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NHS financial woes could worsen

Date published: 07/12/2005

Planned reforms could worsen the financial woes of the NHS, according to a study published today. Thinktank the King's Fund forecast that one in five NHS trusts could amass huge deficits or fail as government-introduced initiatives such as patient choice make the service more market-driven.

The report said that the health service needed to develop a more flexible financial structure as a matter of urgency to help cope with the demands of failing hospitals, and to address problems before they develop. Last week it was announced that the NHS in England alone could be facing a deficit of £620 million.

The King's Fund report, How Should we Deal with Hospital Failure", said that over 25 per cent of English NHS trusts were in the red over the last year, despite record injections of funding. The report cautioned that government plans to put market competitiveness into the service could make matters worse by pitting certain areas of the service against each other.

Initiatives such as patient choice, increased use of community services, raised private sector provision and new payment systems could lead to the best healthcare providers getting more business while poor performers would lose business, running up "large and significant" deficits.

The report's author Dr Keith Palmer said: "A key lesson from the private sector is that failure is the end of the road."

King's Fund chief executive Niall Dickson warned that market incentives could have the opposite effect than the government intends, creating "further instability as a by-product of trying to stimulate improved efficiency and responsiveness."

The report recommends that rescue measures be put into place to address NHS trusts with large deficits. The study suggests that ultimately control should be wrested from the worst performers and put in the hands of an independent administrator.

NHS chief executive Nigel Crisp is set to publish the service's annual performance evaluation later today.

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