This report is being published by the Audit Commission now because we believe that financial management in the NHS needs to improve significantly over the coming years in order for the benefits of current and extra funding to be realised fully and to address the challenges ahead.
Although effective financial management has always been important in the NHS, it has never been more important than now. This is because the scale and complexity of the challenges faced by NHS bodies are unprecedented. Along with significant increases in NHS funding comes a demand for reform and modernisation aimed at transforming services for patients - not just providing more of the same. So, as well as delivering day to day, NHS organisations must also deliver a huge programme of change.
In the future, good housekeeping will not be sufficient. Increasing plurality of provision, changing financial flows and new forms of contracting will change radically the demands on NHS chief executives, finance directors and others involved in planning and delivering services. It will strengthen the requirement to know how money is being spent and what improvement extra investment will bring. The systems, structures and skills needed to succeed in this environment will look very different from those we have been used to in the past. Even NHS organisations whose financial and performance management is regarded as strong today cannot afford to stand still; and those finding it difficult now will struggle to progress in the future.
This report lays down a challenge to the NHS (and to ourselves as regulators) to set and reach standards against the demands of the future rather than of the present. Making the necessary progress will not be easy, nor will it be achieved overnight. This report does not claim to provide all the answers. But by identifying the challenges ahead it will help set an agenda and in doing so provide the first step towards achieving major advances in the quality, consistency and sophistication of financial management in the NHS for the long-term good of patients and taxpayers.
This report has been written primarily for chief executives, directors of finance and other board members to help them raise the profile of financial management across their organisations. It will also be of interest to any NHS staff that have responsibility for financial management.
Included in this report:
- What is good financial management?
- The current state of NHS financial management
- Improving financial management
- NHS financial management in the future
- The Audit Commission's financial management agenda in the NHS