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ONE FOR ALL

The proposed structural reorganisation and the rising pressure to cut costs and improve spending value will increase interest in NHS Shared Business Services financial services, managing director John Neilson tells Steve Brown
YOU MIGHT THINK that the governments Liberating the NHS white paper would have induced panic at NHS Shared Business Services (SBS). The Department of Healths joint venture with business services specialist Steria has spent the past five years establishing a sizeable foothold in the NHS 125 customers and growing. And come 2013, thanks to the white paper, 60 of its customers will be liberated out of existence. But there is no doom and gloom at SBS. Far from it. Managing director John Neilson declares the company a glass half full organisation and the white paper presents an opportunity not a threat. He believes SBS will flourish in the transition and the reformed NHS. Indeed, its plan is to double its business in terms of revenue over the next three years.

Transition credentials
However, theres more at stake than simply growing SBS as a business. Mr Neilson believes the shared services provider can help with the challenging transition the service is now expected to make. I think we can be a facilitator of change and deliver savings in the intervening period. That is good for our business, he says. Yes, we are a deliverer of finance, payroll and other specific services. But actually what we are is a business transformation outsourcing organisation. The good thing is we have a lot of notice but we are moving from one way of working to another. Clearly, we will need to change the way we deliver services as we deliver them to the PCTs today. We need to shape them into a different form so we can also support GP consortia. Precisely what that will look like, we dont yet know. But we are engaged already with different GP consortia and we are talking to other people across the NHS. Our expertise is in being able to adapt and change so we can provide something that is relevant. Mr Neilson argues that there is no point reinventing the wheel several times over, especially given the urgent requirement to increase efficiency and avoid unnecessary expenditure. The idea of 500 or 600 GP consortia all going out to market, individually looking for new finance systems because they now have a

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bigger task to manage than they do in their current practices doesnt make sense. [It would be] much more effective if we could help with an offering that meets their needs. He acknowledges there is some protection for SBS within existing contracts the standard contract is for six years with a fouryear break point and some contracts will novate across to new organisations. In fact contract scope is likely to change in many cases earlier than April 2013 as community services move into new hosting arrangements, perhaps within acute or mental health trusts and foundation trusts.

Focus on the positives

But Mr Neilson says that the organisation is not focusing on any protection afforded to the business by existing contracts. He believes that would be the completely wrong attitude. Instead, he says, paraphrasing NHS chief executive David Nicholson at the NHS Confederation conference, people should not be sitting around thinking this will be difficult or worrying how different aspects will work or what the governance arrangements will be. The focus should be on how to make the vision come to reality because there are some strong, positive things in the vision. Mr Neilson sounds confident that GP consortia will see SBS as the obvious solution for their financial services. Nobody else can enter the market at this late stage and come up with another financial platform, he says, adding that having a single platform offers

Yes, we are a deliverer of finance, payroll and other specific services. But actually what we are is a business transformation outsourcing organisation
John Neilson, SBS

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service-wide benefits as well as direct benefits for individual customers. But he also insists that SBS has a role to play in the transition. He believes the organisation can help PCTs meet demanding management cost reductions during the transition period all finance costs count towards management cost definitions and make the hand-over to consortia easier. If PCTs come to us now for their finance, payroll and family health services, it is one less thing they have to worry about when they get to 2013 and they are deciding where all the different component parts of the PCT need to go. It will simplify their future change process, he says. But while creating a service offering for GP consortia is clearly important, it would be wrong to suggest that this is SBSs sole preoccupation at the moment. While PCTs make up around 45% of its customer base, they account for a smaller percentage of income (about 35%). service provider solutions. In the early days there was also some uncertainty about performance levels, but the overarching concern was probably a perceived lack of flexibility the ability to deliver a bespoke report to the finance director at short notice, for instance. Mr Neilson believes this is changing, as its signing up of Lancashire Teaching Hospitals NHS Foundation Trust earlier this summer demonstrates. SBS now has 17 FTs as customers, eight of which joined as FTs. He believes many had simply been too preoccupied with authorisation or getting established to consider a new approach to their finance and accounting or payroll. But among the established cohort of FTs, he says interest is on the increase. According to Mr Neilson, SBS is talking to a dozen FTs about the possibility of providing services. And he adds that this is serious interest, not just FTs going through the motions of proving the continued value of the in-house arrangements. He says that any earlier misgivings FTs may have also been addressed. First, he points to high levels of customer satisfaction. Recent surveys suggest that 90% of customers overall would recommend the service to other NHS bodies a significant improvement on the 39% in 2007. And the organisation has achieved a world class shared services rating in benchmarking run by the Hackett Group. He also insists that the savings on offer are significant a 20% saving against existing costs plus 2% a year (for the finance and payroll services). While trusts and FTs may not face the same explicit targets to cut management costs, few can ignore opportunities to cut costs given the major savings all organisations will have to make in the coming years. To underline the claimed financial benefits, SBS this year delivered its first dividend to the Department of Health with 1m being distributed among SBSs customers. Mr Neilson rejects criticisms of inflexibility. Yes, there are common aspects to the service delivery the customer dashboard, for instance, which looks at absolute and relative performance (across SBSs customer base and peer groups). But there are increasing amounts of userdefined operations. For instance, SBS is moving to Oracle release 12 and is upgrading its reporting services providing Oracle Business

Foundation focus
Over the five years SBS has been operating, foundation trusts have appeared the most reluctant to sign up. Some disputed the savings on offer compared with in-house or other

