FINANCE Trusts told to fill £100m black hole as report slams their attempts to rein in debt

Published: 11/08/2005, Volume II5, No. 5967 Page 6

NHS trusts in Hampshire and the Isle of Wight have been ordered to work together to dig themselves out of a£100m black hole. The move comes after a stinging report by the Audit Commission which reveals little confidence in individual trusts' plans to tackle historic debts or rein in current overspending.

Hampshire and Isle of Wight strategic health authority's new chief executive, Sir Ian Carruthers, ordered all hospital and primary care trusts to undertake a rigorous spending review to crack a deficit of nearly£40m and historic debts of nearly£60m.

Deficits could have been even higher had the SHA not secured a one-off waiver of£19m in revenue payments for the year for community care and other services from Hampshire county council. The financial problems meant that three acute trusts had to withdraw applications for foundation trust status.

One senior manager told HSJ hat NHS services in the county had received a 'battering' in the local press due to the financial problems, poor star-ratings and headlines about a rise in healthcare-acquired infections.

As a result, trust chief executives had been 'read the riot act' and told to get their houses in order.

Last month, the Audit Commission issued a scathing public interest report on the state of the 'worsening' Hampshire health economy. Auditor Kate Handy said: 'The recovery plans I have seen so far do not convince me that all the local bodies will be able to achieve their statutory financial duties over the next few years.

Recovery plans for the area in 2005-06 total£147m, but even if trusts achieve this level of savings Ms Handy says three PCTs and two acute trusts are still predicting a deficit of£39.4m.

The biggest pressures are faced by Southampton University Hospitals trust and New Forest PCT, which say they have faced 'significant pressure' to comply with the new consultant and GP contracts which the whole health economy estimates has cost£22m.

But Ms Handy says some organisations were 'slow to accept ownership of growing deficits' and therefore slow to take recovery action.

She also questioned the SHA's initiative to refocus the leadership of PCTs on strengthening their management capacity: 'In the short term, it weakened it and deflected attention away from the delivery of recovery plans.' The initiative, launched in August last year, involved three PCT chief executives each taking responsibility for the management of another PCT as well as their own. The shakeup saw three chief executives, Jill Duncan, Tony Horne and Angela Jeffery, lose their jobs.

Although individual trust recovery plans were approved by their respective boards and by the SHA, Ms Handy noted that 'many contained schemes for which there was only a title and little supporting detail on how the savings were to be made or who was to be held responsible for their delivery'.

She also criticised neighbouring trusts and PCTs for delivering 'contradictory' plans - 'for example, trusts assuming increased income from PCTs and PCTs assuming decreased expenditure with trusts'.

'It was therefore clear that the headline total for the combined plans would not be achieved.'