By Vivienne Russell | 30 October 2012
MPs have slammed the Department of Health for its ‘on the hoof’ response to NHS trusts facing bankruptcy.
In a strongly worded critique, the Public Accounts Committee said Whitehall should instead anticipate problems and establish protocols to deal with financial failure.The PAC report comes the day after the special administrator at South London Healthcare NHS Trust issued his draft report to Parliament. The health secretary sent Matthew Kershaw to the struggling trust in July following mounting concern over its debt levels. It was the first time such powers had been invoked.
The PAC’s review of financial sustainability in the NHS, published today, noted that ten NHS trusts, 21 foundation trusts and three primary care trusts reported a combined deficit of £356m last year, while 11 foundation trusts would not have made foundation status given their current finances. There was real concern that more trusts could go bankrupt, the committee said.
It concluded that underlying financial problems were being masked by cash injections from Whitehall and support from soon-to-be-abolished strategic health authorities. Assurance was needed on how the new NHS structures would respond to a failing trust and under what circumstances the DoH would intervene.
PAC chair Margaret Hodge said: ‘The department could not explain to us what would trigger a trust being placed into the failure regime or exactly how the process would work. We do not know whether a bankrupt trust would be allowed to fail or how and when ministers would intervene. And it is not clear how the department would ensure that essential services are protected if a trust fails.
‘It very much looks like the department is inventing rules and processes on the hoof rather than anticipating problems and establishing risk protocols.’
The committee also raised concerns that Private Finance Initiative repayments made it impossible for some trusts to break even. While the DoH, as guarantor, was helping trusts to meet their PFI liabilities, the PAC said it was ‘unclear’ how payments would be made in the future.
Mike Farrar, NHS Confederation chief executive, called the report ‘hugely important’ and urged the government to consider it carefully.
‘We need the government to accept that financial pressures are the biggest facing the NHS at the moment. We cannot deal with these issues on a piecemeal basis,’ he said.
‘Solving these problems requires a fundamental overhaul of where and how NHS services are provided. Propping up struggling trusts with short-term solutions is not the answer. We need to take action before we reach crisis point.’
But health minister Lord Howe said the NHS was in ‘robust financial health’ and had reported a £1.6bn surplus.
‘We have already stated that we are not going to endlessly support trusts with historic financial problems but we know that some hospitals face difficulties and need to radically change to make sure they are providing the highest quality of care to patients,’ he said.
‘But to be clear – we are not “making these rules” up. In fact, we are working closely with Monitor, the NHS Trust Development Authority and health professionals to set out proposals on how foundation trusts and other health care providers can remain financially stable – and will report back on this later in the year.’
