Finance
The early 2000s was an era of severe pressure on trauma and orthopaedics in the region. In response to high cancellation rates, extraordinarily long waiting lists and inability to meet the 18-week referral to treatment time (RTT) standard, four acute trusts joined in partnership to deliver elective orthopaedic surgery in a surgical centre (SWLEOC) ring-fenced from emergency procedures. Despite initial financial losses, within three years, through streamlined pathways and innovative and efficient delivery of patient care, SWLEOC was delivering a significant annual surplus as well as becoming known nationally and internationally as a Centre of Excellence.
Until the start of the pandemic, income was generated through Payment by Results (PbR), with income based on the level of activity. Return on Investment (ROI) is maximised through economies of scale. Negotiating with suppliers on price resulted in significant savings, and further reduction in expenditure is realised through efficiencies in the patient care pathway. PbR provides the incentive to increase capacity, creates an opportunity to treat more patients, reduces waiting lists, and provides the means to invests in innovations to streamline pathways and improve service delivery.
During the pandemic all trusts moved to a Block Contract (BC) payment system, as a way of providing financial support for costs associated with the pandemic as well as supporting the recovery of services. While the BC payment system was welcomed in the early stages of recovery to keep the Centre running and staff paid, the capacity created by opening an additional theatre to reduce waiting lists and support elective recovery plans has meant the Centre is exceeding business as usual (BAU) in excess of 10% when compared to 2019 activity.
The BC was based on historical spend and did not consider the increase in volume of activity, or new service initiatives being implemented to increase capacity. Thus, the Centre moved from a strong track record of financial surplus to being constantly under pressure to meet its financial targets.
The payment system is a combination of PbR and block contract on current activity and the Centre continues to generate profit for its partners.
The Centre was established as a joint venture (JV) between four acute trusts as a strategic business unit with a remit to deliver high quality Orthopaedic Services to patients in SWL and Surrey. The Partners have been operating under the terms of the accountability and governance framework since 2004, are governed by the Partnership Board (PB) and have a contractual JV agreement. This agreement sets out the following:
- the JV will be hosted at Epsom and St Helier University Hospital on behalf of the Partners and shall enter into the commissioning contracts for SWLEOC;
- the Partner’s share control of the JV equally to ensure that it succeeds;
- arrangements for the employment of JV staff are by the JV Host;
- contractual governance and joint management arrangements of the JV.
An annual business plan is prepared for the JV by the Management committee and is approved by the Partnership Board. The JV provides and agrees the activity plan for the Partners in accordance with the commissioning contracts to which the JV host.
The assets of the JV shall be owned, leased and licenced by the JV host (Epsom and St Helier).
With respect to financial governance, the PB requires six-monthly reporting on revenue generated in the preceding six months, attributable to the amount of activity performed by the Centre for each Partner. If a surplus is generated, this will be shared between the Partners in proportion to each Partner’s Revenue Contribution.
If there is a deficit, the PB shall convene a meeting to discuss and agree the basis on which the Partners shall be required to contribute to the balance of the deficit.
The management accounts are recorded by the Centre monthly, quarterly, year-to-date and forecast for the remainder of the financial year and will be reported to the PB, operational teams and each Partner’s finance teams.
The Centre employs a dedicated coder to ensure accurate coding of all inpatient procedures which determines the patient specific income that should be reimbursed. On PbR there is the incentive to code accurately so that the Centre can realise the full income potential for each patient treated.
- Business Planning for the year;
- activity and the associated income;
- expenditure;
- efficiency and control (consumables and supplies);
- efficiency and control (establishment reviews of all departments);
- forecasting profit;
- monthly reporting on financial performance.
The Financial service was set up as part of the JV Host SLA.
All teams within the Centre, including the Triumvirate (Director, Medical Director, Associate Director of Nursing), Business Team including the General Manager, Business Manager and team leads of each department within the Centre. Regular interaction occurs with Acute Partner Collaboration of Partner Trust CEO’s, regular meetings with Partner General Managers and Finance Managers. Procurement Firm. The Finance Team is hosted at Epsom and St Helier and work very closely within the SWLEOC Team.
- Clinical manager;
- care-flow vitals;
- Lifebox;
- patient summary care records;
- Bluespier
Consultant collaboration is crucial to establishing a hub.
- Activity information is delayed and not recorded on time;
- expenditure details not approved according to the correct process resulting in sign-off delay;
- list cancellation due to suppliers’ issues;
- clinical and non-clinical cancellations which reduce activity levels.
- Dedicated clinical coder;
- purchase order training for staff;
- regular meetings with suppliers who have delivery issues;
- regular meetings with operational managers.
- Continuous cost improvement programmes and generating savings;
- commissioning and running an additional theatre without the associated income;
- service development and increased capacity without associated funding;
- expenditure controls when there is variation amongst Consultants for choice of prosthetics;
- workforce challenges.
- Collaboration and job planning of Consultants who will be available to undertake activity at the unit;
- a sustainable model of care delivery and streamlined pathways to ensure safe, efficient and high-quality patient care;
- length of stay: safe and effective discharge with minimal delay;
- commissioning activity to ensure funding and profitability for the Centre;
- comprehensive clinical coding is pertinent when on PbR to ensure correct funding associated with the care being delivered;
- an innovative culture, a dynamic, creative and collaborative workforce and tightly controlled governance will ensure that financial sustainability is maximised and consistently maintained.
- Managed service contract;
- dedicated clinical coding;
- activity plans with targets for each Partner;
- mutual aid outside the Partnership.
The Centre has shown that despite the interim shift to BC and working more than BAU, it has been able to consistently deliver on KPIs through an innovative culture and multiple cost saving initiatives. The current challenge is to avoid a post-pandemic revert to traditional and outdated ways of working, and to continue the positive momentum of transforming how teams, organisations and systems work together to deliver patient care, beyond recovery, continually pushing the boundaries of BAU and working within an evolved funding system.
Staff
Staff Member: Finance & Business Partner (Band 8b x 1 WTE)
Staff Member’s Title: Management Accountant (Band 6 x 1 WTE)