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NHS fails to balance accounts

The NHS will fail to balance its books this year and will have to scale back services to recoup losses, a health analyst says.

The NHS will fail to balance its books this year and will have to scale back services to recoup losses, according to a leading health analyst.

Professor Chris Ham, professor of health services management at Birmingham University and a former head of the health department's strategy unit, warned that overspend in the system would mean that the NHS would have to minimise planned improvements.

The use of three-year budgets, replacing annual budgets, has also meant that hospitals are dipping into finances set aside for the next financial year in order to balance the books.

ìSchemes aimed at reducing unnecessary admissions to hospitals, or to bring care out of hospitals, may have to be put back, or purchasers will have to negotiate with Trusts to delay or scale back on developments in secondary care,î Ham said.

The start of the financial year in April would be ìeven tougher, given that they [the NHS] will have to make up for this year's overspendî, he added.

Government statistics show that nine hospital trusts had a deficit of more than £10m last year. A further 14 had a deficit of more than £5m, while 39 were £1m over budget.

Managers have blamed the overspend on pay issues including new consultant contracts, higher pension contributions and Agenda for Change ñ a new pay deal aiming to award more pay for flexible working hours. Extra work to cut A&E and operation waiting lists has also proved costly.

Professor Ham's revelation is another blow to the NHS which has experienced a number of financial problems over the past year. Earlier this month a survey conducted by the Conservative Party found that hospitals are cutting services in order to prevent a forecast overspend of more than £300m.

The survey, collating results from over 70 NHS Trusts, showed a combined deficit of £350m, with hospitals closing wards, cancelling operations and cutting jobs in order to save money.

Earlier last year, Monitor, the regulator of Foundation trusts in England, sent in professional advisers in an attempt to improve the financial situation of one of the government's flagship Foundation Trusts, Bradford Teaching Hospitals. However, the firm uncovered further financing problems and subsequently estimated that Bradford would report an £11.3m loss by the end of 2004.

Despite the concerns, health minister Lord Warner insisted that the NHS would ìbe very close to financial balanceî by the end of the financial year.

ìEven the worst forecast for this year are that there might be a £350m deficit and that is just 0.7 per cent of the current budget,î Warner noted.

30th September 2008

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