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Welfare Reform on the Web (June 2007): National Health Service - funding

Cuts mean the NHS may have underspent by £500m

N. Fleming

The Daily Telegraph, May 30th 2007, p.16

Doctorsí and nursesí claim that the English NHS may have underspent by almost half a billion pounds last year as a result of aggressive cuts which allegedly eroded current services. Cuts included the closing of wards, operations being cancelled and a freeze on recruitment. The north west of England saw most of the cuts. Health unions claim that the surplus demonstrates that the NHS could afford to pay the 2.5 per cent pay rise recommended for nurses and other healthcare staff.

Financial management in the NHS

Committee of Public Accounts

London: TSO, 2007 (House of Commons papers, session 2006/07; HC 361)

Spending on the National Health Service is the fastest growing area of public expenditure. Despite the increased resources, the NHS reported an overall deficit of £570 million in 2005-06. The Committee examined evidence from the Department of Health on three main issues: what factors had led to the deficits, what the impact was on organisations in deficit, and what steps were being taken to recover deficits. It found that there was no single reason why NHS bodies were in deficit, but that a number of factors, such as varying standards of financial expertise and pressures to meet the costs of national pay initiatives, were at work. To manage their deficits, the NHS bodies have needed to cut the size of the workforce, reduce the number of open hospital wards, and defer significant capital projects. To return to financial balance, NHS bodies with large deficits are required to produce financial recovery plans. Whilst some plans have been successfully designed and delivered, others have been based on unrealistic assumptions or short-term measures. The National Programme Office was created to oversee the turnaround process, but it is too early to judge its success or failure.

Have trusts turned the corner, or just papered over the cracks?

A. Moore

Health Service Journal, vol.117, May 17th 2007, p. 14-15

Some of the most debt-ridden acute trusts in the English NHS are now on the road to financial recovery. Measures which have led to improvement in their financial position include reductions in use of agency staff, trimming bed numbers, better coding, which ensures they get paid for the work they do, and spend to save initiatives. They claim that savings have been made without reducing the quality of patient care.

Options for the future of payment by results: 2008/09 to 2010/11

Department of Health

London: 2007

This consultation paper covers the broad areas of classification of hospital activity, future mechanisms for tariff setting, developing the national tariff, and extending the scope of payment by results.

(For comment see Public Finance, May 4th-10th 2007, p. 24-26)

Primary Care Trusts charged with rewriting £300m script

O. Evans

Health Service Journal, vol. 117, May 31st 2007, p. 12-13

The National Audit Office has urged primary care trusts to use cheaper generic drugs in order to save money. This article reports comment from stakeholders including views of the Association of the British Pharmaceutical Industry, and discussion of incentive schemes for GPs, the role of NICE guidance, and use of software to help doctors identify generic drugs.

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