HFMA’s Chris Calkin on how the money in the NHS system works

How does the money flow through the NHS? Here’s the inside intelligence.

The complicated structure of the NHS is often impenetrable, even to those who work in it. Yet through the dedication of those same people it manages to deliver a world-class service, whilst spending less of the gross national product (GNP) than countries from its peer group. NHS finance professionals play a big role in ensuring that patients receive the best possible care and money flows effortlessly in this complicated system.

At the Healthcare Financial Management Association (HFMA), we are passionate about making NHS finance more accessible to healthcare professionals without a finance background. An understanding of how finance flows through the system is also vital for pharmaceutical professionals.

Providers that deliver care include acute hospitals, GPs, mental health and community services. Clinical commissioning groups (CCGs) are responsible for most contracts with providers. The Department of Health currently retains responsibility for specialist services. This is because of the low numbers and high costs for providing these specialist services.

What is your value proposition?

A value proposition tells prospective customers why they should do business with you. It makes the benefits of your products crystal clear from the outset.

Some key elements pharmaceutical professionals need to consider in their value proposition are care outcomes, patient experience and safety.

If you can satisfy the top part of the value equation, the challenge now is the resources required and specifically the revenue cost of picking one drug over another.

The intelligence regarding cost pressures or indeed savings opportunities is key in your value proposition. Savings may occur not only as reduced cost, but also as reduced length of stay, reduced time in theatre or a move of treatment from inpatient to outpatient.

Who makes the decision?

The decision to use a particular drug will and should always be a clinical one. The director/head of pharmacy has a key role, although different trusts will have their own process for approving changes in drug expenditure.

Consultants may also have some latitude to introduce new drugs. In a small number of cases, especially where the drug is expensive or is for an unlicensed use, authority may be invested in an individual consultant or the medical director.

The role of the finance department

The director/head of pharmacy has a significant amount of data and invaluable pharmaceutical knowledge that are key in building a case for the introduction of new medicines. However, when working on new schemes they often need the support of the finance director (FD) or the wider finance team. It is important for you to understand the pressures that FDs face.

Key concerns for them are future trends and opportunities. Intelligence regarding the pharmaceutical market, and currently the potential impact of Brexit, will be high on their agenda.

The HFMA is a unique network that allows finance staff to share best practice and learn about the latest developments in healthcare finance. With a community of over 14,000, it provides a platform to network and influence strategic decisions. Anyone can join the association from as little as £3 a month.

The NHS in 2018 & beyond

The structure of the NHS is in a constant state of change. Balancing competing clinical, operational and financial pressures will always be a challenge, which is why the concept
of value is gaining popularity.

One of the tools that HFMA has developed to help organisations understand how these pressures can be managed is the NHS Operating Game. Several commercial companies have already found it to be a valuable way of gaining an appreciation of the challenges confronting the modern NHS and are reviewing the way in which they are doing business with the NHS.

‘Our market access team recently played the acute version of the NHS Operating Board Game it was a fantastic training session. The team of facilitators at HFMA really know how NHS finance works and enhanced our understanding of the competing priorities faced by senior NHS professionals,’ says Tony Meredith, National Market Access Team Manager, Allergan.   

Find out more about the HFMA and the NHS Operating Games at hfma.org.uk. Chris Calkin FCMA is a former president of the HFMA and a former NHS Director of Finance and Deputy Chief Executive.