Hewitt U turn as hospital trusts to be free of RBA rule
An accounting rule that has plunged more than two dozen hospital trusts into an irrecoverable financial position is to be ditched, Patricia Hewitt, the health secretary, announced yesterday. Now "absolutely confident" that the National Health Service would record a small surplus at the end of this financial year, Ms Hewitt said it could now use part of the £450m contingency reserve that strategic health authorities had built up to find the £179m needed to end a rule that the health department had long accepted was "unsustainable".
Under resource accounting, a trust that overspends not only has to pay that money back the next year, but has to do so after the same amount is knocked off its budget.
The "double whammy" rule had affected 28 NHS trusts, "making it impossible for them, in some cases, to get out of debt", Ms Hewitt said.
The accounting rule will still apply to primary care trusts as they are chiefly purchasers, not trading bodies like hospitals.
Some of the 28 trusts will now record a small surplus. Others, however, including Hinchingbrooke, the Queen Elizabeth in Woolwich, Whipps Cross and Mid-Yorkshire, will still be left with deficits not caused by the accounting rule that range from £12m to £21m. These will still have to be paid off over time.
Ms Hewitt told the Financial Times there remained "a small number" of hospitals - thought to be between 15 and 20 - with financial positions so serious that they were unlikely on their own to recover.
With the first takeover of an NHS hospital by a foundation trust expected to be formally approved this week, further foundation trust takeovers "may well be the solution in some cases", she said, "but it won't be the solution in every case."
One surprise is that detailed work has shown the "double whammy" effect on hospitals - which has been inconsistently applied across the NHS - is smaller than original estimates that it would cost £500m to £600m to remove.
Ms Hewitt said the ending of the rule was the final part of a big set of financial reforms that would make the NHS finances "much more transparent" and "much fairer" in future.
They would end a trend that had seen healthier but overspending parts of the country being subsidised by other parts, chiefly in the north and Midlands, that had bigger health problems but which had, nonetheless, tended to break even or make surpluses, she said.
From:
http://www.ft.com/cms/s/26d60290-dcca-11db-a21d-000b5df10621.html
The inequity of Resource Accounting and Budgeting (RAB) was highlighted by Health Direct on Dec 14, 2006 in Unsustainable NHS resource account and budgeting (RAB) rules to stay- Hewitt insists when the health department postponed a decision to scrap a set of accounting rules- that have plunged some NHS trusts into potentially irrecoverable financial deficit.
The NHS Confederation, which represents health authorities and trusts, said yesterday that it was disappointed at the decision which came despite the health department accepting that the application of the rules to individual NHS trusts "will become increasingly unsustainable".
Under resource accounting and budgeting, not only does an overspend have to be paid back but the same amount is knocked off the budget for the succeeding year. As a result a £10m overspend on a £100m budget has to be paid back from a budget that has been reduced to £90m.
The refusal of Hewitt to halt the Resource Account and Budgetting farce nails once and for all the lie that the NHS cutbacks are part of a process by Labour ministers to improve the NHS's services.
These accounting cutbacks are the purely the result of Brown and Milburn's incompetent stitch up in 2002 when they tried to agree a new funding process for the NHS.
Under resource accounting, a trust that overspends not only has to pay that money back the next year, but has to do so after the same amount is knocked off its budget.
The "double whammy" rule had affected 28 NHS trusts, "making it impossible for them, in some cases, to get out of debt", Ms Hewitt said.
The accounting rule will still apply to primary care trusts as they are chiefly purchasers, not trading bodies like hospitals.
Some of the 28 trusts will now record a small surplus. Others, however, including Hinchingbrooke, the Queen Elizabeth in Woolwich, Whipps Cross and Mid-Yorkshire, will still be left with deficits not caused by the accounting rule that range from £12m to £21m. These will still have to be paid off over time.
Ms Hewitt told the Financial Times there remained "a small number" of hospitals - thought to be between 15 and 20 - with financial positions so serious that they were unlikely on their own to recover.
With the first takeover of an NHS hospital by a foundation trust expected to be formally approved this week, further foundation trust takeovers "may well be the solution in some cases", she said, "but it won't be the solution in every case."
One surprise is that detailed work has shown the "double whammy" effect on hospitals - which has been inconsistently applied across the NHS - is smaller than original estimates that it would cost £500m to £600m to remove.
Ms Hewitt said the ending of the rule was the final part of a big set of financial reforms that would make the NHS finances "much more transparent" and "much fairer" in future.
They would end a trend that had seen healthier but overspending parts of the country being subsidised by other parts, chiefly in the north and Midlands, that had bigger health problems but which had, nonetheless, tended to break even or make surpluses, she said.
From:
http://www.ft.com/cms/s/26d60290-dcca-11db-a21d-000b5df10621.html
The inequity of Resource Accounting and Budgeting (RAB) was highlighted by Health Direct on Dec 14, 2006 in Unsustainable NHS resource account and budgeting (RAB) rules to stay- Hewitt insists when the health department postponed a decision to scrap a set of accounting rules- that have plunged some NHS trusts into potentially irrecoverable financial deficit.
The NHS Confederation, which represents health authorities and trusts, said yesterday that it was disappointed at the decision which came despite the health department accepting that the application of the rules to individual NHS trusts "will become increasingly unsustainable".
Under resource accounting and budgeting, not only does an overspend have to be paid back but the same amount is knocked off the budget for the succeeding year. As a result a £10m overspend on a £100m budget has to be paid back from a budget that has been reduced to £90m.
The refusal of Hewitt to halt the Resource Account and Budgetting farce nails once and for all the lie that the NHS cutbacks are part of a process by Labour ministers to improve the NHS's services.
These accounting cutbacks are the purely the result of Brown and Milburn's incompetent stitch up in 2002 when they tried to agree a new funding process for the NHS.
Labels: Labour U turn, NHS deficits, Patricia Hewitt, RAB
posted by Dr Search- Principal Consultant at the Search Clinic at
6:09 PM
0 Comments:
Post a Comment
<< Home