Vision & Strategy - Financial strategy
Introduction
Service strategies should be developed in the context of a realistic financial strategy. The purpose of the financial strategy is to ensure:
- all the available resources are disclosed and made available for strategic service planning
- there are sufficient resources to meet all service strategies
Openness should be a core principle in developing strategies and PCT finance colleagues should work with fellow PCTs, stakeholders and local Trusts on the financial strategy just as they will on service strategies.
It is essential that recurring and non recurring resources and expenditure be separately identified to minimise the danger of developing unaffordable strategies, where recurring deficits are masked by non recurring resources.
The key end product of the strategy is a high level summary that should show total expenditure (and percentage of total resources) by care group, reconciled to available resources. It should compare the present position to the forecast future position highlighting the proposed shifts between care groups. It should also be analysed by provider to illustrate the proposed changes incommissioning patterns.
It is useful to produce an analysis of where future growth is going (by caregroup and by provider). This will highlight areas of net disinvestment and the care groups attracting the highest priority for new resources.
Strategies should be led by needs and quality standards. However they will plainly need to be contained within realistic assessments of available resources. Resource guidelines can be produced for each client group to influence the strategy makers’ thinking. One way to do that is to make a high level judgement, using the principles in the vision, about the future share of total resources for each care group.
For example a PCT may decide that primary care should grow more quickly than the average rate of growth over the next decade. If so its share of future resources may increase from say 23% now to say 25% in the future. Other care groups would need to have lower growth targets. This can be a powerful tool to concentrate minds on achieving the preferred future pattern of care. It should however be treated with caution as the basis for such guesstimated resource prospects is a series of value judgements.
The main building blocks of a financial strategy are:
- Resource prospects
- Current expenditure
- Current deficits (and recovery plans to balance them)
- Future expenditure forecasts from service strategies
- Efficiency and inflation
- Non recurrent resources and expenditure, including capital and trust funds
- Risks.
Resources
Each element is described in more detail in Resource Guide No. 3 Developing a Service Strategy
Resource Guide No. 8 Commissioning Specialist Services
The Finance Friend for PCTs 9 available Dec 03
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