DoH fails to reassure about NHS' financial viability

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The Department of Health has failed to reassure that financial problems will not damage the quality of healthcare in a Public Accounts Committee report published yesterday.

Margaret Hodge MP, chair of the committee of Public Accounts, was speaking yesterday as the Committee published its 16th report examining the financial sustainability of the NHS.

The document is based on evidence from the Department of Health and Monitor.

She said: "The Department of Health could not explain to us how it will deal with an NHS trust that goes bankrupt.

"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.

"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."

Hodge called for absent "critical" details of how the new system introduced by the NHS reforms would work.

NHS organisations in England reported a combined overall surplus of £2.1bn in 2011 to 2012.

But there was significant variations in performance between NHS bodies; 377 NHS organisations reported a surplus in the year while 10 NHS trusts, 21 NHS foundation trusts and three Primary Care Trusts (PCTs) reported a combined deficit of £356m.

Hodge said the overall surplus masked the the significant minority in financial difficulty.

She added: "On top of that, the NHS is striving to make efficiency savings worth £20bn while undergoing a major reform of the system.

"It very much looks like the Department is inventing rules and processes on the hoof rather than anticipating problems and establishing risk protocols."

Hodge said "particular concerns" were about the number of trusts locked into unaffordable private finance initiative (PFI) contracts with fixed annual charges.

Mike Farrar, chief executive of the NHS Confederation, said: "It is important not to overstate the impact of PFI. It is part of the story, but the fundamental issues are much deeper.

"We absolutely need to look at alternative funding models for financing NHS estates, but we must also remember that PFI is not the sole reason why organisations find themselves in financial distress."

He added the Government, NHS, regulators and the Department of Health needed to consider the "hugely important report".

"We need the Government to accept that financial pressures are the biggest facing the NHS at the moment," Farrar said.

"We cannot deal with these issues on a piecemeal basis. We need a frank conversation with the public about how we deal with these problems."

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