This time three years ago it looked like it was going to be a pretty grim Christmas for the NHS. Ballooning deficits, with trusts in England initially facing a £250m shortfall, which rapidly rose to more than £1bn, led the government to turn in desperation to the Big Four to help dig the service out of its financial crisis.

This year, the general economic doom-and-gloom notwithstanding, things couldn’t be more different, with the NHS heading for a £1.75bn surplus for the 2008/09 financial year. So, job done?

Well, not exactly, as Michael Magee, partner in the restructuring practice at PricewaterhouseCoopers, point outs. ‘There is probably as much work now with the NHS as there was back at the height of turnaround,’ he says.

How come? And does this mean the big firms are simply riding a lucrative NHS gravy train? Certainly not, stress both Magee and Alan Downey, head of public sector and healthcare at KPMG.

‘Because trusts are no longer facing the same acute financial difficulties they were facing, they no longer need help that is badged as turnaround,’ says Downey.

‘But that does not mean to say they have stopped buying our services. In fact, we are doing even more business now than we were then, but it is now under a different heading, more of performance improvement and cost efficiency,’ he adds.

Chris Calkin, chairman of the Health Financial Management Association and director of finance and deputy chief executive of University Hospital North Staffordshire, puts it somewhat more dramatically. ‘A lot of organisations have looked over the precipice and do not want to go there again,’ he says.

What this has meant in practice, argues Downey, is continuing work on how resources are being spent, removing duplication and examining what is wasteful or inefficient.

‘It is now much more a question of joint teams and working with NHS clinicians at all levels. The focus is not so much on desperately making savings,’ he says.

The turnaround experience showed trusts the value of focusing very clearly on financial management and bringing control and rigorous oversight to the spending process, agrees Magee.

‘It was about ensuring that people did what was intended, that it had the impact that was intended and that the benefits of what they did were effectively tracked through,’ he says.

‘The organisations really enjoyed that approach to change and it gave them a confidence. So they, in effect, now have an engine for change within their organisation and are using that for other purposes, such as improving the patient experience and programme management,’ he continues.

‘What we want to achieve is not financial turnaround, because we have done that, but turnaround from the health perspective. So, for example, it might be on improving the health indicators for areas such as childhood obesity, cancer or smoking cessation,’ he adds.

There are also a number of NHS-wide projects that external consultants are continuing to work on, including helping trusts apply for foundation status and implementing the government’s World Class Commissioning initiative, which is reforming how the NHS buys healthcare.

‘All 152 PCTs in England are going through a Department of Health assessment process where they have to put together a strategic, financial and organisational development plan and self-assess themselves. Many have looked for external support and assistance in this exercise,’ explains Downey.

Then there is M&A support, with Imperial College, St Mary’s and Hammersmith hospitals last year forming a ‘super trust’, plus Frimley Park in Surrey and Middlesex’s Ashford & St Peter’s hospitals looking at the option but deciding against it.

Finally, the toughening economic climate makes it distinctly likely that we may not have seen the last of external turnaround consultants within the NHS. ‘Our understanding is that the Comprehensive Spending Review will be honoured until 2010 but my opinion is that once we are into the next CSR it will be much tighter for all public sector organisations,’ explains the HFMA’s Calkin.

‘Everyone is expecting, once we are past the next General Election and have got through the worst of the recession, that things are going to get very tight,’ agrees Downey.

If firms want to avoid‘gravy train’ headlines about themselves they will need to be ensuring, even more than they already do, that they are bringing measurable improvement or expertise to a particular area or goal, he argues.

‘Turnaround is a bit like a patient going into A&E. The priority is to stabilise them and give a platform for improvement, recovery and rehabilitation,’ adds Magee.

While many have done that, others have failed to develop a momentum of their own, he warns. In fact, just last month the Department of Health admitted that seven English trusts, even now, remained ‘financially challenged’.

‘Those that have not moved forward and made ongoing efficiencies will probably struggle,’ says Magee. ‘So we may see the return of turnaround specialists in a few years, although they may be called something else.’

The gentile touch

As FD of St George’s NHS Trust in Tooting, south west London, Colin Gentile was one of the first NHS FDs to make use of turnaround experts, bringing in PwC to plug a £30m deficit, in a programme that become a template for other trusts.

For him, the main legacy of their work was the culture shift they brought to the NHS and how they changed the way what had up until then been a bit of a dirty word – finance – was perceived.

‘They helped foment – and it was no stronger than that – the understanding that finance needs to be as much of a consideration as clinical and operational issues,’ explains Gentile, now executive director of finance at Brighton and Sussex University Hospitals NHS Trust.

Even back in 2005, turnaround was very much seen as a short-term fix, he stresses. ‘When we brought them into St George’s it was for three months and the intention was that they would be transferring their skills to us, to then be used within the in-house team,’ he says.

Now the emphasis has shifted towards financial improvement and sustainability rather than turnaround, he agrees.

‘It is about working very closely with the senior team to embed financial improvement into operational improvement,’ Gentile says. ‘The main lessons have been around integrating financial and non-financial performance management and developing a forensic attention to detail. It was not rocket science but it was something that, up to then, had not often been done in the NHS.

‘Now it is about ensuring that when we are making savings it is not impacting on the quantity and quality of patient care,’ he adds.