Operations cancelled as hospitals run out of money
Significant parts of the National Health Service have lost financial control, with operations being delayed and jobs shed in an attempt to balance the books. On current projections, the NHS is on course for a £623m net deficit this year: a figure the Department of Health hopes to reduce to £200m by the year-end.
But Treasury officials and the NHS Confederation, which represents health authorities and trusts, fear this year's overspend will turn out much worse than £200m. Treasury officials believe it could be "several hundred millions" higher.
The overspend appears to make a mockery of previous statements by Sir Nigel Crisp, the NHS chief executive, that health authorities and trusts needed to get into surplus over the next couple of years to provide an investment cushion beyond 2008, when the growth in health spending is expected to halve.
There is dramatic evidence of the severity of the problem in Suffolk and Surrey, where two primary care trusts have told staff and GPs that they might not be able to pay them for the last month of this year.
Some NHS hospitals, particularly but not exclusively in London and the south-east, are shedding staff and delaying admissions to reduce projected deficits.
Leaked letters from one Surrey PCT shows it is planning to admit no non-urgent patients for four months, until April 1, unless they already have a date booked for their operation. Harrow PCT has said the maximum six- month wait for non- emergency surgery will have to become the minimum. It and others are telling outpatients they will have to wait a minimum of 10 weeks for a non-urgent appointment.
The NHS Confederation said that although two-thirds of NHS organisations were in financial balance, they were all under pressure from three big pay awards: one for consultants, one for family doctors and another still being implemented for all other NHS staff.
Nigel Edwards, the NHS Confederation's policy officer, said awards had cost far more than budgeted. But the worst overspends were also concentrated in certain parts of the country "where there are unresolved strategic issues", he added.
These included Surrey and Sussex "where there are probably two to four too many hospitals but no one over the years has taken a decision to deal with that". Hertfordshire has five hospitals "when it probably needs three" and the same applies in Avon and Gloucestershire where overspends are high and there is probably at least one hospital too many, Mr Edwards said.
Chris Ham, professor of health services management at Birmingham University, said some targets the health department has set, and which the NHS is hitting, have probably not been costed properly.
He added: "But when there are a relatively small number of NHS organisations - 30 to 40 - so out of control that they are running massive deficits, it does suggest there is a lack of the necessary financial management skills, or that chief executives, or their boards, are not taking financial discipline seriously enough."
Andy McKeon, head of health at the Audit Commission, whose auditors since March have issued more than two dozen "public interest" reports warning of mounting financial difficulties at various NHS organisations, said the figures "do suggest that those people who have got into financial difficulties are finding it very difficult to get out and are getting into further difficulties. Some seem to be going further down rather than recovering."
The commission has repeatedly warned that NHS financial management needs to be improved as it faces "unprecedented challenges" from the new market.
HEALTH SERVICE'S PROJECTED OVERSPEND
Actual deficit 2004-05:
NHS organisations: £219m
Foundation trusts: £37m
Together, approximately 0.3 per cent of NHS funding
Current projected overspend 2005-06:
NHS organisations: £623m
Foundation trusts: £20m
Together approximately 0.8 per cent of NHS funding
The potential deficit is made up from those organisations projecting a £948m overspend, offset by those projecting a £325m surplus. About a quarter each of NHS trusts and primary care trusts are projecting overspends. But 37 organisations, about 7 per cent of the total, account for two-thirds of the gross deficit of £948m
NHS spending has doubled since 1997 to £76.4bn in England this year. It will have almost tripled by 2008
Sources: Department of Health and Monitor, the foundation trust regulator
http://news.ft.com/cms/s/1fdaba18-6533-11da-8cff-0000779e2340.html
But Treasury officials and the NHS Confederation, which represents health authorities and trusts, fear this year's overspend will turn out much worse than £200m. Treasury officials believe it could be "several hundred millions" higher.
The overspend appears to make a mockery of previous statements by Sir Nigel Crisp, the NHS chief executive, that health authorities and trusts needed to get into surplus over the next couple of years to provide an investment cushion beyond 2008, when the growth in health spending is expected to halve.
There is dramatic evidence of the severity of the problem in Suffolk and Surrey, where two primary care trusts have told staff and GPs that they might not be able to pay them for the last month of this year.
Some NHS hospitals, particularly but not exclusively in London and the south-east, are shedding staff and delaying admissions to reduce projected deficits.
Leaked letters from one Surrey PCT shows it is planning to admit no non-urgent patients for four months, until April 1, unless they already have a date booked for their operation. Harrow PCT has said the maximum six- month wait for non- emergency surgery will have to become the minimum. It and others are telling outpatients they will have to wait a minimum of 10 weeks for a non-urgent appointment.
The NHS Confederation said that although two-thirds of NHS organisations were in financial balance, they were all under pressure from three big pay awards: one for consultants, one for family doctors and another still being implemented for all other NHS staff.
Nigel Edwards, the NHS Confederation's policy officer, said awards had cost far more than budgeted. But the worst overspends were also concentrated in certain parts of the country "where there are unresolved strategic issues", he added.
These included Surrey and Sussex "where there are probably two to four too many hospitals but no one over the years has taken a decision to deal with that". Hertfordshire has five hospitals "when it probably needs three" and the same applies in Avon and Gloucestershire where overspends are high and there is probably at least one hospital too many, Mr Edwards said.
Chris Ham, professor of health services management at Birmingham University, said some targets the health department has set, and which the NHS is hitting, have probably not been costed properly.
He added: "But when there are a relatively small number of NHS organisations - 30 to 40 - so out of control that they are running massive deficits, it does suggest there is a lack of the necessary financial management skills, or that chief executives, or their boards, are not taking financial discipline seriously enough."
Andy McKeon, head of health at the Audit Commission, whose auditors since March have issued more than two dozen "public interest" reports warning of mounting financial difficulties at various NHS organisations, said the figures "do suggest that those people who have got into financial difficulties are finding it very difficult to get out and are getting into further difficulties. Some seem to be going further down rather than recovering."
The commission has repeatedly warned that NHS financial management needs to be improved as it faces "unprecedented challenges" from the new market.
HEALTH SERVICE'S PROJECTED OVERSPEND
Actual deficit 2004-05:
NHS organisations: £219m
Foundation trusts: £37m
Together, approximately 0.3 per cent of NHS funding
Current projected overspend 2005-06:
NHS organisations: £623m
Foundation trusts: £20m
Together approximately 0.8 per cent of NHS funding
The potential deficit is made up from those organisations projecting a £948m overspend, offset by those projecting a £325m surplus. About a quarter each of NHS trusts and primary care trusts are projecting overspends. But 37 organisations, about 7 per cent of the total, account for two-thirds of the gross deficit of £948m
NHS spending has doubled since 1997 to £76.4bn in England this year. It will have almost tripled by 2008
Sources: Department of Health and Monitor, the foundation trust regulator
http://news.ft.com/cms/s/1fdaba18-6533-11da-8cff-0000779e2340.html
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