National Audit Office report shows NHS bailout culture must end

July 05, 2012 5:38 PM

The National Audit Office has today published a report ‘Securing the future financial sustainability of the NHS’. The report found that although there was a surplus last year of £2.1bn across the NHS as a whole, 10 NHS trusts, 21 NHS foundation trusts and 3 Primary Care Trusts reported a combined deficit of £356m.

National Audit Office head Amyas Morse said:
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.

Over the last five years, the Department of Health spent more than £1 billion bailing out financially unstable NHS Trusts so they could pay staff and creditors. South London Healthcare and its predecessors received over £350 million in bailouts over the past six years while the Barking, Havering and Redbridge University Hospitals Trust has been given £195 million by the Department of Health. If failing hospital trusts are constantly rescued through bailouts, lessons will not be learned and the same mistakes which led to their failings will be repeated again and again.

Letting underperforming NHS trusts fail doesn’t mean that the actual hospitals they manage would close. The hospitals concerned would still remain open and the service provided to patients would not be affected, just like when an electricity company goes into administration, the power stations remain running and homes and businesses still get electricity. Management boards, however, would be closed and bosses would be fired. Without some form of market discipline in the NHS, taxpayers will not get the value for money they deserve.

The NHS budget in England is set to rise in real terms over this Parliament. However, as the NHS attempts to save £20 billion over the next three years, continually bailing out failing hospital trusts will prove increasingly difficult. It is deeply unfair to expect taxpayers to foot the bill for these failing trusts while the upper tiers of management remain in their well-paid senior roles without facing the consequences for their incompetency.The National Audit Office has today published a report ‘Securing the future financial sustainability of the NHS’. The report found that although there was a surplus last year of £2.1bn across the NHS as a whole, 10 NHS trusts, 21 NHS foundation trusts and 3 Primary Care Trusts reported a combined deficit of £356m.

National Audit Office head Amyas Morse said:
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.

Over the last five years, the Department of Health spent more than £1 billion bailing out financially unstable NHS Trusts so they could pay staff and creditors. South London Healthcare and its predecessors received over £350 million in bailouts over the past six years while the Barking, Havering and Redbridge University Hospitals Trust has been given £195 million by the Department of Health. If failing hospital trusts are constantly rescued through bailouts, lessons will not be learned and the same mistakes which led to their failings will be repeated again and again.

Letting underperforming NHS trusts fail doesn’t mean that the actual hospitals they manage would close. The hospitals concerned would still remain open and the service provided to patients would not be affected, just like when an electricity company goes into administration, the power stations remain running and homes and businesses still get electricity. Management boards, however, would be closed and bosses would be fired. Without some form of market discipline in the NHS, taxpayers will not get the value for money they deserve.

The NHS budget in England is set to rise in real terms over this Parliament. However, as the NHS attempts to save £20 billion over the next three years, continually bailing out failing hospital trusts will prove increasingly difficult. It is deeply unfair to expect taxpayers to foot the bill for these failing trusts while the upper tiers of management remain in their well-paid senior roles without facing the consequences for their incompetency.

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