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Last Updated: Wednesday, 7 December 2005, 03:29 GMT
Balancing the books the hard way
By Nick Triggle
BBC News health reporter

One in four trusts finished last year in deficit and the cash problem looks like it will worsen this year.

Why is this happening when the NHS is receiving record levels of funding?

Surgery generic
The NHS in England could be heading for a 620m deficit

The dilemmas facing local health bosses in Harrow are typical of what is happening in the NHS.

If the London primary care trust is to balance its books this year something has to give.

And NHS managers have decided that it will be non-emergency surgery.

Local doctors have been told surgery must be delayed in a bid to ensure most of it does not have to be paid for until the next financial year.

Under government targets, patients have to be seen within six months so the PCT has ruled that where possible doctors should wait until the final month before operating.

Deficit - One in four NHS trusts failed to balance the books last year, creating a 250m deficit overall. It is predicted to rise to 620m this year
Spending - Spending on health is rising at over 7% a year until 2008 to help bring the NHS up to European levels
Cuts - Some hospitals are delaying operations, while others have taken the more traditional route of closing wards and cutting jobs

PCT chief executive Andrew Morgan said: "It is a hard decision, but it is one we have to take. We are constantly hearing warnings about the need for NHS trusts not to run a deficit.

"The important thing is that patient care will not be affected."

But Mr Morgan admitted in many ways the decision was just storing up the problems for next year when there will be a glut of operations, but he said it was "something that would have to be dealt with".

The trust has been forced into the move mainly because of a new system of payment which is being phased in.

PCTs, which control three-quarters of the NHS budget, now pay hospitals per patient treated for elective surgery instead of doling out a lump sum at the beginning of the year which is obviously much easier to plan for.

And it is a sign of the times that Harrow doctors have even accepted a move which perhaps in the past would have sparked outrage.

'Drastic measures'

GP Dr Chaand Nagpual, a member of Harrow's medical committee, who was consulted on the move, said: "It's a pity. But most GPs are resigned to these deficits and the drastic measures that have to take place."

But the decision has prompted criticism from elsewhere. Paul Miller, chairman of the British Medical Association, said: "It is hard to argue this does not affect patients.

"But unfortunately it is a sign of the times."

The truth is Harrow is far from a unique case. Across the health service in England, NHS trusts are taking a variety of measures to help reduce deficits.

The situation is getting worse, it is hard to see where the end of the tunnel is
Paul Miller
British Medical Association

Last year the NHS finished 250m in deficit as one in four trusts failed to balance its books.

Health Secretary Patricia Hewitt has already announced this year's deficit could top 600m, although in reality she expects it to be pegged back to 200m and eliminated the following year.

Several other PCTs, particularly in the south-east of England, are thought to have issued similar diktats to Harrow.

While others have attempted to cut back on surgery in other ways.

NHS managers in East Anglia decided last month that obese patients will be denied hip and knee replacements in a bid to avert a 22m deficit.

Meanwhile, some trusts are cutting staff numbers. Oxfordshire Mental Healthcare Trust is currently consulting on plans to reduce the number of doctors, including consultants, to help save 5.5m.

St George's Healthcare NHS Trust has introduced a recruitment freeze on all but the most essential staff and has closed wards - 10% of the trust's beds have gone.


The measures have been taken since the south London trust finished last year 21.7m in deficit. This year it is expected to be limited at just over 12m.

Hospitals across Hertfordshire and Berkshire have also been affected.

In one trust, East and North Hertfordshire, between 30 and 40 posts have gone - although the staff have been redeployed - and two wards shut.

The Royal College of Nursing has estimated 3,000 posts could go in total, including 1,000 nurses, either through redundancies or recruitment freezes.

Mr Miller said: "The situation is getting worse, it is hard to see where the end of the tunnel is.

"Trusts claim they are being forced into it, but I am not sure I have sympathy with that.

It is unfair, but all to easy to blame managers
NHS Confederation spokesman

"If you look at the trends, it is not happening everywhere, there are clusters of trusts in deficit."

And this, it seems, is the crux of the matter. Health Secretary Patricia Hewitt has been quick to lay the blame an financial mismanagement.

She points out NHS funding is rising at record levels - more than 7% a year until 2008 - and has announced consultants will be sent in to sort out the trusts with the biggest problems.

But the NHS Confederation, which represents health service managers, has defended the performance of trusts.

It has pointed out that most of the extra cash has gone on new staff, increased salaries and the soaring drugs bill, while the new payment system was creating "volatility".

A spokesman said: "It is unfair, but all to easy to blame managers. The truth is much more complex."

Professor John Appleby, chief economist at the King's Fund think-tank, agreed the current problems could not be categorically put down to poor financial management.

But said more research was needed to find out where the money had gone as recent reports were "sketchy".

620m deficit predicted for NHS
01 Dec 05 |  Health
Community hospitals 'face cuts'
15 Nov 05 |  Health

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