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Last Updated: Monday, 10 July 2006, 23:09 GMT 00:09 UK
Managers blamed for NHS deficits
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The report blames poor management
Inadequate leadership and ineffective management are the causes of the worst deficits in the NHS, a watchdog says.

The Audit Commission said senior officials had taken their eye "off the ball", relying on short-term fixes to solve growing financial problems.

The watchdog made its conclusion after studying the 25 public interest reports it issued last year to highlight the NHS bodies with the worst problems.

Health managers said it was "all too easy" to blame them.

Critics have suggested the pace of health service reforms and bumper pay deals for staff have been significant factors in causing the financial problems.

The NHS finished last year over 500m in deficit with nearly one-in-three NHS organisations failing to balance its books.

We must take care to look at the whole picture and not make NHS managers the scapegoat for financial problems facing a small minority of trusts
Gill Morgan, of the NHS Confederation

The problems have led trusts to cut thousands of jobs, close services and delay operations.

The report acknowledged that many parts of the NHS were facing deficits, but said these had got out of control in a number of trusts because of a variety of reasons related to poor management.

It said there was often a "lack of robust budget-setting", a lack of engagement by clinicians, a reliance on "short-term fixes".

Management often only finalised budgets after the financial year began, and included "significant unidentified savings, coupled with vague or heroic assumptions about the achievability of savings".

It said many trusts had struggled to manage large building projects, many of which have been financed through the government's private finance initiatives.

And the report added trust boards suffered from a lack of "cohesion and ability to challenge", before concluding "financial failure is inseparable from wider organisational failure".

Many of the trusts given a public interest report have subsequently had new management teams appointed and some have also had financial hit squads sent in by the Department of Health.

It is crucial that boards and management get the basic right because financial failure is often a reflection of wider organisational failure
Audit Commission

The Audit Commission has drawn up a list of indicators to help trusts identify when they are running into trouble.

It also recommends strategic health authorities - regional bodies which oversee trusts - intervene earlier when problems arise, better training and support be introduced and more attempts are made to engage with clinicians.

Sir Michael Lyons, acting chairman of the Audit Commission, said: "It is crucial that boards and management get the basic right because financial failure is often a reflection of wider organisational failure."

But Gill Morgan, chief executive of the NHS Confederation, which represents health service managers, said: "It is all too easy to blame NHS managers for the current deficits.

"But we must take care to look at the whole picture and not make NHS managers the scapegoat for financial problems facing a small minority of trusts."

She added financial problems were a result of "many factors", including targets, reforms and structural problems.

And the Department of Health said trusts with deficits were beginning to show signs of improvement.

A spokeswoman said: "We agree that financial balance can only be achieved with commitment from finance staff, management, clinicians and board members working together throughout all levels of an organisation."


SEE ALSO
Q&A: NHS deficits
06 Jun 06 |  Health

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