A report published by the National Audit Office (NAO) has found that, although there was a surplus of £2.1 billion across the NHS, as a whole, in 2011-12, Trusts are also experiencing financial distress.
The audit showed that there was a large gap between the strongest and weakest NHS organisations in 2011-12 – with the difference being particularly marked in London. According to the report, 10 NHS Trusts, 21 NHS Foundation Trusts, and three Primary Care Trusts (PCTs) reported a combined deficit of £356 million. Based on a census of PCTs the NAO estimated that without direct financial support, a further 15 NHS Trusts and seven PCTs may have reported deficits. There are four Foundation Trusts and 17 NHS Trusts which between 2006-07 and 2011-12 needed injections of working capital from the Department of Health (DH) totaling £1 bn. Among these, between 2006-07 and 2011-12, the DH issued a total of £356 m to South London Healthcare NHS Trust and its predecessor bodies, and £195 m to Barking, Havering and Redbridge University Hospitals NHS Trust. The DH anticipates that NHS Trusts and NHS Foundation Trusts are likely to need around £300 m more public dividend capital in 2012-13. Of the PCTs responding to a NAO census, 51% said they were concerned about the financial sustainability of their healthcare providers. Previously, PCTs and Strategic Health Authorities (SHAs) have been able to support otherwise weak providers. It is not yet clear whether clinical commissioning groups and the NHS Commissioning Board will agree to provide financial support to providers, in the way that SHAs and PCTs have done. The NAO concluded that it is hard to see how continuing to give financial support to organisations in difficulty will be a sustainable way of reconciling growing demand for healthcare with the size of efficiency gains required within the NHS. Without major change for some providers, the financial pressure on them will only get more severe. Amyas Morse, head of the National Audit Office, said:“So far the NHS is meeting the challenge of maintaining strong finances in a period of austerity. It is clear, however, that parts of the service are under strain. For value for money to be delivered in future, two things are required: firstly, careful management of the risks created by transition to a new commissioning model; and, secondly, a coherent and transparent financial support mechanism which outlines when Trusts should be supported, or allowed to fail.” Commenting on the report, the Rt Hon Margaret Hodge MP, chair of the Committee of Public Accounts, said: “It is shocking that over the past year alone the amount the DH has had to spend on bailing out Trusts in financial difficulty rose by 333%.” She pointed out that although there was a surplus of £2.1 bn last year, once a Trust becomes a Foundation Trust the DH is unable to ‘claw back’ any surplus money that it could otherwise use to ensure the delivery of health services. “This report says that there are 31 Trusts in deficit but it remains unclear what will happen if a Trust goes into administration,” she added. “If Trusts are allowed to go bust, it would be unacceptable for people in poorer communities to suffer from poorer health services as a result, exacerbating the postcode lottery that already exists. My Committee will want officials to tell us what systems are in place to prevent this. “The DH must do more to help struggling organisations make the efficiencies essential to the financial sustainability of the NHS. Half of PCTs are concerned about the long-term financial prospects of their healthcare providers. Action is urgently needed to ensure a viable financial future for a large number of healthcare providers and to maintain public confidence in the ongoing delivery of their local services.”
