Finance directors plan to renegotiate supplier contracts

Posted on July 9, 2009. Filed under: Journals | Tags: , |

Health Service Journal | 9 JULY 2009 | BY SALLY GAINSBURY

NHS finance directors are increasingly pessimistic about the financial outlook for their organisations and plan to address their concerns by renegotiating contracts with suppliers. Finance graph

Participants interviewed for HSJ’s first quarterly finance survey were asked to rate the financial outlook for their organisation on a scale of 1 (poor) to 10 (good) for 2008-09, 2009-10 and 2010-11.

On average, the 35 finance directors and deputy finance directors – who were selected to reflect the balance of commissioning, acute and mental health providers in the NHS – scored their outlook for the current financial year at 6.4. They said last year they would have given the outlook a score of 7.6.

Participants expected next year to be worse still, scoring the financial outlook at 5.3 – a 17 per cent drop in confidence compared with this year and a 30 per cent drop since 2008-09, when the NHS finished the year with a £1.7bn surplus.

Seven directors rated their outlook as 9 or 10 in 2008-09 but no one did so for 2010-11.

The survey asked participants what were the most significant changes they were planning in the way they allocate resources this year. The most frequent response was that NHS finance departments would attempt to renegotiate or rationalise supplier contracts and/or procurement. Thirty-two out of the 35 participants (91 per cent) said that is what they are planning.

Sixty per cent said they planned to “increase productivity”. The proportion was highest among primary care trusts, where 69 per cent said that would lead to significant changes in how they manage their finances. Only five of the 35 said they would be changing how they spend to improve patient care and quality.

Twenty per cent planned to outsource services this year. That tallies with the CBI’s expectation that outsourcing will increase during the economic downturn. But the business lobby has warned this could be hampered by the inability of the private and third sector to offer staff access to the NHS pension scheme.

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