Claims threaten improved NHS

National Audit Office head Sir John Bourn has welcomed the improved financial performance of the National Health Service but warned it could be hit by clinical negligence claims of up to £2.8bn.

Reporting to parliament, Sir John said government measures to improve quality – such as the National Institute for Clinical Excellence – could also help reduce the number of future negligence claims. The recently issued Financial Reporting Standard on provisions will set a framework for further progress in this area.

NHS Executive insiders told Accountancy Age they were pleased with the findings of the report, particularly Sir John’s approval of the work the executive had done on combating clinical negligence claims.

Such claims are regarded as one of the biggest challenges facing the NHS, with potential liabilities totalling £1.8bn disclosed in the accounts.

Sir John estimated that the cost of clinical incidents which have occurred but have not been reported in the balance sheet could potentially amount to another £1bn.

The introduction of a counter-fraud services director was also welcomed in the report, along with the recent publication of the NHS anti-fraud strategy to combat the abuse of health services.

Overall, health authorities and trusts reported significant improvements in current financial performance in 1997/1998, news that is sure to please NHS head of finance Colin Reeves.

Only 48 health authorities reported a deficit for 1997/1998, compared with 72 in 1996/1997. The 100 authorities in aggregate reported a deficit of £8m for the year, compared with £238m in the previous year.

The summarised accounts, which cover an annual budget of £34bn, also remained unqualified for the fourth year running. But health authorities reported an accumulated deficit at the end of the year of £717m, the majority of which represents a future call on NHS cash resources.

More worryingly, 29 health authorities and 78 trusts were in serious financial difficulty. By the end of the third quarter of 1998/1999, the numbers had fallen to 19 authorities and 50 trusts.

MPs on the public accounts committee will grill Sir Alan Langlands, chief executive of the NHS Executive, next month over the state of health service finances and the rise in compensation claims.

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