Health department 'inventing rules'

The House of Commons Public Accounts Committee said it appeared the Department of Health was “inventing rules and processes on the hoof” to deal with hospital trusts which get into financial difficulties, rather than establishing a robust protocol for action.

Ministers were unable to provide the committee with reassurance that financial problems will not damage the quality of care or access experienced by patients of troubled trusts, at a time when the service is already struggling to find £20bn-worth of cuts and implement the reform programme, said PAC chair Margaret Hodge.

Although NHS bodies reported an overall surplus of £2.1bn in 2011-12, the apparently healthy financial picture masked a “significant minority” of bodies which are in difficulties, said the report.

Ten NHS trusts, 21 foundation trusts and three primary care trusts reported a combined deficit of £356m, £115m of which was accounted for by two London trusts, one of which was put into special administration in July.

And a further 31 struggling NHS trusts and 11 foundation trusts may not have broken even if they had not been bailed out with cash injections worth £1.1bn from the department, as well as support from PCTs and strategic health authorities, said the report.

In a number of cases, trusts’ chances of breaking even were being undermined by “unaffordable” contracts with private-sector companies under the Private Finance Initiative, the report warned. The department is liable for supporting all PFI payments and already expects to have to find £1.5bn to bail out seven trusts experiencing problems.

During the committee’s inquiry into the future financial sustainability of the NHS, the department was unable to explain clearly how the “failure regime” would work under the new arrangements, or what circumstances would trigger it being applied to a struggling hospital.

The committee said it was “particularly surprised” that the department could not explain how the process will work for the South London Healthcare NHS Trust which was put into special administration earlier this year.

And it raised concerns about plans for “risk pools” which might levy money from all NHS bodies after April next year to provide support for failing trusts. These pools threaten to “destabilise otherwise healthy organisations” and the department needs to clarify how they will work, said the committee.