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
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
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
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
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