A year in review: catching up with the excess in 12 turbulent months

January

2006 was the year the NHS really started to face up to its financial problems. This started in January, when an exclusive HSJsurvey of chief executives showed just how bad things were getting.

Three-quarters said they thought patient care would be affected, with 63 per cent admitting to closing wards. Only 13 per cent believed that turnaround teams - sent into the NHS the previous month - were an effective way to get the health service on track.

In an interview with HSJ, health secretary Patricia Hewitt announced a rise in the number of turnaround teams, which she said had found problems that had been missed by strategic health authorities.

Meanwhile the Commons health select committee rebuked the Department of Health, saying its approach to primary care reform was 'flawed and incoherent' and 'ill-judged in the extreme'. It called on the government to scrap Commissioning a Patient-led NHS and allow primary care trusts to develop 'organically'. It said that the reconfiguration was 'unlikely to yield'£250m savings, and urged the DoH to review its internal systems to ensure such 'on the hoof' policy making did not happen again.

It was also reported that GPs were to get a 'bribe' to take up practice-based commissioning, but the National Association for Primary Care warned that doing so would mean that the policy would 'sink before it could swim'.

February

The government turned its attention to primary care reform with its much-anticipated white paper Our Health, Our Care, Our Say, which said primary care trusts must take on 5 per cent of acute hospitals' activity during the next 10 years in a 'fundamental strategic shift'.

It also called for PCTs to rethink the policy of saving costs by closing community hospitals, and made it clear that turnaround teams will become 'service reconfiguration' teams in areas of persistent deficits to tackle the root causes.

New Conservative leader David Cameron was also turning his attention to the NHS. In an exclusive article for HSJhe announced that he had asked a policy review team to consider whether control of NHS policy should be removed from central government. He said political interference and centrally-driven structural change were hindering health service managers' attempts to raise standards.

PCTs were furious after learning that compensation for those whose costs will rise under payment by results is to be halved next year, before being abolished in 2008. Estimates suggested that the worst-affected PCT would be left£16m poorer by the phasing out of this purchaser parity adjustment.

Meanwhile, prime minister Tony Blair told HSJhe would support NHS managers while local services were restructured. 'When managers are grappling with that, our job should be to support them,' he said.

March

In meteorological terms, March is supposed to come in like a lion and go out like a lamb. In NHS terms, however, the month blew in with a storm over finances and blew out just the same way.

Things started badly when the DoH had to withdraw the national tariff for payment by results, which had been due to take effect in April, after admitting that it had got its sums wrong. NHS managers greeted the news with predictable 'disbelief'.

They were not much happier about receiving 'diktats' from director of programmes and performance Duncan Selbie, telling them to sort out their finances as the NHS's year-end deficit threatened to hit£800m.

In one memo, Mr Selbie indicated that his boss, NHS chief executive Sir Nigel Crisp, would be taking a 'personal interest' in the response of trust and PCT leaders. But that threat proved short-lived when Sir Nigel resigned the next week, accepting 'accountability' for the NHS's financial problems. The DoH split his job in two, with Sir Ian Carruthers taking over as interim chief executive and Sir Nigel's deputy, Hugh Taylor, standing in as DoH permanent secretary.

Meanwhile, the Healthcare Commission announced it would be delivering 'weak' marks to trusts with poor financial performance in its first annual healthcheck. And the DoH ended a lousy month by announcing cuts in public health and clinical training programmes, because it had over-committed its£12bn central budget by£2bn.

April

If March was all about money and senior departures from the Department of Health, then April was all about more of the same.

Sir Derek Wanless, who published an influential report for the Treasury on NHS funding requirements in 2002, published a similar report for the King's Fund on social care.

The former NatWest chief executive was pessimistic about the way the billions that his report had helped to secure for the NHS had been used. Money, he told HSJ, had gone on pay hikes and costs, not public health and productivity.

In the week that Sir Derek's report was launched, HSJreported that the foundation trust programme might be 'derailed' by deficits, that the government's 18-week 'total' waiting time target might be threatened by cuts, and that NHS Direct was contemplating mass redundancies.

Even Tony Blair acknowledged that the NHS was facing a 'challenging year' at a conference, while urging managers to push ahead with reform.

