Comparing financial performance between NHS Trusts is highly challenging. This is largely due to NHS Trusts existing in an only a ‘half real’ finance world. Most NHS Trusts’ funding comes from central government, which is distributed to providers via commissioners where some sense of a commercial market is encouraged to drive improved outcomes.

To do this several adjustment devices are used such as Market Forces Factor (MFF), which gives providers a different amount of money for providing the same treatment depending on where the trust is located, and in theory the additional cost associated with that location. For example, University College London Hospitals NHS Foundation Trust receives 29.3% more income for each individual treatment than Royal Cornwall Hospitals NHS Trust.

In addition to MFF the varied implementation of fines, incentives, loans, land sales and ‘technical accounting adjustments’ makes drawing conclusions about an organisation’s financial competence challenging.

However, whilst assessing financial competence is difficult, financial health is relatively straight forward. If an organisation has a surplus, they likely have cash in the bank. With cash they can make investments in capital programmes, which can help deliver modern and improved quality of services. Therefore, it could make sense that organisations with stronger finances deliver better ‘quality’.

Analysis from Public View would certainly support this idea. Figure 1 shows a visible correlation between % surplus / deficit and CQC rating.

Figure 1 Trend chart showing CQC group % surplus/deficit

Perhaps in recognition of some of the potential flaws and skews in the way money is distributed across the country, NHS Improvement have in recent years placed increased emphasis on a ‘control total’, where an organisation is managed to the financial plan they submit at the start of the year. This is possibly a better reflection of an organisation’s financial competence to accurately forecast and deliver the projections, but is still not without potential skews, one such example might be the varied adoption of the ‘Sustainability and Transformation Fund’.

Figure 2 shows the financial year to date performance for each CQC rating group from Quarter 4 2016/17 to Quarter 4 2017/18. There is once again a visible association between CQC rating and performance with the interesting context of the gap widening between the rating groups.

Figure 2 Trend chart showing CQC group variance from plan (£1,000s)

Whilst finance indicators appear to provide a good insight to quality (CQC rating) let us not forget the lessons from the past where financial performance was prioritised over the safety of patients, with tragic consequences (www.midstaffspublicinquiry.com).

In part four we will be exploring some of the 'workforce' indicators.  To get early sight of the CQC groups performance for these indicators click here to register for an account.