Understanding the NHS’s financial challenges: Tips from a Deputy CFO
We are acutely aware that the NHS is facing significant financial challenges: annual agency spending has exceeded £3bn, yet organisations have been set an ambitious efficiency target of 2.2% in an attempt to curb soaring workforce solution costs.
With these mounting pressures, it’s more important than ever that we take a proactive approach to understanding the challenges and goals of our partner organisations, to together drive sustainable and cost-effective workforce solution improvements.
That’s why we welcomed Arthur Vaughan, Deputy Chief Finance Officer at King’s College Hospital NHS Foundation Trust, to speak with our team about the financial challenges currently facing NHS organisations, and how we can help deliver effective recovery plans – from effective workforce planning through to clinician engagement and comprehensive reporting.
Below, we outline the key learnings from the workshop, and what approaches we believe workforce solution providers should take to support healthcare organisations.
Key insights into the healthcare system’s current financial landscape:
- The COVID-19 pandemic undoubtedly intensified the pressures placed on workforce budgets, with rising staff shortages leading to heightened agency spending (£3bn from 2021-22). However, many organisations were already in Financial Special Measures prior to early 2020, and so need to alleviate long-standing, embedded challenges that were present prior to the start of the pandemic.
- Non-recurrent COVID income that organisations have relied on to help maintain safe staffing levels is now being withdrawn, leading to a significant funding shortage. Many organisations are still treating a high number of COVID patients, and the financial and operational pressures associated with this are likely to continue over the next year.
- Against a backdrop of reduced financial support, Trusts are simultaneously expected to reduce agency spending to 3.7% of the total pay bill, and meet the 2.2% efficiency target, which represents a huge reduction in total organisational spend.
- In the next year, wider system factors are expected to have a combined impact on NHS recovery plans, including:
- Increased costs of elective recovery
- Increased non-elective demand
- National rates of inflation
- Ongoing workforce shortages
- Limited headspace to manage staffing at an ICS-level
Learnings for workforce solution providers to improve financial outcomes:
It’s crucial that digital workforce solutions take the unique needs and requirements of their healthcare partners into account, to effectively support them in overcoming these significant financial challenges.
With insights from King’s College Hospital NHS Foundation Trust, we’ve identified key areas tech providers and NHS organisations can together focus on to maximise financial performance:
- Think finance in all decisions: when it comes to rolling out a staffing solution, it’s easy to focus relationship-building efforts on HR functions. While this is of course essential, it’s also crucial to engage with finance stakeholders from the beginning of any partnership, to ensure that the solution delivers the necessary efficiencies to reduce spending and meet financial targets.
- Commit from idea to delivery: implementing a successful solution should never start and finish at the point of go-live. To streamline costs long-term, ongoing support and open communication are vital – this enables providers to respond to shifting priorities and ensure the solution is fit for purpose for the duration of a partnership.
- Be transparent: providing maximum visibility around opportunities for improvement, potential challenges and ROI can foster a culture of trust, and ensure that providers and clients continue to work towards the same shared goal. Maintaining an open conversation with finance leads ensures that the solution in place can be optimised for cost savings throughout the partnership and deliver maximum results.
- Generate ideas from the front line: engaging clinicians in any technology roll-out ensures that the solution meets the needs of stakeholders at every level. Clinicians on the frontline often have the greatest awareness of key workforce challenges, so using this insight can help to deliver results that have a tangible impact. For example, prioritising buy-in from clinicians during a staff bank implementation can increase sign-up rates and shift booking activity, ultimately leading to higher fill rates and reduced agency spend.
- Deliver speedy reporting: driving cost improvements relies heavily on having access to financial trends and data. By maintaining a grasp of current patterns, organisations can predict future workforce costs, identify areas of high spend, and share best practice. Insights relating to shift fill rates, agency to bank conversation and pay rate escalations can enable organisations to make data-driven decisions and successfully manage workforce costs.
Understanding what makes our NHS partners tick is the foundation of everything we do. It allows us to build better products, solve the problems that matter most to staff, and approach every interaction from a place of empathy.
A huge thank you to Arthur for sharing such useful insights and expertise from his experiences at King’s College Hospital NHS Foundation Trust.