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MPs warn of ‘hidden’ crisis in hospital funding

One in five hospital trusts are in financial trouble and their situation is expected to get much worse when CCGs take over, concludes a report by MPs published today.

The doom laden report from the House of Commons Public Accounts Committee, warns that despite the NHS being in surplus in 2011/12 it conceals the ‘significant minority’ which are in financial difficulty.

The influential group of MPs said this situation was likely to get worse as historically badly performing trusts were secretly bailed out by PCT or SHA managers and CCG leaders were going to expect them to radically change the way they provide services to save cash.

The report also criticised the Department of Health for not being able to explain how it would deal with a trust that is allowed to go bankrupt, claiming the DH looked as if it was ‘inventing rules and processes on the hoof rather than anticipating problems and establishing risk protocols.’

Reviewing financial data from 2011/12, the committee found three PCTs, ten NHS trusts and 21 NHS foundation trusts reported a combined deficit of £356 million. But the situation for a further 69 trusts was also uncertain.

The report said the National Audit Office estimated that bailouts worth £161m were given to hospital trusts by SHAs and PCTS in 2011/12. Without this direct financial help a further 15 NHS trusts may have been in deficit.

SHAs and PCTs also gave trusts other non-recurrent funding totalling at least £274 million, without which another 16 NHS trusts and 11 foundation trusts may not have broken even, meaning 41 NHS trusts and 32 foundation trusts might have been in deficit at the end of March 2012 without help.

The report also said a further 29 or 30 trusts were unviable in their current form.

Committee chair Margaret Hodge said: ‘The overall surplus of £2.1 billion across all NHS bodies in 2011/12 masks the fact that a significant minority are in financial difficulty.

‘On top of that, the NHS is striving to make efficiency savings worth £20 billion while undergoing a major reform of the system.’

‘Up to now financial problems have often been hidden, with struggling trusts being bailed out through additional financial support from the NHS and the Department.’

Her comments come in the wake of a report recommending that hospitals in the debt-ridden South London NHS Trust should be written off and an A&E department closed as the trust struggles with a £150 million debt burden.

The report also expresses concern that the financial viability of trusts will be badly affected by CCG plans to reconfigure services.

The report said: ‘The incentives for CCGs to work collaboratively within regional health economies remain unclear.

‘Given the scale of the challenge, it is alarming that there is a lack of comparative data that could inform a debate on reconfiguration of services, particularly because the Department expects that every trust will need to reconfigure services.’

Dr Johnny Marshall, the interim partnership development director for NHS Clinical Commissioners said it was crucial CCGs worked together to prevent other failures and to learn the lessons from the failing trusts.

He said: ‘We want to work together with providers to get the very best services for our patients. The concern is about determining what that mechanism is.’

Dr Amit Bhargava, the clinical accountable officer for Crawley CCG said: ‘The whole NHS is in unchartered waters with change, particularly with the economic downturn.

He said it was essential there was a ‘meaningful and open dialogue’ and more collaboration between CCGs and hospitals to help plan

Readers' comments (3)

  • Vinci Ho

    Here is the game of the government:
    (1) 20 billions saving in 5 years , non negotiable.
    (2) It is your 'fault' that the hospital runs into debts. You will be 'sacrificed ' and cease to exist if you do not sort it out
    (3) Bail out will be like lottery
    (4) The Bailiff is called CCG
    (5) A private company may take over the management

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  • I've seen hundreds of new school buildings over the last five years when the education system changed from 3 tiers into 1. I don't think that any of those schools went bankrupt....so why do we talk of hospitals failing if its down to PFI cost?

    Is a GP Practice lumbered with the costs of their new big shiny Practice building? NO no no it isn't.

    It all smacks of a trumped up attempt to tarnish the idea that secondary healthcare in Hospitals is good whilst promoting out of hospital care (which is apparently free or cheap).

    Annoyed PCT Finance manager

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  • How many more stories like this before Johnny-boy and his mates at the NAPC realise just why professional body except them opposed these car crash reforms???

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