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Wednesday, 26 July 2006 10:06
BNN: British Nursing News Online · www.bnn-online.co.uk
New plan to tackle NHS trust debts
A plan to put NHS trusts on a firmer financial footing has been published by the Audit Commission.

Health Secretary Patricia Hewitt commissioned the report to find a strategy for dealing with the huge deficits incurred by some trusts.

The recommendations aim to support the Government’s major health reforms and put trusts and primary care trusts (PCTs) and the NHS overall in a position to operate on a sound and sustainable financial footing in the future. Key recommendations include:

• the principles of Resource Accounting and Budgeting (RAB*) should no longer be applied to NHS trusts, and that NHS trusts should move onto a regime which offers sharper, more appropriate incentives for good financial performance
• changes to PCT planning and financing arrangements which would put them in a stronger position to manage their financial risks;
• specific improvements to the Department of Health’s (DH) and strategic health authorities’ (SHAs) oversight and management of the service, covering the costing of policy initiatives, the way the Payment by Results tariff is developed and given greater certainty over the medium term, and the accuracy and availability of data;
• key elements of a more effective and swifter mechanism for identifying and dealing with financial distress at NHS bodies. In addition, financial support for organisations should be provided in the form of working capital and that the DH should establish a banking arrangement to do this; and
• the specific steps to be taken to improve the skills of finance staff and the capacity of boards.

Sir Michael Lyons, Acting Chairman of the Audit Commission, said:"The NHS is a unique and complex organisation and its economy is equally complex. Our proposals are challenging and wide-ranging, and they may take time to implement. But, the financial management and accounting regime of the NHS needs to change to keep pace with the many significant new health reforms that are designed to further improve the NHS. Crucially, our recommendations support the NHS reforms, would enable trusts and PCTs to achieve better value for taxpayers' money and contribute to consistent, reliably funded services for patients".

The Commission believes its recommendations would ensure that the DH meets its commitments to HM Treasury and the taxpayer while enabling trusts to operate in a more businesslike way. Other outcomes would be to:

• bring greater clarity to the financing system both for individual organisations and for the NHS as a whole;
• improve further the professionalism of NHS finance staff; and
• increase the capacity and capability of individual bodies to manage their affairs and at the same time increase their accountability for doing so.

Shadow health minister Stephen O'Brien said: "This report is a damning indictment of financial mismanagement in the NHS that goes right to the top”.

A Department of Health spokeswoman said: "We will now take some time to reflect in more detail on the recommendations made, and will publish a response later in the year”.
   


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