SBS IN INDIA: SHARED INSIGHT

In early April, Steve Clarke, director of finance at NHS East of England, and I were invited by NHS Shared Business Services (SBS) to visit their offshore operations in India. As a long-running shared services sceptic, I was surprised to receive this offer but intrigued, writes Bill Shields. I agreed to participate in order to see if things had really moved on from my past experiences, during which I oversaw the migration of 14 organisations in Hampshire to SBS and the creation of their payroll offering. That experience was extremely challenging and the teething problems were exacerbated by system migration, the organisation of the ledger and transfer of NHS payroll staff to a new entity. Since then, the business has grown and now has 125 customers, including 50 payroll and seven family health services (FHS) clients. But is bigger necessarily better? So, it was with some anticipation and apprehension that I visited the facility in the Delhi suburb of Noida, where Steria (the Department of Healths partner in SBS) provides services not only to the NHS, but also to private sector clients including Boots, Lloyds TSB and Barclaycard. I could not help but be very impressed with the knowledge and professionalism of the staff I met. Their willingness to address leading edge practice, eliminate waste and duplication through techniques such as Lean and Six Sigma, and their focus on individual productivity and greatly reduced error rates were salutary. Our visit to Pune, the major NHS SBS facility in India, provided insights not only into what has been achieved with existing NHS clients, but what can be delivered by optimising current management. This could mean the roll-out of FHS services for primary care trusts, adoption of shared human resources services, further roll-out of NHS payroll services and the investigation of shared procurement and estates services. I know that many directors of finance reading this article will be extremely sceptical. They will point to the fact that they already run shared services on behalf of other NHS clients. They will point to the savings they can make individually by adopting a pick and mix approach to shared services

provision. And they may just be concerned, as I have been, at a loss of control, coloured by a previous bad past experience. While I have some sympathy with this view, I believe in an NHS dominated by the need to reduce cost and increase productivity. We must ask ourselves

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Intelligence reporting at no extra cost to customers a development that will put SBS and its customers at the leading edge of the available technology, Mr Neilson claims In fact Mr Neilson believes this kind of upgrade is a key benefit of being on the shared services bus. Technology proofing the future of their IT systems [is something] that customers often understate in their view of the savings [on offer], he says. been on strategic sourcing, and getting contracts in place, the private sector has traditionally put more time into ensuring compliance with these contracts and ensuring that the levels of spend are delivered. These yet to be launched managed services would provide trusts with the opportunity to outsource their procurement activity. Our perception is that the savings will be substantial, says Mr Neilson. He believes NHS SBS is now firmly established as part of the NHS finance landscape. Again, he points to internal surveys that suggest that 87% of customer finance directors believe the service adds value, rather than just providing existing services at lower cost. He estimates that SBS currently has about a third of the finance and accounting market in the NHS and perhaps 25% of payroll. By broadening its offer and attracting new customers both from the new GP consortia and by winning round FTs he believes the SBS business plan of doubling revenue within three years is very much on target. I dont see why the white paper would hinder that, he concludes. In fact it might accelerate it.

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We process 30bn of payments every year we hold the largest database of NHS spend in the country
He says the data reveals substantial opportunities for consolidation of spending power and improvements in consistency. For instance, the most commonly purchased product across the whole SBS database a specific brand of computer was only purchased by 30 trusts. SBS is already sending spend analytics back to customers, showing how their spending levels compare with other customers but also highlighting opportunities to secure better prices for the same products. However, it has plans to build on this with a service that organisations could choose to take. Mr Neilson says this new offer would combine SBSs purchase-to-pay capability with its experience in business transition and a new strategic sourcing capability. He says that while the focus in the NHS has

Added benefits
Mr Neilson claims numerous other benefits to the SBS service. It has audit (SAS70) and information governance accreditation (IGAF2), offers a basic level of VAT consultancy and cash management and has helped with the move to the new government banking arrangements. But perhaps the biggest additional benefit the service can claim is the way SBS can use the data from across its whole customer base to identify savings opportunities for individual customers. We process 30bn of payments every year as a result we hold the largest database of NHS spend in the country, he says. According to Mr Neilson, this is where the real value in the service can be found.

Growth strategy: as part of NHS SBS and Sterias environmental programme in India, guests are invited to plant a tree in the grounds to mark their visit. Pictured from left to right, Kapil Gupta (head of NHS SBS Pune office), Bill Shields, Steve Clarke, John Neilson and David Edmonds (chair of NHS SBS)

why shared services still elicits a critical response when it is widely accepted in other businesses? Is it really because our individual accounting needs are so different that they require bespoke solutions? Or is it that, like the clinicians whom we are fond of criticising for only using the prostheses they were trained on, we really dont want to change or standardise our practice? Clearly with the inception of the electronic staff record and no more than three or four pay scales in the NHS, many of the arguments against shared human resources and payroll services are now redundant. So, given that I like to put my money where my mouth is, what am I going to do following this Damascene conversion? First, I have asked SBS to look at the likely cost savings arising from wholesale movement of every NHS organisation in the South West to a shared services solution for payroll, finance and accountancy and FHS. These would appear to be quite substantial. They may be only minimally more than can be achieved by each organisation acting alone, whether with SBS or another shared services provider. But if everyone goes it alone, the savings are unlikely to be replicated at scale within a short time. Second, a piece of work has been implemented to look at the optimisation of NHS Supply Chain in the South West with a particular focus on the ways in which improvement can be facilitated by developing a shared procurement approach. Third, work is under way to look at all services that lend themselves to a shared services approach. Here, we need to be guided by private sector experience, which points to estates and HR as very readily optimised through this approach. The end point in all of this is clearly a smaller central administrative function in each organisation, focusing only on what it needs to do itself and buying in services provided efficiently, at scale, by those who are expert because this is their core business. Clearly a change such as this will be extremely difficult for many of us, but, as is being said increasingly in this tough economic climate, is the alternative any better? Bill Shields is director of finance and performance at NHS South West and immediate past chairman of the HFMA

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