Turnaround is everybody's problem

Organisational turnaround is often seen as the sole preserve of the finance function. Equally, it is often perceived to reduce quality and increase clinical risk.

The reality is somewhat different: poor quality costs money through, for example, litigation, duplication, waste and reputational damage. Financial turnaround, if properly targeted, can therefore lead to increased quality at lower cost while creating surpluses for investment in new services.

‘Financial turnaround is much more akin to trench warfare than discovering a cure for cancer’

The financial turnaround at Imperial College Healthcare Trust achieved over the last 18 months has led many observers to speculate how this could be done so quickly; to question whether the original forecast position was robust or was overstated; and to try to understand what magic solution we discovered that could come to the rescue of other challenged organisations.

So it will be disappointing for some to learn that there are no magic bullets in financial turnaround, the process being much more akin to trench warfare than discovering a cure for cancer.

People, process and culture

Turnaround must focus on three areas: people; process; and culture. It has four phases: control; turnaround; transformation; and, ultimately, stabilisation.

No process, however well designed, will operate effectively with poorly trained operatives. Equally, the best people will not succeed with antiquated, inefficient processes and systems. It is, therefore, crucial to recruit the best possible staff while, at the same time, ensuring systems are optimised and based on best practice.

For Imperial, this meant recruiting a small number of high-calibre, experienced people who could hit the ground running and have a clear understanding of what works and what good looks like. Only by doing this and having an unambiguous and well-articulated vision of improvement can genuine cultural change take place.

Too many financial turnaround programmes fail here because the improvement is seen as the responsibility of the finance director, or worse still, is sidelined by the set up of a programme management office and, therefore, immediately stops being everyone’s problem. So, while it is absolutely crucial to emphasise the importance of turnaround, bring in adequate, highly skilled individuals and resource this appropriately, it must never stop being business as usual.

There will be few organisations, no matter how financially challenged, that will have no room for the eradication of waste, duplication or poor practice. A review of financial controls, authorisation levels, systems and processes must always be the first step. It behoves us to review these areas as well as back office and administration costs prior to any consideration of clinical efficiency. Suspicions must be raised in any organisation where this has not happened. Indeed, robust financial planning will ensure there is no potential within for emotive or clinically risky capital improvement programmes to be proposed, purely as a spoiling tactic to ensure nothing happens.

Difficult conversations

Turnaround which is clinically based and carried out by individuals with detailed clinical knowledge leads to reduced cost, while improving quality. For example, much has been written in the wake of the Francis report about safe nursing levels. On the ground, however, can we really be sure that in every ward, every off-duty has been optimised? If this is the case, on an average 30-bed ward with a nurse to bed ratio of 1.1:1 there will be five staff on leave at any given time. This means enforcing annual leave policies, however, and having difficult conversations with staff who will, inevitably, not always get their first choice holiday.

The alternative is to compensate for absences with expensive and, very often, less experienced bank and agency staff which increases both cost and clinical risk.

Transformative change can only really be successful once turnaround has started to have a positive impact. There is no point in trying to optimise pathways across systems through application of Lean techniques if key inputs such as labour resource have not been subjected to the rigour of turnaround first. This does not mean that putting in place the building blocks of transformation should be ignored while the focus is on turnaround – quite the contrary. Transformative changes are what will deliver the efficiencies under the £20bn QIPP challenge, allowing providers to have financially sustainable future prospects which deliver high quality care, world class patient experience and the clinical outcomes that we would expect if we were treated in our own institutions.

Lack of proper control or failure to adopt turnaround techniques will prevent many trusts from getting there on their own and lead many foundation trusts into the unsustainable provider regime and, ultimately, administration.

Bill Shields is chief financial officer at Imperial College Healthcare Trust