Performance management framework for Clinical Business Units
Introduction
This paper seeks to explain and clarify the performance management
arrangements for the clinical Business Units at Southend University NHS
Foundation Trust. It also aims to clarify how Executive holding the Business
Units to account escalates of concerns to the Trust Board.
Context
In 2009/10 the Trust designed a new clinical structure that aimed at reducing
the many Clinical Directorships into units that represented clinical pathways.
The main aim was to develop a system of earned autonomy so that the
Business Units would be responsible for what they did and spent and good
performance would be recognized both financially and by the ‘centre’ (i.e. the
Executive) allowing the Units to have limited decision making. The thrust of
the change was to support the concept of more clinical ownership with a
model that mirrored a commercial one of a large owner with subsidiary entities
with potential to keep some of their surpluses.
This was subject to consultation, that in the event took over a year, and had
complete Board oversight and agreement. All Business Unit Directors went
through a thorough recruitment process and the system went live in April
2011.
Management of the Business Units
Originally the Business units were responsible to the Chief Executive but this
was formerly changed to the Chief Operating Officer in December 2011.
There have always been two forums with the Executive and Business Units;
the Corporate Team, which is a joint decision making forum and the Executive
to Business Unit Board meeting.
Corporate Team (C.T.)
After a slow start, together the executive and Business units have molded and
changed C.T. into a two weekly meeting where all Executives, Business Unit
Directors (BUDs) and their Associate BUDs (ABUDs) have a full two hours
together. The agenda includes;
Overall Trust performance – financial and operational including a PMO
report.
Clinical issues of overall concern (e.g. never events).
Large project updates (i.e. implementation of the new Patient
Administration System).
1
Areas that the Executives and Business Units need to work on together
(i.e. 7 day hospital, consultant contract)
Decisions that affect all Business units (i.e. training of Healthcare
Assistants)
Strategic debates (i.e. developing the strategic objectives, clinical site
strategy development, Annual Plan)
C.T. and leadership development framework.
On alternate weeks the Chief Operating Officer meets with the BUDs and
ABUDs where some of the issues raised are discussed in more detail for
presentation back to the whole C.T.
Executive to Business Unit Board (BUB) meeting
Again after a haltering start and a change of format, the Executive to BUD
meetings happens every month currently for every clinical Business Unit. It
runs the first Monday of every month with each BUB having one hour each
with the whole executive team. The Business Unit Board consists of;
The Business Unit Director
The ABUD
Finance manager
HR manager
Head of Nursing / Midwifery and or Matron/s
General Managers for specialty areas
Clinical leads if required or wish to attend
Each business Unit produces a set of papers prior to the meeting answering
queries from the previous meeting, responding to actions and outlining
performance and further actions if required. These meetings can be tough
going, particularly when performance in one or more areas is not up to
standard. That said, most of the Boards enjoy the scrutiny and discussion at
this detailed level.
Performance Framework
Currently the performance framework has four elements;
Quality - including incidents, ward score card, complaints, outcomes,
patient experience.
Governance – mainly around the risk register for the Business Unit.
2
Performance & people– all standards that are pertinent to the Business
Unit from the balance score card including activity, targets and
standards, all HR metrics.
Finance and Cost Improvement.
All areas are discussed with quality being the area with greatest focus.
Financial reward for good performance is outlined in Appendix 1. Whilst in
order to earn back some of the surplus the individual Business Unit has to
have met all their financial targets, they cannot do this and perform poorly
against quality standards or fail overall performance.
This year financially Medicine, Diagnostics and Therapeutic (D&T) and
Ophthalmology have performed well financially. However, there have been
operational issues in Medicine (Emergency Care standard), D&T (Cancer 62
day issues) and Ophthalmology (patient experience). The Executive have yet
to decide if they meet the criteria and will only do so at the end of the financial
year.
Business Units will only go to quarterly meetings once they are sustaining
performance across all elements of the framework for three quarters or more.
The framework and responsibilities of both the Executive and the Business
Units are laid out in Appendix 2.
Intervention
Interventions will be formally made at monthly Executive to Business Unit
performance meetings but also put in place where needed by the Chief
Operating Officer.
Interventions will aim to be proportionate to the problem, and related to the
level of confidence in a Business Unit’s ability to solve issues as they arise.
Escalation to the Trust Board
Actions and concerns that emanate from the meetings are escalated to the
Trust Board in several ways.
Firstly they are picked up as part of the reporting framework at the Board,
particularly in regards to operational performance (cancer, 18 weeks.
Emergency care, cancelled operations, sickness absence etc.) on the balance
scorecard. Or financially, via the finance report or Finance and Investment
Committee. Clinical issues are identified and flagged either in Board reports
(complaints, Serious Incidents) or via the Quality Assurance Committee.
3
Secondly, issues that may be of a more systemic nature and require Board
agreement, assurance or input are fagged separately and are subject to a
separate report, rather than as part of routine reporting. For example;
Request for support of the National Intensive Support team for Cancer
and now Emergency Care.
Concerns around complaints and local media articles in regards to
maternity services where a ‘deep dive’ was conducted and full action
plan for improvement put in place.
Next Steps
1. To develop the ‘Quality & Performance Rules’ for the Business Units
during next year so that transparency exists in regards to what is
expected to gain a financial incentive.
2. To add into the monthly meeting a review of the BU’s strategic and
annual plan.
3. To develop a similar system for the non-clinical Business Units (i.e.
Finance, HR, Governance etc.) during this coming year.
