Published: 09/06/2005, Volume III, No. 5959 Page 11
Acute trusts and primary care trusts in Bedfordshire and Hertfordshire have embraced a tough regime of cuts and service redesign in a bid to restrain runaway deficits.
Patients' representatives say the area is historically underfunded, and claim that cuts in acute services cannot be made without damaging patient care.
But trust managers say they do not expect to be bailed out - and some admit they have neglected the financial bottom line while focusing on meeting targets and improving their star-ratings.
West Hertfordshire Hospitals trust has drawn up a financial recovery plan to prevent its existing£13m deficit from doubling to£26m this year. The plan involves closing around 90 beds in Watford General and Hemel Hempstead hospitals, expanding intermediate care provision by PCTs, moving minor surgery to GP practices and rationalising estates costs.
Director of service redesign Nick Evans said every trust could put forward a case for more money, 'but we had over£200m in our budget last year'.
'We have really focused on delivering some key targets - accident and emergency has improved spectacularly in the past year. In delivering some of these improvements we may well have taken our eye off the financial ball. We have to address that now. It is clear there will be no more money.' He added: 'By the end of March we aim to achieve a total of£19m adrift, including the accumulated deficit of previous years. What we have agreed with the [Bedfordshire and Hertfordshire strategic] health is that by the end of this financial year we will have balance between our income and expenditure.
'We have got to get into a position where we are spending what we are earning. In future years we will have to tackle re-payment of accumulated debt.' Mr Evans said the trust had the backing of PCTs despite the 'strain' the recovery plan would place on them: 'We [Bedfordshire and Hertfordshire] have a long-term strategic plan, Investing In Your Health, which PCTs signed up to 18 months ago.
'What we are doing is accelerating the pace of change rather than setting a new direction. It doesn't feel like a cost-cutting exercise, ' he continued.
However, Edie Glatter, co-chair of West Hertfordshire Hospitals trust patient forum, warned that the financial recovery plan risked reversing the service improvements achieved in recent years: 'There have been tremendous improvements, but we are worried that this is going to turn the clock back.' She said there was an 'underlying' funding shortage in the local health economy which meant it could not cope with extra pressures such as the accident and emergency targets and increasing staff costs.
Two local acute trusts are also facing financial problems. Bedford Hospital trust and East and North Hertfordshire trust are each tackling end-of-year deficits in the region of£8.5m.
Meanwhile, a new management team at Bedfordshire Heartlands PCT is aiming to eliminate a recurrent£10m a year overspend by March 2007, with savings of£6m this year and a further£4m in 200607.
Tensions reflect 'a seminal moment'
Bedford Hospital trust's recovery plan - which aims to clear its£8.5m deficit within four years - recognises as a key longer-term goal the trust's continuing work towards foundation status: 'We are a very ambitious trust, ' commented chair Helen Nellis: 'We have gone from zero stars three years ago to three stars.
That has meant a greatly improved service for patients but clearly It is important to balance that with the bottom line.' A turning point for the trust, revealed Ms Nellis, was Bedford primary care trust's refusal to fund the hospital trust's 'overperformance' - a tough line she predicted would be replicated throughout the NHS.
'I think we are looking at a seminal moment in the NHS: it will become clear in the next couple of years that some services are not affordable. In my own trust we do not have a specific funding line for our chronic pain service.
In foundation trusts if there is no income you cannot fund it. Across the country the public will be faced with difficult choices that have to be made.' Ms Nellis said no part of the trust would be 'off limits' to cost reductions: 'It is hard - but It is tremendously liberating.
I do not think there is anything more scary than not having a handle on how much it costs to run a business.' Bedford PCT chief executive Margaret Stockham also said that the stricter financial climate would ultimately be 'liberating', forcing the NHS to become a 'much more business-like and outcome-orientated system.' 'Everybody realises that we have been given a lot of new money and that is coming to an end.
Foundation trusts, with their binding contracts rather than service-led agreements, have just brought everything to a head very quickly.
'We better shape up now.'
New era of financial rigour
The claim of Bedfordshire and Hertfordshire managers that they are finding the new era of financial rigour 'liberating' was welcomed by Foundation Trust Network director Sue Slipman. 'It is very good news if this is a trend. It is the Department of Health's intention to bring everybody into the same sort of financial regime [as foundation trusts], ' she commented.
'The sense I get from the Department of Health is that the pace of change is accumulating - It is feeding itself.
'Now the rest of the system needs to be pushed into rapid change so that everybody understands the [foundation trust] mindset.' HSJ columnist and former NHS finance director Noel Plumridge said the example of foundation trusts was encouraging greater financial restraint: 'Rather than foundation trusts being seen as pioneers, There is now a pressure building for all trusts to aspire to it. The disciplines within a foundation trust regime are much tougher.' Mr Plumridge said trusts were responding to warnings that they would 'stand or fall' by their financial performance:
'We do not yet know if that is real or rhetoric. What has yet to be tested is whether there is no pot of gold that will be used to bail out trusts that get into financial difficulties.
'What is much more likely [than failing trusts closing] is that they will be merged, either formally or informally.' He added that trusts in arrears might be putting too much faith in redesign: 'There is a dearth of success stories of service redesign delivering savings.' And within payment by results there was still scope for 'sharp practices', he said, such as acute trusts admitting patients unnecessarily, rather than let them stay in accident and emergency longer than four hours.
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