In the same vein, the Department of Health's outgoing workforce director, Andrew Foster, told HSJthat the thousands of posts being cut were a 'small, necessary correction' to expansion. He claimed that, over the previous 15 months, there had been a 'growing sense of dislocation' between the DoH and the NHS over the direction of reform, and that the consensus of the NHS plan had disappeared under John Reid.

May

Acting NHS chief executive Sir Ian Carruthers told managers to 'get on with the job of making difficult decisions' about reconfigurations, assuring them they would be backed 'from the prime minister down'. Managers should 'seize the moment' for change, he told the HR in the NHS 2006 conference.

Managers trying to change services in south west London might have been forgiven some scepticism. Health secretary Patricia Hewitt overturned their decision to site a new critical care hospital in Sutton rather than St Helier, saying priority should go to the most deprived communities. But London's regional director of public health Sue Atkinson was revealed to have found no difference between the two sites in terms of inequalities. Conservative MP for Epsom Chris Grayling, insisted the decision was 'politically motivated'.

Meanwhile, HSJdid its bit to get across the message that 'Managers Make the Difference' with a campaign to celebrate high-quality management. It also revealed that the DoH had finally come up with formal plans for public and patient involvement that would see forums replaced with local involvement networks covering PCT areas.

Lastly, the NHS Confederation threw its weight behind managers facing rows over bed numbers, with a report arguing that the NHS could do with fewer. Campaigners were unconvinced.

June

Monitor predicted that fewer than half of acute and mental health trusts were likely to reach foundation status by 2008.

Of around 170 acute trusts, the regulator expected 'around 75', to reach the status by 2008, while 'up to' 30 of 53 mental health trusts were expected to do the same.

Acting chief executive Sir Ian Carruthers told HSJthat cutting the NHS deficit to£512m was a 'creditable' performance. His report, based on unaudited accounts for 2005-06, showed that a gross deficit of£1.28bn was partly balanced by a gross surplus of£765m, and the net deficit of£512m was lower than the mid-year forecast of£623m.

An NHS Alliance report showed that GP leaders, the government and PCTs had all failed to inspire doctors to take up practice-based commissioning.

The report said that the main problem was a 'lack of clear communication and leadership' from the centre, strategic health authorities and PCTs.

Royal Bournemouth and Christchurch Hospitals foundation trust became the first in the country to turn patients away after the escalation of a public row with its PCT over funding. Monitor called the foundation trust and Bournemouth PCT into crisis talks to end the stand-off.

The dispute concerned£6.3m the trust claimed it was owed from last year and the failure to agree a contract for 2006-07.

July

The start of the holiday season was dominated by the DoH being told that it must try harder to get its sums right on payment by results.

Britain's five orthopaedic hospitals banded together to warn the department they would have to cancel operations and cut services unless it changed the way they were paid. The Specialist Orthopaedic Alliance said the hospitals' situation would become critical once transitional protection ended in 2008, and urged the DoH to rejig the tariff to reflect the real cost of dealing with complex cases.

Meanwhile, shortlisting for candidates to replace Sir Nigel Crisp as chief executive of the NHS got under way and David Nicholson emerged as the only NHS candidate among a field of private sector and US contenders.

As the sun shone, the DoH felt the heat from the 'cock-up' over the publication and rapid withdrawal of the payment by results tariff in the spring. A report concluded the debacle had partly been caused by a 'lack of expertise' in its payment by results team, and suggested that the DoH might think about 'contracting out' parts of the tariff-setting process.

Yet there was good news for managers: health minister Andy Burnham rounded off HSJ's Managers Make the Difference campaign with an interview supporting them and promising an 'engagement and communications plan' to win the public round to the government's reforms.

August

The new chief executive of the NHS told HSJhe was 'over the moon' about his appointment. David Nicholson also stressed that he would put the interests of 'individual taxpayers and patients' over those of 'individual organisations' and that the biggest challenge facing the NHS was to sort out how to organise services to deliver most benefit to patients. He continued his celestial theme by saying this put SHAs 'on the side of the angels'.

Senior managers hoping to run PCTs found the appointment process rather less than heavenly. HSJresearch suggested that only a third of former PCT chief executives were likely to get jobs in successor organisations.

Ruth Carnall did rather better on the job front when she took Mr Nicholson's previous post to become interim chief executive of NHS London.

Later in the month, 14 private firms won a share of£200m worth of work providing an additional 150,000 elective procedures as part of the DoH's 'extended choice' network. The government also began to look at extending choice beyond elective treatments to mental health, cancer treatments, end-of-life care and maternity services.