Conclusion
Initially both the Corporate Team meeting and the Executive to BUB meeting
erred on the disorganized and unfocussed. However, over the last two years
both have matured into more corporate affairs with the Business Units taking
responsibility for performance across many areas. As expected, some
Business Units fair better than others but through the framework, being held
to account and being helped to achieve we are seeing ownership and
improvement.
Jacqueline Totterdell
Chief Executive
February 2013
4
APPENDIX 1
SOUTHEND UNIVERSITY HOSPITAL NHS FOUNDATION TRUST
Business Rules Budget Management
Introduction
The Trust’s financial rules are set out in its Standing Orders, Standing
Financial Instructions and Scheme of Delegation. These business rules help
to support these documents.
The Trust operates a system of devolved budget management, with budgets
delegated from the Chief Executive to Business Unit Directors. Whilst
ultimately accountable, Business Unit Directors may delegate budgetary
responsibility to Department Heads and Ward Managers etc.
Earned Financial Autonomy
Within this system of devolved budgetary control Business Units have the
opportunity to earn autonomy whereby those Units whose annual business
plan has been approved by the Executive Team will be allowed discretion in
spending levels and recruitment in line with the Trust’s Scheme of Delegation
and up to the agreed budget.
In order for earned financial autonomy to be retained, Business Units must:
be within their budgeted run rate (income and expenditure) for the year
to date (i.e. in a better than planned bottom-line position),
be forecasting a year end position at least in line with their annual
budget,
not have overspent their budget in more than one of the previous four
months.
Benefits of Earned Autonomy
Earned Autonomy gives the Business Unit the right to retain and use part of
its ‘excess’ surplus from the previous year as it sees fit (within SFIs etc.).
The rules and calculations of retained (excess) surpluses as follows:
If a Business Unit over achieves against its’ “bottom line” in year 1 half
of this “underspend” will be carried forward non recurrently and added
to the following years budget.
The Unit may invest this as it sees fit as long as there are no recurrent
implications. Staff appointments should only be made on a short term
basis and only for that year e.g. to facilitate development of a planned
project on a non-recurrent.
The full effect of the underspend in year 1 will also be carried forward
and count against the CIP plan in year 2 i.e. the new year budget
5
would only be reduced for CIPs and not be reduced to penalise good
performance in the preceding year.
The following example demonstrates how the benefit would be counted
CIP
Base budget
Outturn
Year 1
£100,000
£1,000,000
£800,000
Year 2
£100,000
£900,000
Year 2 non recurrent
Year 2 total
£100,000
£1,000,000
£800,000
Therefore the year 2 budget would be set £200k higher than the year 1
outturn although £100,000 of this would be non-recurrent, and it is
expected that the impact of the year one outturn would already have
delivered the year 2 and year 3 CIP and would feed through into year 3
as follows
Year 3
CIP
Base budget
£100,000
Year 3 non recurrent
£800,000
£50,000
Year 3 Total
£850,000
In addition the Business Unit would not need to participate in any central
vacancy or other similar controls, (subject to complying with Trust Standing
Orders)
The Business Unit will be subject to quarterly rather than monthly financial
performance review by the Trust Executive Team.
Earned autonomy does not mean that Trust rules eg Standing Orders, SFI’s
etc may be ignored.
If a Business Unit or Department has not earned financial autonomy the Trust
will apply a performance management process to ensure performance
improves. Also financial autonomy cannot be earned at the expense of other
performance measures including Quality, Operational Performance and HR
standards.
6
APPENDIX 2
Framework for performance managing business units
Responsibilities of the Executive Team
The Executive team need to ensure they are consistent and clear in directing
the performance of Business Units and need to create the right environment
for their success.
The responsibilities for the Executive team are:
to define success criteria for Business Units
set out Corporate objectives
engage Business Unit Directors in producing a long term plan
understand and agree Business Unit plans
monitor progress
support when escalated to (be a resource)
intervene when asked and when Business unit is failing
provide clear direction through Chief Operating Officer
don't be arbitrary
provide a reward structure for success and remain consistent
involve Business Units in development of new strategic plans
ensure Business Unit plans adapt to continue to meet corporate
objectives
Responsibilities of Business Units
Business Units have a greater expertise in their own areas than the executive
team and therefore are best placed to aid decision making and respond to
issues as they arise. Involvement in decision making needs to increase as
earned autonomy increases following success in meeting corporate objectives
and their own plans.
The responsibilities for Business Unit Directors are:
to create their own long term plans to meet corporate objectives with
clear measures of success, balancing all the interdependent priorities
meet or exceed those measures
respond to direction as corporate priorities change
escalate problems, and solution options if possible, to appropriate
executive team members to allow problems to be resolved in good time
with their support
cooperate with other Business Units for the good of patients and the
organisation
7
Planning
Corporate Objectives have been set, the annual plan is being finalised, the
new risk register and Board Assurance Framework is in place. The key is that
Business Unit plans sum together to deliver the corporate objectives for the
clinical areas, and this is overseen by the Corporate Team.
A sign-off on each plan will be done each year, and as necessary in between
annual sign-off at the relevant monthly Executive to Business Unit
performance meeting.
Performance management
Business Unit plans and their measures will be monitored against targets and
trajectories daily, weekly or monthly as appropriate by production and
dissemination to relevant executives of reports by email.
Reports to Business Units at the right frequency on their predicted level of
success, designed to be as simple and helpful as possible to support rapid
and correct actions to resolve emerging problems.
Expert corporate teams to monitor and support BU success, including
Nursing Quality teams, Performance and Information, PMO, Information
Governance, Workforce and Finance.
Monthly performance meetings chaired by Chief Executive with each
Business Unit based on their own integrated performance reports, plans and
measures. This will go into detail on successes, forecast failures, and provide
support and direction on mitigation or recovery plans.
8