15 September 2006
The Department of Health has indicated that it wishes all NHS trusts to move towards the more market-orientated financial system currently experienced only by foundation trusts.
The move follows an Audit Commission review of the NHS financial management and accounting regime in July, which found it was no longer suitable for the new, reforming NHS.
The DoH is preparing to give its full response to the commission's report in the autumn.
But a spokesman said: 'During the course of 2006/07 we are introducing a new transparent financial regime for capital investment to ensure that NHS trusts generate sufficient cashflow to finance the running costs of new buildings and equipment.'
He said draft guidance on capital investment would be issued to strategic health authorities this month and a new system would be fully implemented in the next financial year. He added: 'The changes will give all NHS trusts an incentive to improve their financial performance.'
A spokeswoman further commented that recent media speculation that the new approach would mean less capital investment was not necessarily correct.
Instead, new investment projects would need to construct business cases demonstrating they were sustainable in the light of the move to the new payment-by-results funding mechanism.
However, in his first public comments since taking up his role as chief executive of the NHS earlier this month, David Nicholson said every strategic health authority in England was likely to be affected by a reconfiguration of their local services. This would include ward closures, as the DoH implemented key reforms such as the white paper's aspiration to move great swathes of treatments out of the acute sector and into primary and community care.
Nigel Edwards, director of policy at the NHS Confederation, said that in many cases such closures were needed to deal with long-standing issues of over-capacity that had helped fuel NHS deficits.
'We need to get away from the fixation with buildings,' he said. 'We should recognise that services can be delivered in many settings and that proximity to a hospital may be less important than the ability to access the right services for a patient's needs.'
PFsep2006