However, experts pointed out that even meeting the government's existing commitments on choice in maternity would be challenging. Others worried that plans for choice could fragment NHS services.

September

As the movers and shakers of the health world returned from their summer holidays and geared up for party conference season, HSJpublished its ranking of the top 50 most influential people in policy and practice.

Top of the list was Professor Paul Corrigan, health adviser to Tony Blair and the 'quiet revolutionary' of NHS reform. Health secretary Patricia Hewitt came in at number two, with her lieutenants filling the next handful of places.

The revolution in the use of the private sector ran into trouble in the middle of the month, when it emerged that many procedures paid for through the independent treatment centre programme had never been carried out. HSJresearch revealed that the centres were performing less than 60 per cent of the procedures they needed each year to fulfil their contracts.

At the Labour conference, chancellor Gordon Brown suggested that an independent board might be set up to handle the day-to-day running of the service, while health minister Andy Burnham proposed an NHS constitution, setting out its values, to be renewed every 10 years.

Managers were sceptical about both plans, remembering the fate of similar initiatives in the past.

Outside the conference, unions protested about 'cuts' and 'privatisation'. And there were public protests across England about hospital reorganisation.

October

Among the fiery rows at the party conferences, health minister Ivan Lewis clashed with Royal College of Midwives general secretary Dame Karlene Davies at an HSJ fringe event at Labour's Manchester gathering and was accused of 'throwing his toys out of the pram' by Dame Karlene in response.

Down in Bournemouth, shadow health secretary Andrew Lansley told the Conservative party conference that GPs should be given responsibility for managing demand as PCTs were not up to the job. He also called for managers to be governed by a 'proper commercial framework', more freedom for foundation trusts and a greater role for the private sector.

Meanwhile, the Healthcare Commission delivered its first annual healthcheck on the NHS. Just two organisations managed to get top marks for both quality of care and use of resources (take a bow Harrogate and District and Royal Marsden foundation trusts).

Back at the King's Fund, Sir Derek Wanless started work on a review of the impact of the billions of pounds spent on the health service since his groundbreaking report on its future financial requirements in 2002.

Speaking exclusively to HSJ, the former NatWest chief executive said the government had failed to tackle obesity and his vision of a healthier population and a more efficient NHS would hang in the balance until it did.

November

Amid nationwide protests at 'NHS cuts', chief executive David Nicholson urged MPs to think about 'not just how many hospitals we have, but how many lives we can save and improve'.

In an impassioned letter arguing for service reconfiguration, he told MPs that the NHS had to 'think imaginatively' about how to redirect money and people to where most benefit could be achieved.

A Department of Health consultation suggested that clinicians and managers should work together to take joint decisions on commissioning under radical proposals for professional executive committees. It said each PEC member should have a specific role and work with designated directors to take key decisions.

As they approached their first anniversary, it emerged that turnaround teams had been sent into 143 trusts - one-third of acutes and a quarter of PCTs. A DoH memorandum to the Commons health select committee admitted that the teams had cost cash-strapped trusts at least£22m.

On sexual health, the government appeared to have abandoned its pledge to spend£50m on safe-sex campaigns. At the launch of a£4m TV and radio campaign urging young adults to use condoms, public health minister Caroline Flint refused to guarantee that the rest of the funds - pledged in the 2004 Choosing Health white paper - would still be spent on campaigns.

December

As the year drew to a close, service redesign and finance were still the dominating issues.

Managers may not have been cheered by national emergency access director Professor Sir George Alberti, who launched a report supporting reconfiguration.

He said clinicians will have to lead on change because managers 'are not believed' by the public. In support Tony Blair said clinicians were 'far more persuasive than politicians'.

How strange then that, in the same week, chief medical officer Professor Sir Liam Donaldson revealed that he had not been involved in drawing up one of the department's key policy documents until two hours before its release. He had to hastily add something into last year's Commissioning A Patient-led NHS about public health, which had not been mentioned in the previous draft.

Patricia Hewitt expressed renewed confidence that the NHS would be in balance when the financial year comes to an end.

And managers who had hoped for changes to the resource accounting and budgeting rules which have been blamed for penalising indebted trusts twice over finished the year disappointed: the operating framework put the issue on the back burner for at least three months.