Managing financial difficulties in health economies: lessons for clinical commissioning groups

This report examines why some health economies have been more successful than others in balancing their finances and outlines key lessons for clinical commissioning groups.

With rising costs and demand for services, the NHS is set for a difficult decade. At the same time as facing budgetary constraints, the system is undergoing an extensive reorganisation, with the implementation of a new commissioning structure and regulatory framework.

The bodies involved, particularly clinical commissioning groups (CCGs), need to rise to the challenge of performing as new organisations, while dealing with ever-tightening budgets.

Even in periods of high financial growth, the NHS has had difficulty balancing the books. In 2006, during a time of significant real-terms increases in spending, 104 NHS organisations were put into the Department of Health’s ‘turnaround’ programme, which was set up to help them address financial difficulties.

While their potential ability to better engage with clinicians across the health system may offer them 
greater legitimacy in the eyes of the public and providers than their largely managerial predecessors, CCGs face a very complex future. Natasha Curry and Benedict Rumbold, report co-authors

In the years following 2006, some health economies continued to struggle to balance their books, while others consistently made surpluses.

This project set out to gather learning from the experiences of organisations in turnaround and to explore why some health economies were more successful than others in balancing their finances in subsequent years.

Although much of the learning will be applicable to all NHS organisations, we have focused on the lessons for CCGs, who arguably face the greatest challenge in managing their finances while establishing themselves and addressing local health and care needs.

The research revealed a number of reasons seen as contributing to financial deficits, and identifies key lessons for CCGs as they grapple with difficult financial futures.

The authors suggest that effectively managing finances is a careful balancing act between delivering short-term balance and strategic planning; between challenge and collaboration; and between an internal and economy-wide focus.

It will also be important for policy-makers and NHS England to ensure that clinical commissioning groups are given the support and tools to implement the learning identified.

This research report precedes a further study, to be published in 2014, that will use quantitative data to examine the trends in deficits and surplus in the NHS.

Suggested citation

Curry N, Rumbold B, Edwards R and Arora S (2013) Managing financial difficulties in health economies: lessons for clinical commissioning groups. Research report. Nuffield Trust.