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Last Updated: Thursday, 8 June 2006, 09:46 GMT 10:46 UK
What does the future hold for the NHS?
By Nick Triggle
Health reporter, BBC News

The NHS deficit has more than doubled in the last year.

Thousands of job losses have already been announced. So what does the future hold for the health service?

Storm clouds - copyright John Mason
Is the future bleak for the NHS?

Acting NHS chief executive Sir Ian Carruthers called it a "blot on the landscape".

And while a 512m deficit may seem a large blot, it is arguably small change for an organisation with a budget in excess of 65bn.

It equates to less than 1% of turnover, or, 160 for someone on a 20,000-a-year salary.

But, as the King's Fund health think-tank points out, what the 512m figure obscures is the true extent of the deficits in a minority of trusts.

Most of the 174 NHS organisations which ended the year in deficit, only narrowly failed to balance the books.

And they are unlikely to lose to much sleep over Health Secretary Patricia Hewitt's demand they break even by the end of this financial year.

Significant

But for a hardcore group, it will be more challenging.

In total, 31 hospitals had deficits which NHS officials term significant - more than 5% of turnover.

Another 18 primary care trusts - responsible for community services such as physios and GPs - also racked up similar size deficits.

Between them, this small proportion of NHS trusts were responsible for 60% of the debt.

Many of them have already reacted to the worsening situation by shedding jobs or delaying treatment.

The future, at least in the short term, promises more of the same.

It seems clear to me that we will hospitals have to scale down, and in some cases close
Paul Miller, of the British Medical Association

But as the health service adapts to the new climate, more far-reaching changes will be seen.

A look at Surrey and Sussex Healthcare NHS Trust, which has the largest deficit in England at over 40m, illustrates what could happen.

The trust runs two hospitals - Crawley and East Surrey. Some 400 job losses have already been announced, but the centres are undergoing what is termed in the industry as rationalising.

Crawley has lost its A&E department, with patients being passed on to East Surrey. The hospital is also set to be downsized further to allow local health bosses at the PCT to develop more community-based services to be run by GPs.

Trust chief executive Gary Walker said the changes had allowed Surrey and Sussex to reduce their monthly overspend by 1.2m to 2m.

He said "significant progress" had been made in the last year without harming patient care, as waiting times and MRSA rates had fallen.

What the example shows is the financial situation has to be viewed in context with the ongoing reforms the government is introducing.

This year has seen the introduction of more policies which move the NHS towards a market.

Money

Hospitals have had the old security they enjoyed where they were guaranteed money, no matter how many patients they treated, stripped from under their feet.

Under the new system, known as payment by results, they have to compete for patients to be paid.

And all this is happening at a time when ministers want to move care away from hospitals and into community by handing GPs budgets to develop specialist services alongside their traditional practices.

If the NHS cannot become more efficient within the next few years it could start struggling again
Henry de Zoete, of Reform

Surrey and Sussex have reacted to their deficits by trying to redesign services to compete in the new market-drive NHS.

Many see this being repeated elsewhere in the health service.

"It seems clear to me that hospitals will have to scale down, and in some cases close," said Paul Miller, chairman of the British Medical Association's consultants committee.

"Hospitals have to compete for patients at a time when there will be less going round. In some cases, with the likes of A&E, you can argue closing them down is right. But the outcome won't be good for everyone."

However, the key question for patients is whether this will affect patient care.

Mr Miller thinks so, and the findings of a joint Audit Commission and National Audit Office report support his claim.

The watchdogs warned the trusts with the highest debts would not be able to move towards financial stability without it being "detrimental to patient care".

Henry de Zoete, of centre-right think tank Reform, agrees hospitals will have to adapt, but does not believe the doom merchants are right - at least in the short-term.

He said the NHS will start to drag itself towards financial balance over the next year as the market reforms kick-in.

"The NHS should become more efficient. My only concern would be that the government does not go far enough, quickly enough."

He used the example of patient choice - allowing patients to choose where they are treated - which will not be fully implemented until 2008.

Mr de Zoete added: "The record budget increases for the NHS are due to come to an end in 2008, and if the health service does not have its house in order by then the drop in the annual increase could leave NHS trusts with difficulties."




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