True scale of NHS deficits ‘masked’ says think tank
pharmafile | June 9, 2006 | News story | |Â Â Â
Figures showing the NHS with debts of 512 million pounds are masking the true extent of the crisis, according to an independent think tank.
The King's Fund claims the true figure is 1.27 billion pounds and has only been reduced to 512 million pounds by incorporating increased surplus money from other parts of the NHS.
The government has admitted the NHS has fallen far short of its deficit target of about 200 million pounds, but says it has done slightly better than the predicted mid-year net deficit of 623 million pounds.
King's Fund chief executive Niall Dickson said: "These figures mask the true scale of financial problems in the NHS. In fact, more NHS organisations are in deficit than predicted, while the net deficits for primary care trusts and hospitals are worse than last year."
He added: "It is especially worrying that trusts have known for months that they have been running an overspend, yet even though they have been under enormous pressure, they have not managed to tackle this. Some will certainly need more time, but the requirement to manage a budget that already assumes efficiency savings, as well as rising cost pressures such as pay deals, new drugs and other technological costs, will also add to the challenge."
Although the majority of NHS institutions are either in surplus or have balanced their books, the King's Fund says slightly more organisations have slipped into deficit in the last financial year (174) compared with the previous year (159). It represents a worsening situation compared with the forecasts made in December 2005, when 133 organisations predicted a deficit for 2005/2006.
There are now 15 organisations with deficits amounting to more than 10% of their turnover; last year (2004/05), there were only three reporting deficits on that scale whereas, in the year before that, there were none.
The gross deficits, in the 102 organisations subject to the 'turnaround' programmes initiated in December 2005 by the Department of Health to restore the financial health of the worst performers, have doubled slipping from a combined gross deficit of 476 million pounds in 2004/05 to 915 million pounds in 2005/06.
Sir Ian Carruthers, acting chief executive of the NHS, has announced that the government is to publish quarterly NHS finance figures in future in a drive to balance the books.
In his first six-monthly report, he maintains NHS finances are beginning to stabilise, with NHS figures showing that overspend has fallen over the past six months by around 100 million pounds.
He stated that the NHS deficit represents less than one per cent (0.8%) of the annual NHS budget, with more than two thirds of this sum accounted for by about one-tenth of all NHS organisations.
Sir Ian said: "Financial problems are being addressed. Reform is not the reason for the overspend or the reported job losses – it is the solution. The reforms are uncovering problems hidden for years and provide incentives to ensure the NHS can return to financial balance."
Experienced turnaround directors have now been appointed in each of the new Strategic Health Authorities (SHAs) and all bar one of the NHS organisations requiring urgent intervention have already received support.
Some turnaround organisations are identifying savings of up to 8% of turnover and 23 out of the 65 organisations needing action are already saying they expect to achieve a balance of payment by the end of the financial year.
Health Secretary Patricia Hewitt added: "I know there are financial challenges in a minority of organisations, but it is encouraging that the provisional end-of-year figures show that the minority of trusts that are overspending are now focusing on their problems and putting plans in place to tackle the issue."
She stressed: "The end of year position is the equivalent of a person on an annual wage of 20,000 pounds overspending by around 160 pounds. Publishing the quarterly figures will further increase the departments commitment to financial transparency."
