FDQs: Healthcare FD Lorraine Bewes

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In the latest of a series of interviews with prominent finance managers, AccountingWEB speaks to Lorraine Bewes, until recently CFO of Chelsea and Westminster Hospital, about the challenges of being a finance manager in healthcare.

Chartered accountant Bewes joined the NHS in 1991 following a career in commercial accountancy, during which she worked at ITN and WH Smith Television Services, and has led the early implementation of service line reporting in the NHS.

She was recently made an OBE for her services to NHS financial management in the New Year’s honours list, and with NHS funding and management once again making headlines Bewes offered her perspective on what could be done to support and improve the UK’s health sector.

What are the biggest challenges of being an FD in healthcare?

I think there are three main challenges:

  • The financial target tolerances that the NHS works to are so much tighter than the commercial sector – the difference between success and failure can be a matter of a few % and the opportunities to respond to any adverse operational variances to plan by removing costs are limited; unfortunately a number of ‘must have’ emergency services are also loss making under the national tariff but their economics are difficult to change in the short term
  • Creating an environment in which clinicians give equal weight to quality and finance and are in synch with the financial sustainability objective - the consequence of high profile failures such as Mid Staffordshire and public expectations has naturally led to a pressure to invest in staffing and quality investments at the same time as NHS budgets have been frozen
  • Understanding what optimal efficiency looks like in healthcare – it’s complicated and there are few meaningful industry benchmarks, though the Carter indices are a step in the right direction

You had a successful commercial accountancy career before joining the NHS. Compared to purely commercial FDs, how different is your role when some of the key metrics aren’t purely financial?

I think the NHS has been aligning with the commercial sector and the metrics are not that different (but the levers for change are much more limited as I have already outlined). We are increasingly focussed on optimising value in healthcare, which is to optimise the quality/cost equation, just as in the commercial sector.

However, the metrics in healthcare are more rudimentary and the ability to standardise cost is much more difficult. I think the NHS CFO role is very similar to that of a commercial CFO, in that you need to be able to influence and inspire your staff and board colleagues to ensure finance is seen as a credible strategic enabler and gatekeeper rather than just look after the numbers.

You were recently awarded an OBE for your services to NHS Financial Management – what are you/your department doing to stand out from others?

I am incredibly proud that NHS Finance and my team in particular has been nationally recognised in this way, as the finance function is a critical partner in healthcare delivery but rarely gets a positive light shone on it. I have had the privilege of serving as CFO of Chelsea and Westminster for the last 12 years and we are one of a few organisations who have delivered on both service performance and financial targets during that period. So I guess continuity and passion has brought the ability to experiment and learn equally from our mistakes and successes and working as one team, and this underpins the consistency of delivery on our plans year in and year out, despite an increasingly hostile external financial environment.

What business software do you use and how does it help you in your role?

Post acquisition, we are running two financial accounting systems – Oracle and E-financials – and we will move onto one platform. The most useful business tool has been our patient level costing and information system (Healthcost) and Qlikview business reporting.

More generally, how is technology influencing the role of the FD?

The need for reliable information on demand for and cost of service in healthcare, has developed exponentially over the last decade. This is because meeting a minimum national efficiency target of 4% over the last few years is challenging if you do not address the economics of individual service lines.

An FD in healthcare needs also to be aware of how well the organisation purchases – and investment in procurement processes and systems to enable transparent benchmarking of supply prices is essential. The trend towards integration of healthcare in order to address the duplication of service activity between primary and secondary providers will require increasing investment in technology that brings these clinical teams together – either through investment in comprehensive electronic patient record systems such as Cerner and Epic or through investment in middleware which allows these systems to interface effectively and allow one platform for clinical decision taking. The business cases for these investments are notoriously difficult to assess and delivery on hard cash-releasing benefits even more difficult.

Of all the tools you currently use, what’s the most interesting technique or process you’ve recently used?

I would say the use of Bubble charts and classic quadrant analysis to determine actions for improving the EBITDA of our service lines has been the most interesting and effective technique for engaging our clinicians on service and efficiency improvement.

Does working as an FD in healthcare demand effective forecasting?

As an FD in health, effective forecasting is absolutely essential –  in a busy acute hospital with significant focus needed from the operational teams during the Winter months, there is in my experience a very short window for recovery (i.e. by the Summer) if you are off plan and action needs to be quick and emphatic. Therefore accuracy of forecasting is a key performance metric for the team and naturally this requires our business partners to be integrated with their operational teams.  

What policies do you want to see the government adopt to improve your working environment?

I welcome the recent comprehensive spending review settlement. I also welcome the recommendations set out in last Summer’s Carter review, in particular the development of the matrix to allow true benchmarking of NHS efficiency and would encourage the government to continue to build on this.

As a finance team what are your priorities to support your organisation’s strategic aims in 2016?

Supporting the successful integration of the new organisation through consolidation of the finance teams and systems investment; providing accurate reporting and effective accountability framework for delivery of our five year efficiency improvement programme; building capacity and capability to improve service line economics; delivery of robust contracts for the new organisation which provide appropriate risk share on volume and price with our commissioners; delivery of improved compliance processes and transparency of price information to deliver required procurement efficiencies.

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