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Financial resilience and sustainability

The daily news is full of natural disasters which are made worse by poorly designed buildings with inadequate and inappropriate foundations. If, when constructing a modern building, so much planning and design goes into ensuring that its foundations can withstand a natural disaster such as earthquake or flooding, why do we expect an organisation that has poorly designed financial systems to survive major changes in service delivery and demand?

Today, primary care is going through massive changes so it is no surprise that antiquated management and financial systems cannot respond quickly enough to these new pressures to ensure resilience and sustainability. When talking about financial resilience and sustainability within the primary care setting, whether it be in general practice or wider primary care, it is often easy to get bogged down in the numbers and lose sight of the important building blocks that support financial resilience. If these are not in place, it will be difficult for any organisation within any sector to be financially resilient or sustainable.

The Chartered Institute of Public Finance and Accountancy (CIPFA) has defined financial resilience as: “this is the ability, from a financial perspective, to respond to changes in delivery or demand without placing the organisation at risk of financial failure. This means having the agility and flexibility to forecast and manage both expenditure and income to meet requirements as they change while delivering a balanced budget”. [CIPFA – The importance of financial resilience]

CIPFA highlights certain pillars that underpin the development of strong financial resilience. These are:

  • Reserves / savings
  • Understanding unplanned overspends
  • Financial planning
  • Strong governance
  • Robust medium-term financial planning
  • Integrated and aligned strategies and plans
  • Effective performance monitoring and reporting
  • Effective ownership and accountability.

The Health Service Financial Managers’ Association (HFMA) has developed a toolkit called “Improving NHS Financial Sustainability”. This toolkit asks the question: “Are you getting the basics right?” The toolkit has been developed to help integrated care boards (ICBs) ensure that they have necessary core elements in place to ensure financial sustainability.

Both models can be adapted and utilised within the primary care setting to ensure that an organisation has the correct pillars in place to enable it to be both financially resilient and sustainable.

Areas covered include:

  • Business and financial planning
  • Budget setting
  • Budget reporting and monitoring
  • Forecasting
  • Cost improvement / efficiency plans
  • Board reporting.
  • Financial governance framework
  • Culture, training and development

The approach outlined above, will help primary care organisations assess whether they are financially resilient and sustainable and signpost where more work is needed to mitigate any financial risk. It is my view, as a retired public sector accountant and practice manager, that this approach should be adopted by all primary care organisations to ensure that they can meet changes in healthcare provision.

Don Beckett, PCC associate

PCC supports primary care in a number of areas https://www.pcc-cic.org.uk/practice-support/ including financial reviews and governance enquiries@pcc-cic.org.uk.

Don has worked in the NHS for over 40 years, starting his NHS career as an internal auditor in Cheshire, then moving to Worcestershire in 1990 as an accountant working for Hereford & Worcestershire Family Health Services Authority. He is a retired qualified public sector accountant with CIPFA. Don became a practice manager with Northumberland House Surgery in Kidderminster in 1997, retiring from this role in 2017. He has performed various other roles within the county in health and the charity sector. Don has also worked for the Care Quality Commission as a special adviser and supported various struggling GP Practices. He is currently a director with Healthwatch Worcestershire and is particularly interested in primary care. He is currently a PCC associate supporting practices.

Last Updated on 28 February 2024