Published: 27/05/2004, Volume II4, No. 5907 Page 9

Trusts will be able to carry out direct comparisons of their financial management, due to new assessments from the Audit Commission.

Last month the commission's report, Achieving First-class Financial Management in the NHS, claimed that 64 per cent of local delivery plans could fail because a lack of financial management ability has meant that trusts are unable to plan accurately.

But Audit Commission managing director of health Andy McKeon has promised that his organisation's work will make it easier to judge trusts' performance.He said: '[Our audit work] is going to be a much more explicit way of assessing on a comparative basis how good NHS trust and primary care trust financial management really is.'

He said the audit assessments were unlikely to form the basis of any explicit rating system: 'It is going to be more subtle than that.'

And it would not include foundation trusts.

But he added: 'It came as a surprise to me [on taking on the job] that we do not do that already.

There is quite a lot of anecdotal evidence that [financial management] is getting worse and all the rest, but you need to ask people to name names and provide the evidence.We need to go about that in a much more systematic way. It will be helpful to us and helpful to the bodies concerned. The one thing they always say to us is 'how do we compare?' or 'is our audit committee any good?'.'

In what has been described as one of the most challenging years for financial management since the NHS plan was published four years ago, the commission said it will focus on five of the biggest policy initiatives currently facing the service: payment by results, Agenda for Change, the national IT programme and the GP and consultant contracts.

Next month the commission will publish its findings into the payment by results system. It is expected to examine a number of the alleged perverse incentives that critics of the scheme have highlighted.

This will mean a detailed analysis of potential gaming. And it is likely to mean looking at the ability of PCTs to control the demand for secondary care. There have been concerns that under the system, PCTs have an open-ended commitment to fund the care in acute hospitals if hospital activity rises, without an effective means to control it.

Mr McKeon said the commission will also look at financial planning in mental health, an area he believed was 'particularly weak'. And it will investigate the financial implications of implementing National Institute for Clinical Excellence guidance as well as examining the success of PCTs' relationships with the new foundation trusts - work likely to feed into the Healthcare Commission's investigation on the effect of the controversial policy on the NHS.