A business plan is the best prescription

Watching the current crop of medical soap operas, it would be easy to run away with the idea that hospitals have always been subject to the discipline of the market and not places for tending the sick whatever the cost.

In fact, though, such an approach was anathema to the National Health Service until as recently as the mid-Eighties. As with the rest of the public sector, the NHS only became familiar with business planning once the privatisation of the likes of British Telecom and British Gas had paved the way for a shake-up that - among other things - has entailed the separation of the purchase of services from their provision.

One effect of that has been the sudden growth in business planning, identified by Tom Jones and Malcolm Prowle in the latest edition of the Association of Chartered Certified Accountants' guide to NHS finance.

Health authorities need to concentrate their strategic planning on identifying needs and deciding priorities, the authors write in "Health Service Finance - An Introduction", while NHS trusts need to prepare strategies on the basis that they are business units which must provide services that meet purchaser needs, attract income and be financially viable in order to survive.

As a result, they need to prepare business plans - which, the authors helpfully explain, are "longer and shorter-term plans which are business oriented".

Under current NHS rules, such an activity is a requirement. But as Mr Jones, a director of the healthcare companies MJM Healthcare Solutions and Mental Health Strategies, and Mr Prowle, a KPMG management consultant specialising in the sector, explain, if this was the only reason that trusts prepared plans it would be "unlikely that there would be much commitment to the process at local level and the quality of the business plans would suffer accordingly".

Raising finance has assumed special significance in the new world in which health service managers find themselves. The guide makes clear it that business plans must underpin the content of the case for undertaking particular capital projects.

"Just a clinical case is not enough," it says. "One impact of the NHS reforms has been the need for providers to consider whether, in financial terms, they can afford particular levels of capital investment and the extent it will add value"

Roger Trapp

`Health Service Finance - An Introduction' (fourth edition), by Tom Jones and Malcolm Prowle, is available from the Association of Chartered Certified Accountants (0171-396 5922) at pounds 19.50.