Wednesday, 27 February 2008

Money-go-round

As an example of the sense of tumbling through the looking glass that one often encounters when discussing the financial arrangements in the NHS I thought I would recount the key points of a conversation I had a couple of days ago with a peer from a near by acute Trust (or hospital as most normal people call them) to my own.


They are currently suffering a particularly difficult financial situation and have been for several years. According to my colleague all staff are being exhorted by the Chief Executive to reduce or eliminate ‘unnecessary’ expenditure. It has even been rumoured that failure to resolve the problem this year may result in the Chief Executive and the Finance Director being taken out and summarily allowed to continue to ply their trade at a different authority.

The problem has been so severe over there that her hospital is currently in something called ‘turnaround’. For the uninitiated in technobabble this is basically where measures are imposed in an attempt to restore financial stability.

A management consultant has even been contracted to provide services on a full time basis as a ‘Turnaround’ Director to oversee the process and introduce efficiency schemes. At a meeting that my colleague attended a few weeks ago the ‘Turnaround’ director asked whether it would be possible to suspend the purchasing of absolutely everything up until the end of the financial year. Thus showing an admirable understanding of the needs of a functioning hospital and fully earning their £800.00 day rate.

Apparently after some further discussions it was decided not to implement the scheme in full but bans were imposed on buying many items deemed to be non-essential. Stationary, furniture and the like.

However for the last couple of weeks her Purchasing Department have been involved in a frenzy of activity attempting to spend about £750k on equipment to be funded from Capital accounts. It was explained to me that about a month a go it was announced that this money was available and a free for all ensued with everyone submitting wish lists. The other factor is that the money has to be spent (goods not only to be delivered but invoiced and paid for) by the end of the financial year. Although not breaching any procurement legislation it seems that the orders are being banged out left, right and centre with the minimum of competitive quotations being sought.

If one were to do this properly you should be taking a generic specification to the market and see what results, not necessarily jumping on the first quote that comes your way. But in all fairness there is not much else that one can do as the prospect of an authority just losing the money is considerably worse.

It’s not exactly the best way to buy things though.

And often with equipment there are of course revenue budget implications. If you buy a bit of kit you have to have it serviced and maintained and in some cases consumable products need to be bought to be used in conjunction with it.

So next year when their ‘turnaround’ director suggests that an easy way to save money would be to cut back on equipment maintenance programmes….. well you get the general idea.

I’m not an expert in financial allocations, I just get to spend the stuff but it still seems a little strange that in one authority a budget holder is on one hand refused when requesting to buy a couple of reams of paper and a box of staples but can have pallets of ‘machines that go ping’ delivered so long as they are delivered on time and not in excess of the particular budget set.

Never mind, where’s my requisition pad?

4 comments:

jmb said...

So when the CEO and FD get "fired" or transferred to another facility do they get a golden handshake to the tune of $500,000 as they do here? Now there's a great waste of money. We had three in our province "fired" in the space of six months to the tune of a payout of $1.5 million. Not a cent of which was spent on patient care nor even on paper or machines that go ping, or whatever. Each got a new job immediately elsewhere. Yes we have a nationalized health scheme too. All government funds here but private industry contracts for the upper management boys and girls.

Ah, the "here's $25,000, spend it by next Wednesday else we'll give it to someone else" story. Quick, what do we need? OK, let's buy X. Two weeks later Y breaks down and there is absolutely no money to fix Y or buy a new Y until next year's budget.

Bretwalda Edwin-Higham said...

Turnaround manager - my goodness!

Fitaloon said...

Please tell me where you get the £800 pound a day consultant. This must surely be the junior, just out of uni variety. No wonder they didn't know how to cover up that they knew nothing about what they were consulting on.

Liz said...

The same thing happens on a very small scale in our church trust. We have budgets for this and that. So we're struggling to find money to pay people but we can afford to have the walls painted or the floor tiled. 'Ah well that's a different budget.' Makes no sense to me.