Department of Health Director General of NHS Finance, Performance and Operations David Flory has stated recently that whilst the news that NHS finances are near the top of organisations’ agendas is reassuring, recognising the concern is only the first step towards taking action or reaching any difficult decisions.

The NHS is finding itself increasingly under the spotlight as commissioners and providers agree how they will contribute to making efficiency savings of £20 billion over the next 4 years. Flory however believes that the service is in a stable position to deliver real quality and efficiency improvements during this transition stage, but this will require careful and effective managerial skills.

The operating framework and ‘payment by results’ guidance are designed to challenge the system to assist in driving up quality and removing inefficiencies. The key judgements on tariffs, efficiency and standard contract terms are made with the aim of supporting viable and healthy commissioners and providers to secure and deliver better services.

Despite these levels of support, headcount and hospital activity numbers suggest Trusts are not meeting the demands of the quality, innovation, productivity and prevention (QIPP) programme as projected. Whilst this is not currently being seen as problematic, the shift in working practises to a lower cost could drastically influence the quality of patient care.

Flory asserts that some organisations are already starting to recognise that their existing business models based on growing income are not sustainable in an environment where they must reduce expenditure and work more flexibly. For many, successful transition will mean transforming their business models to work more efficiently with fewer provisions.

As the current demand for efficiencies surpasses any prior levels, trusts are increasingly announcing potential job losses. Flory refers back to 2006, where projected redundancies that never materialised caused great backlash, and states that whilst some job losses are inevitable, the focus should not be placed solely on them, but on finding new and innovative business models.

Many NHS managers in the system today have the benefit of experience of previous NHS recovery to draw on and an understanding of how system managers have intervened to support organisational viability. Despite this, the NHS is changing, and making increasingly difficult decisions may become a feature of their role that managers have not previously been used to. Flory says it is not sustainable to postpone the difficult decisions about service operations, but that managers must be more proactive and implement changes to pre-empt the new NHS now.

In order to prepare for an NHS which demands better outcomes from reduced financial input, some managers have opted to implement an Electronic Patient Record (EPR) system like Therapy Manager. The system provides on-demand monitoring of key measures including such as the cost of care, but provides a real-time view of all clinical activity and automated collation and production of performance indicators to ensure that the best working practices are implemented.