those at risk of diabetes can significantly reduce their risk o f developing the condition. Those with diabetes can control their h ealth through lifestyle and drug-based therapies. As the disease progresses the intensity and sophistication of interventions needs to increase. Effective monitoring of those at risk and living with diabetes is key to maintaining good health. The rest of the guide: Below is a series of questions that board members might ask to ensure that they are adopting strategies that will improve the reliability of care for people with diabetes, and that plans are in place to support members of the population at risk. Overleaf is a guide to the stages in a Ņdiabetes careerÓ. Also see the diabetes world class commisisoning maturity matrix
Key Questions Plausible answers Unacceptable answers 1. What steps are we taking to raise awareness with at risk pre-diabetic groups w ithin our local population, and to steer them towards lifestyle control programmes?
We have systematic primary care based screening programmes targeting at risk groups. We have set local targets and are achieving them.
Using existing diabetes registers this is best left to primary care to decide. The current economic climate makes it sensible to not unearth unmet need.
2. For patients with an HbA1c of greater than 6.5 within our local population do we have a comprehensive programme to continuously monitor relevant clinical markers, including sugar levels, blood pressure, cholestero l, weight, lifestyle habits and potentia l for vascular damage?
Though a proportion of patients will not achieve agreed targets for parameters of risk, our priority is to achieve a reduction in the number of people at risk, especially those at dangerous risk. Year on year audits of strategy demonstrates a sustained reduction of HbA1c levels, and other markers of risk.
QOF and enhanced QOF are sufficiently robust targets and ensure we identify the patients we need to. Additionally, the dietetic service manages weight loss programmes.
3. Have we a comprehensively structured progra mme of care for people with diabetes , supported by clinical engagement and e ducation, to ensure that patients receive properly ta ilored packages of care as they progress through the various stages of diabe tic disease and does this allo w for clinician and patient choice?
Regular audits compare practice with NICE guidelines, and this has identified service gaps which our multi-disciplinary team for diabetes is addressing with the commissioner. A structured education programme for all local clinicians is being implemented, and we are rolling out a shared care record for patients with long term conditions. This includes patient education.
We have a clinical lead for diabetes and a team of specialis t nurses. The diabetes lea d for diabetes is developing a care pathway document.
4. Do we ensure continuity and consistency of care for our patients between our local primary care services and our specialist diabetic services?
We have a well-supported local diabetes network attended by clinical and managerial staff from primary care, the PCT and local hospital providers. We follow up patients lost to the service.
This issue is addressed by the agreed local formulary.
Good GovernanceInstitute
Developed by the Good Governance Institute with input from NHS colleagues and an educational grant from BMS - sanofi aventis
Clinical Board Assurance Prompts End of life
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Board Assurance Prompts (BAPs)
Key Questions Plausible answers Unacceptable answers 1. What steps are we taking to raise awareness with at risk pre-diabetic groups within our local population, and to steer them towards lifestyle control programmes?
We have systematic primary care based screening programmes targeting at risk groups. We have set local targets and are achieving them.
Using existing diabetes registers this is best left to primary care to decide. The current economic climate makes it sensible to not unearth unmet need.
2. For patients with an HbA1c of greater than 6.5 within our local population do we have a comprehensive programme to continuously monitor relevant clinical markers, including sugar levels, blood pressure, cholesterol, weight, lifestyle habits and potential for vascular damage?
Though a proportion of patients will not achieve agreed targets for parameters of risk, our priority is to achieve a reduction in the number of people at risk, especially those at dangerous risk. Year on year audits of strategy demonstrates a sustained reduction of HbA1c levels, and other markers of risk.
QOF and enhanced QOF are sufficiently robust targets and ensure we identify the patients we need to. Additionally, the dietetic service manages weight loss programmes.
3. Have we a comprehensively structured programme of care for people with diabetes, supported by clinical engagement and education, to ensure that patients receive properly tailored packages of care as they progress through the various stages of diabetic disease and does this allow for clinician and patient choice?
Regular audits compare practice with NICE guidelines, and this has identified service gaps which our multi-disciplinary team for diabetes is addressing with the commissioner. A structured education programme for all local clinicians is being implemented, and we are rolling out a shared care record for patients with long term conditions. This includes patient education.
We have a clinical lead for diabetes and a team of specialist nurses. The diabetes lead for diabetes is developing a care pathway document.
4. Do we ensure continuity and consistency of care for our patients between our local primary care services and our specialist diabetic services?
We have a well-supported local diabetes network attended by clinical and managerial staff from primary care, the PCT and local hospital providers. We follow up patients lost to the service.
This issue is addressed by the agreed local formulary.
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Partnerships
GGI recognises 6/7 governance groups / relationships Partnerships • Networks • Joint Committee • Joint Management Board • Advisory Board • Community of Practice Others • Direct Management & Reporting • Contracts /Grants/PFI
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Killer Questions
• Is the group a legal entity? • Is the group set up to achieve common objectives? • Does it have separate decision taking structures • Are decisions binding on the members? • Do members have delegated (but limited) authority to take
decisions? • Who is accountable for Duty of Quality and Health & Safety of staff
and visitors? • Who is accountable for VFM/counter fraud issues? • To whom should complaints and whistle blowing comments refer? • Who undertakes the root cause analysis, who audits the group? • Are there competition issues?
Maturity matrix
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• Seek assurance that we are managing the relationship and working the handover.
• Make partnerships explicit and fit for purpose; • learn from our own and others mistakes, and • move to the front foot in achieving what we want to do. • ‘comply or explain’ but set a joint vision (total place?) • ‘The challenge of working with others is that we need to influence
others to share in this commitment and this has implications for our board development programmes’
The keys
good-governance.org.uk
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Asking the right questions (2)
• Have we aligned our quality and financial accounts?
• How much does governance cost?
• How much do our programmes of care cost?
• Do I understand the medicine?
• What is our joint spend on this service area?
• What is the ROI/return on our commissioning?
• Where is the wastage c.f. others?
• How do I operate the benchmarking clause in the contract?
• Are we taking the right decisions?
• What does the 2010/11 Operating Framework say we should be focusing on?
• What are the right things to be investing in?
• Have we established our principles for disinvestment
• What on this basis would I expect from an integrated Agenda/Accounts/BAF?
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2002 A Report of the Joint Review of Social Services in Cardiff, Audit Commission2005 Governing Partnerships, Audit Commission
2005 8th futures forum on governance of patient safety, WHO 2006 Partnerships Working Toolkit, Hull City Council 2007 Board Assurance Prompts (BAPs- Northern Ireland) 2007 Integrated Governance, Delivering reform on two and half days a month, HFMA 2007 Monitor, NHS Foundation Trusts: Annual Plans 2007-08 2007 Pandemic flu: A national framework for responding to an influenza pandemic, and
supporting guidance, DH Gateway 7569 2007 Partnership Governance Framework and Toolkit, Birmingham City Council, 2007? Governance Framework for significant partnerships, Leeds City Council App III 2008 Learning from Investigations, Healthcare Commission 2008 Integrated Governance II- Governance between Organisations debate paper,
IHM
Key GBO References
good-governance.org.uk
