The NHS has reached a ‘crunch point’, to coin a phrase used recently by prime
minister Tony Blair as he desperately defended the government from accusations
of financial mismanagement.
Yet health secretary Patricia Hewitt has tried to deflect attention away from
the government by blaming poor financial controls at health trust level for the
deficits and redundancies with which many trusts are now grappling. But were
accountants in the health service to blame? Could they have done more to prevent
Michael Sobanja, chief executive of primary care trusts body the NHS
Alliance, blames a ‘culture of spend’ – a group of health managers ‘brought up’
at a time of huge investment weren’t able to cope when the cash flow dried up.
The situation wasn’t helped, he says, by the Department of Health failing to
tackle overspends when they were first identified last year.
Professor John Appleby, chief economist of health think tank the King’s Fund,
feels FDs have been unfairly blamed for the current problems.
He can cite two financial directors of health trusts in London sacked
recently because of financial deficits.
Many trust FDs warned their chief executives and board masters that the
financial strategies they had chosen were risky, he says, but decisions were
taken based on the pressing need to meet targets.
The lack of financial skills among board members is where Nigel Edwards,
policy director for the NHS Confederation, believes some of the blame lies.
This was the problem identified by some of the turnaround teams sent in last
year to sort out the financial problems.
There were also systemic failures: ‘The financial control systems people
traditionally had have not been working as well now because of the sheer scale
of new initiatives thrown at organisations that hadn’t been well costed,’
Nor did some board members appreciate the effect of the new payment by
results system being introduced in the NHS, where a hospital’s finance
settlement is based on the number of patients it treats. Generous pay awards for
consultants and GPs added to the problem.
Many observers predict that the outgoing NHS chief executive Nigel Crisp will
be made a scapegoat for the current crisis, as he takes early retirement, and
speculate the prime minister will grasp at the opportunity to be seen as the man
who saved the health service.
Either way, FDs remain at the forefront of trying to untangle problems
created by political pressure, and a lack of financial expertise among health
trust board members.
It could be time for FDs to magic a financial rabbit out of the hat.
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Head of editorial Kevin Reed discusses this week's important accountancy news, including Brexit and audit market evolution