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Accounting for care

25 March 2011

As the Health and Social Care Bill is debated in parliament there are a some concrete elements to the government reforms which can be planned for.

We do know that, subject to Parliamentary approval, GP Commissioning Consortia (GPCC) will be at the heart of these changes, with direct responsibility for as much as 80% of the NHS budget in England – around £80bn.

As this is taxpayers’ money it comes with strings attached – namely that there is an absolute requirement to demonstrate that it is used well and for its intended purpose. GPCC will be accountable for how they spend the funds and will need to demonstrate probity.

From April 2012, the National Commissioning Board (NCB) will allocate the funding previously received by primary care trusts (PCTs) directly to GPCC.

This will be in the form of a budget that is a total of individual practice-level budgets based on a weighted capitation model. The aim is to provide funding based on population need and local circumstances to equalise buying power. GPCC will be ‘bodies corporate’ and have a statutory basis.

A ‘body corporate’ is a legal entity through which the law allows a group of natural persons to act as if they were a single composite individual for certain purposes, an example of this would be a company registered at Companies House. Being on a statutory basis in this context means being able to spend public money and accountable to parliament for its use.

Although the powers and functions of consortia are defined by the Health and Social Care Bill 2011, it is proposed that they will have flexibility in making their internal governance arrangements.

However, there will be some essential requirements, particularly relating to financial management. One of these
essential elements is to have an ‘Accountable Officer’, who will be accountable directly to the Chief Executive of the NCB as Accounting Officer for NHS commissioning activity.

The Accountable Officer (AO) is vital to ensuring the sound stewardship of public funds and is a role that already exists throughout the public sector. In NHS organisations to date, the role has been fulfilled by the chief executive of PCTs and foundation trusts, and before that, the chief executive of health authorities.

It is important that all organisations spending public money are able to account fully and transparently for their use of public funds.

The role of the AO is key to this in ensuring that the organisation:

  • Operates effectively, economically and with probity.
    Makes good use of its resources.
    Keeps proper accounts.

This is a key role in governance terms and will involve having arrangements in place to ensure:

  • Robust financial records are kept at consortium level.
  • A sound system of internal control is established and
  • The necessary financial records are retained.
  • Financial considerations are taken fully into account in
    decision making.

This is quite separate from the responsibilities of a Chief Financial Officer CFO, or Director of Finance (DF) in the NHS, which are complex and varied, ranging from statutory duties relating to accountability, governance and probity, ‘traditional’ treasurer activities, corporate strategic management and day-to-day operational management of financial functions. Indeed, my own view is that theAccountable Officer role should not be undertaken by the CFO or DF for probity reasons.

The Bill requires that when making applications to the NCB to establish a consortia, the applicants must include a copy of the consortium’s proposed constitution, and specify the name of the person whom the consortium wishes the board to appoint as its AO. Paragraph 9 sets out that each consortium must have an AO, who may be either a member of the consortium or an employee.

They may be the AO for more than one consortium. If the AO is not an employee of a consortium, the consortium may remunerate him/her as they see fit. The AO is responsible for ensuring the consortium complies with its financial obligations.

The AO is also responsible for ensuring that the consortium fulfills its duties to exercise its functions effectively, efficiently and economically under new section 14K, and its duties under new section 14L in relation to improvement in the quality of services.

They must also ensure that the consortium exercises its functions in a way that provides good value for money. Other obligations may be specified in a document published by the board for these purposes.

The Bill leaves it quite flexible as to who can be an AO; it does not have to be a GP. It needs to be a person who is aware of their responsibilities, both within the consortia and also to the NCB. Someone who is financially savvy, carries weight in the group, and is prepared to take appropriate action to ensure that the consortium fulfils its financial obligations.

For example the appointment letters for AOs in PCTs state:

“You are, together with the Director of Finance and Service Development, responsible for ensuring that the accounts… must disclose a true and fair view of the PCTs income and expenditure, and of its state of affairs.
“You have particular responsibility for ensuring that expenditure by the PCT complies with Parliamentary requirements.”

It also says you must:

  • Not exceed your resource limit.
  • Draw the attention of Parliament to losses or special
    payments by appropriate notation of the statutory
  • Obtain sanction for any expenditure that exceeds the
    limit delegated to the primary care trust; this includes any
    novel, contentious or repercussive expenditure, which is
    by definition outside your delegation.
  • Ensure that all items of expenditure, including payments
    to staff, fall within the legal powers of the PCT, exercised
    responsibly and with due regard to probity and value for
  • Ensure that all expenditure is correctly attributed.
  • Comply with guidance issued by the Department of
    Health on classes of payments that you should authorise
    personally, such as termination payments to general and
    senior managers.

And critically it says that the AO must raise an objection in writing if the chair or executive committee is contemplating a course of action that the AO “considers would infringe the requirements of propriety and regularity”.

While the exact terms of appointment for GPCC will differ from primary care trusts, the principles will remain the same, which gives the AO considerable power in the system and personal accountability for a number of key issues.

In this sense, the AO can be dismissed by the NCB Chief Executive and a GPCC cannot continue to function without an AO.

If a GP did step up to take on this role I envisage it taking less than a day a week, unless the person concerned is already intimately involved in the business of the GPCC such as the Chief Executive or another lead role on the board.

There is an implication that the Accountable Officer should attend all Board meetings and be familiar with the
overall financial position of the organisation. There is no set remuneration as the Bill makes it clear that any remuneration is a matter for the GPCC.

In my own role as Health Authority Chief Executive, I was not paid any additional sum, for being an AO it was part and parcel of the job. Things are slightly different in GPCC, in the sense that the role is not attached to a particular position or even an employee of the GPCC, so some form of remuneration is appropriate in my view. It would have to be negotiated locally but a pro rata sum to a Board position would be realistic.

The role of AO will be mandatory in law. The post holder has considerable powers and responsibilities in relation to
financial matters. That is not to say that the AO is solely responsible for financial problems and is certainly not responsible for everything that happens, or doesn’t happen in a GPCC.

The responsibilities should not be taken lightly, but equally are not so onerous as make the role untenable. The key issue is understanding and awareness of the role.

This is not yet fully clear yet, given additional clauses in the Bill which could be interpreted as making the Accounting Officer responsible in some way for quality aspects and the clause that allows the NCB to specify “other obligations for these purposes” – watch this space. If you are considering being an AO – go in with your eyes open.

Mike Sobanja, chief executive, NHS Alliance

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