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Welfare Reform on the Web (February 2006): National Health Service - Funding

Buildings: PFI special

E. Forrest (editor)

Health Service Journal, vol.116, Jan.26th 2006, p.29-32

Repayments due to contractors for facilities constructed under the private finance initiative (PFI) could become a huge burden for foundation trusts. Trusts unable to maintain their income under the new payment by results system and in the face of competition from other providers may find it difficult to meet their obligations. The regulatory body Monitor has deferred some applications for foundation status due to concerns over unrealistic assumptions about ability to pay for PFI deals.

DoH estimates 3,500 jobs could be lost under service restructuring

L. Donnelly and A. Moore

Health Service Journal, vol.116, Feb.2nd 2006, p.9

Data submitted to the Department of Health by Strategic Health Authorities in October 2005 suggest that at least 3,500 jobs will be lost in the forthcoming NHS restructuring.

Giveaway deal could turn out costly for the NHS

N. Timmins

Financial Times, January 3rd 2006, p. 2

Under a deal signed in 2001, Patientline and two other companies were contracted to install bedside telephones and televisions in NHS hospitals. The companies undertook to install the equipment free of charge on the understanding that they would recoup their costs by charging patients for the services and the NHS for the use of the equipment to display patient notes, order prescriptions, etc. Unfortunately only a handful of hospitals have decided to make use of the equipment. In order to recover their costs, the companies have set charges for phone calls and use of the TVs very high. Ofcom, the telecommunications watchdog, has launched an investigation into whether the companies and the trusts have abused their dominant position under competition law.

Health authority so mired in debt it faces possibility of hospital closures

N. Timmins

Financial Times, January 6th 2006, p.2

The Audit Commission warns that Surrey and Sussex Health Authority is likely to be £80m in the red in March, unable to pay staff and purchase goods, and with hospital closures likely.

[See also Guardian, January 6th 2006 p.14]

Hewitt: go Deutsch to shift work out of hospitals

D. Martin

Health Service Journal, vol.116, Jan.19th 2006, p.18-19

Report of an interview with Health Secretary Patricia Hewitt, in which she lays the blame for the current level of overspending in the NHS at the door of about 23 rogue organisations which account for half of the projected debt for 2005/06. She also reassures trusts that her instruction to them to prescribe the expensive drug Herceptin for the treatment of early breast cancer before its approval by NICE was exceptional. This instruction infuriated trusts as it put further unanticipated demands on their budgets. The interview also touches on the government’s plans for the transfer of work from hospitals to primary care and for improved management of chronic conditions in the community.

Managers urge courage under fire as 'painful decisions' loom

I. Lloyd

Health Service Journal, vol.116, Jan. 26th 2006, p.5

Managers are convinced that in order to bring NHS finances under control, they will have to reconfigure services and close hospitals. As these measures will be unpopular with the public, they need political support for making the necessary changes.

A market in unmentionables in need of 'modernisation'

M. Gould

Health Service Journal, vol.116, Jan.12th 2006, p.14-15

Government is consulting on proposals to reform the way that the NHS supplies incontinence and stoma appliances in order to reduce the current £630m per year costs. Charging patients for some products is being considered, as is putting personalised home fitting services out to tender. Price differences between products supplied to primary and secondary care would be swept away. Companies supplying to primary care would face a 15% cut in their income for incontinence and stoma appliances and a 5% cut on dressings and other equipment. There are concerns that these reforms could drive many small specialist companies out of business, and bring to an end the system of industry-sponsored stoma care nurses working in the NHS. This could cost the NHS many millions in terms of extra work for community nurses.

NHS Crisis

J. Laurance

Independent, January 2006, p.1&2

Given the huge increase in government health spending, why are wards shutting, operations cancelled, and trusts in trouble? This feature pinpoints staff pay, inflated pharmaceutical costs, a pre-election spending spree and a risky focus on waiting list targets, as the culprits and looks at recent bad news on building costs.

NHS faces spending squeeze

N. Timmins

Financial Times, January 17th 2006, p.1

The massive increases in NHS spending have made its doctors and nurses among the best paid in the world, but ministers must now secure productivity gains in return, according to a leaked Treasury document. The NHS can no longer expect funding increases on anything like the current scale and must concentrate on efficiency gains and cutting its branded drugs budget.

(See also Financial Times, Jan. 17th 2006, p.3)

NHS finances

Health Service Journal, vol.116, Jan.19th 2006, p.6-7, 10-11

Results of a survey of 117 chief executives of acute, mental health and primary care trusts reveal their fury at being blamed by the government for the current cash crisis within the NHS. In detail:

  • respondents said that Agenda for Change and the new GP and consultant contracts, which were all centrally imposed on trusts, had not been costed effectively and this had caused serious 99% of financial problems in the NHS.
  • 82% said that the government was trying to disguise its own culpability by blaming NHS financial problems on trusts
  • 87% said that the new financial management turnaround teams to be sent into the worst-performing trusts would not be effective in getting NHS finances back on track
  • 75% said that patient care will suffer as trusts cut services to balance their books:

Nine in ten say NHS will not break even next year

I. Lloyd

Health Service Journal, vol.116, Jan. 26th 2006, p.6

Only 13% of respondents to an HSJ survey of acute, primary care and mental health trust chief executives thought that the NHS could meet to government’s target of balancing its books by the end of 2006/07. A total of 32% thought that their own trust would still be in debt at that time, with 10% expecting that debt to total over more than £5m. It is argued that the NHS will be unable to balance its books without reducing demand and redesigning services.

No magic solution to NHSís money woes

A. McKeon

Health Service Journal, vol.116, Jan. 26th, 2006, p.18-19

In order to move to a sound financial footing, the NHS will need to focus on recovering historic deficits, and achieving productivity and efficiency gains. It must move away from reliance on accounting tricks to balance its books.

Private chain in talks to run failing NHS hospitals

J. Carvel

Guardian, January 17th 2006, p.4

As the issue of how to deal with failing hospitals is raised, BMI Healthcare, Britain’s largest private hospital chain with 1 million patients in 49 hospitals, proposes a rescue plan.

Time for intensive care?

S. Ward

Public Finance, Jan. 6th-12th 2006, p.28-30

Government has insisted that the total deficit across the NHS should be no more than £200m at the end of the financial year 2005/06. Turnaround teams made up of experts from the commercial and health sectors will be sent into around 50 of the most indebted organisations to help them balance their books by the end of the financial year. There is widespread scepticism that the teams will make much of an impact on the financial woes of the NHS, which are attributed by managers to the costs of centrally imposed reforms and targets.

Trusts look to the future to fight historic debts

N. Edwards and M. Hensher

Health Service Journal, vol.116, Feb. 2nd 2006, p.16-17

Primary care and acute trusts blame current financial problems in the NHS on one of more of historic debt, the transition to payment by results, recent increases in activity and the costs of workforce reform. Proposed solutions include service restructuring, rationalisation and reduction, staff cuts, and demand management strategies.

Uncertainty around PFI

M. Britnell

Health Service Journal, vol.116, Jan.19th 2006, p.17

It is thought that use of Private Finance Initiative deals to fund the construction of very large hospitals may become unaffordable when the payment by results system is introduced. Hospitals will be unable to predict their financial position at the end of a possible 30-year deal and may be unable to guarantee repayment of the money invested by the private partner. Furthermore, the Treasury is becoming concerned that these deals are adding to the problem of NHS debt and overspending.

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