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Understanding Finance; avoiding crisis Foundation Trust Governors

Understanding Finance; avoiding crisis Foundation Trust Governors. Richard Douglas, DG, Department of Health. Agenda. financial context the things to think about the role of governors Q&A. The NHS faces similar challenges to other health services around the globe. Population changes.

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Understanding Finance; avoiding crisis Foundation Trust Governors

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  1. Understanding Finance; avoiding crisisFoundation Trust Governors Richard Douglas, DG, Department of Health

  2. Agenda • financial context • the things to think about • the role of governors • Q&A

  3. The NHS faces similar challenges to other health services around the globe Population changes Rising expectations and treatment costs Funding pressures

  4. our population is getting older Proportion of total population by age group Source: ONS population projections

  5. people are developing more complex needs Number of people with three or more long-term conditions 3.5m Projections 2012 3.0m • Based on projections: • The number of people with three or more LTCs has increased by over 50% in the last decade • Number of people with LTCs is projected to increase 20% by 2018 2.5m 2.0m Number of people 1.5m 1.0m 0.5m 0.0m 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Department of Health projections (2008 based)

  6. the NHS has coped by spending more and more money Real terms health spending 1949-50 to 2010-11 7.1% p.a 3.7% p.a 1.9% p.a 4.6% p.a 4.4% p.a 2.9% p.a Sources: Graph – IFS. Office for Budget Responsibility, Fiscal Sustainability Report, July 2011

  7. but is now facing the toughest financial challenge in its history The current Spending Review was tough And it’s not likely to get any easier • DH funding is constrained by two factors: • Reduction in total public sector current expenditure as a percentage of GDP; and • Increase in the proportion of annually managed expenditure (e.g. Welfare, Debt financing), and so not available to Health and other departments Source: Office of Budget Responsibility

  8. Avoiding crisis: what are the things to think about – personal perspective • It’s never just finance • Things don’t suddenly happen overnight • Periods of major change are periods of highest risk • Finance is too important to be left to the Finance Director • If something looks too good to be true it usually is • Confrontational relationships usually end in problems.

  9. Avoiding crisis – the role of governors • You are not financial analysts nor expected to be experts on the NHS financial regime • But you have key role and responsibilities • Holding the non-executives to account • Appointment and removal of non-executives • Consultation on Forward Plan • Decisions on significant transactions • Receiving the annual report and accounts • Get the right information and ask the right questions

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