Emergency services

Last week it was announced that of the 61 Trusts that KPMG inspected, 18 are in such serious deficit that they required urgent intervention, and a further 23 need additional expertise or resources.

It is a disgrace that things have got to this stage, because it was avoidable. The secretary of state has seen the deficits coming, yet it took months for her even to acknowledge the existence, let alone the scale, of the problem. With KPMG going into 18 trusts, the taxpayer is paying over the odds for work that should already have been done.

How can they cut this deficit? There are only two ways the government will clear this debt, either through cuts to frontline services, or by easing it themselves, from central taxation.

We are already seeing cuts come thick and fast: specialist nurses sacked or not replaced; respite care services cut down; the elderly crippled by cuts in podiatry services; minor injuries units keeping shop hours and hospital beds lost. Most worryingly over 80 community hospitals are threatened with cuts and closure.

Where ineptitude in NHS finance managers has allowed this state of affairs to arise they must be held accountable, just as those managers who have kept their trusts on an even keel must be congratulated.

But NHS managers should not have to take responsibility for systemic mismanagement by government. Much of the deficit is due to central policy decisions: the new GP contract the relocation of out-of-hours services to PCTs; the new consultants’ contract; and central targets.

Instead of attacking the soft underbelly of the NHS, the government should step up to its responsibilities. Patricia Hewitt should acknowledge the fiasco and offer sensible repayment options to trusts in difficulty. The chancellor should access the contingent fund, the government’s self-insurance policy (albeit funded with taxpayers’ money) against its own ineptitude. Only then can the NHS managers turn around the deficit without penalising patients, doctors, nurses and NHS support staff.

Stephen O’Brien is the MP for Eddisbury and shadow minister for health

Re-diagnosing the problem

First let’s be clear – the forecast gross deficit for 2005/06 at the half year point was £948m. Taking account of organisations in surplus, the projected net deficit was nearer £600m. Even at this level it will be less than 1% of the NHS budget, worth £76bn this year.

But turning around NHS finances should not be the sole responsibility of finance managers. The Audit Commission has stated thatrecovering – or retaining – financial health is an operational not a finance issue.

Therefore, regaining financial stability requires finance managers, their non-financial colleagues, the clinical workforce and politicians to work together.

If we boil down the basic diagnosis for turning around business to increasing income or cutting expenditure, we see that it is difficult for healthcare finance managers to increase revenue given that parliament votes the NHS an exact sum each year. But cutting expenditure in the NHS is far from easy.

The NHS spends most of its money on staff, and far from cutting costs, the new centrally negotiated employment contracts have increased the pay bill.

The private sector might restructure its way out of a recurrent overspend. But even talk of hospital closures or the downgrading of wards provokes local MPs and protest groups to start criticising managers.

Finance managers need to enhance skills to deal with the challenges of payment by results and patient choice, but the majority of the NHS finance function are hard working professionals dedicated to the NHS.

So yes, the NHS’s finance managers can turn around the financial position, as long as the government recognises the cost pressures they face.

In addition we need good financial training for the people who actually spend the money. We need to look at hospital facilities that are essentially uneconomic and take sensible decisions about our cost base.

Then, instead of paying out additional resources on expensive consultants to re-diagnose the problem, we can call upon our own professionals to fix it.

Mark Knight is chief executive ofthe Healthcare Financial Management Association