Published: 15/12/2005 Volume 115 No. 5986 Page 12 13 14 15

Two thousand and five ended rather as it began: with NHS managers poring over their books, desperately trying to work out how to tackle an ever-increasing hole in their finances as the media jeered and politicians criticised.

In the meantime, the year has seen fury over the government's handling of the independent treatment centre programme, financial meltdown in Bradford, the replacement of 'rottweiler' John Reid as health secretary with 'consensus-builder' Patricia Hewitt, and plans to restructure the NHS and reduce dramatically the number of primary care trusts and strategic health authorities.

HSJ looks back at the highs and lows of an eventful year.


New year's resolutions to rein in spending were given sharp focus when HSJ's first issue of 2005 revealed the size of the black hole in NHS finances.

Deficits across the service had reached£500m, while the year-end position was forecast at£224m. And the magazine warned: 'It is going to get worse.' HSJ columnist Noel Plumridge said financial pressures were 'popping up here, there and everywhere' while Mike Farrar, then chief executive of South Yorkshire strategic health authority, said 'most believe this year is going to be a lot tighter than last'.

Meanwhile research into foundation trusts suggested 'perverse incentives' could be behind increasing numbers of patients being admitted to accident and emergency under lucrative shortstay tariffs. A week later, ministers decided to delay the rollout of payment by results for emergency and outpatient care at nonfoundation acute trusts by a year.

In mid-January, chief executives launched a fierce attack on the government's handling of the programme to increase NHS use of the independent sector.

The majority of respondents to a survey of over 100 chief executives described the Department of Health's approach as 'prescriptive' and 'political'. Almost three quarters said the programme did not represent value for money. As HSJ remarked: 'No other issue... in the last five years has caused such consternation.'


February saw the Healthcare Commission buckling under the pressure of a massive backlog of patient complaints about the NHS.

The full spectre of Bradford Hospitals foundation trust's financial meltdown was unveiled.

Independent regulator Monitor released papers that highlighted the trust's slide into a financial quagmire.

The papers revealed memos sent from then trust chief executive David Jackson and directors detailing the financial difficulties. Monitor suggested the directors knew how bad the situation had become before informing the regulator. The report also detailed Monitor's decision to send in an independent consultancy.

An HSJ survey found much disquiet among NHS managers over the Healthcare Commission's proposed new ratings system.

Eighty-one per cent of chief executives said they feared prompts, to help organisations self-assess, would become 472 new proxy targets. 'If you spend all the time weighing the pig, when do you take it to market?' one respondent asked.

It emerged the DoH had created a 'marketing intelligence unit' to teach trusts how to strengthen their reputations as they compete to win patients.

And the Conservative Party revealed its intention to abandon all centrally set targets on hospitals and stop the Healthcare Commission inspecting trusts on the basis of core and developmental standards set by government.


The DoH diverted over£600m to plug a financial hole about to emerge under payment by results. The money was promised to primary care trusts set to lose out under changes to the tariff-based system, due to go live across the NHS in April. But some PCTs were still unhappy as they were disproportionately hit by a remaining£73m funding gap.

Meanwhile, current finances were looking worse: forecasts for the endof-year deficit rose to£341, while the current deficit reached£554m.

Despite these alarm bells there was a widespread belief that end-of-year balance would be achieved, by hook or by crook, with NHS organisations taking part in a traditional 'moneygo-round', with funds transferred to cover up fundamental problems.

NHS chief executive Sir Nigel Crisp revealed that patients would have a choice of any independent treatment centre or foundation trust by April 2006.

The move was outlined in Creating a Patient-led NHS, which also said all acute trusts would be moving to the NHS foundation trust accounting regime. NHS chief executive Sir Nigel also told HSJ of his desire to see PCTs join together to make contracting with providers more efficient.

Public health directors lined up to back Jamie Oliver's campaign for healthier school dinners. But some argued the government needed to go further. 'There is no point Jamie cooking you lunch when You have got vending machines full of fizzy drinks and sweets down the corridor, ' said one.


Claims and counter-claims about NHS finance, bureaucracy and waste dominated the last days of the 2005 general election campaign.

Health secretary John Reid admitted record levels of funding going into the NHS would end after 2008. In an exclusive HSJ interview, he insisted that when waiting-list and public health reforms had taken effect, the service would not need so much cash.

As Labour pledged to save£250m by NHS streamlining, HSJ wondered whether the service would really be allowed to take an 'organic' route to structural change.

Rumours emerged that PCT numbers were likely to halve, with coterminosity with social services the key driver for change. Commentators urged the government not to be too prescriptive.

Meanwhile, strategic health authority bosses said they expected to see their numbers dramatically reduced, perhaps to as few as nine.

One observer said there would 'be no tears shed' at their demise.

Patient watchdogs attacked the efforts of Premier Telesolutions advisers to sell 'entertainment services' to patients at West Suffolk Hospital. Although the company assured the hospital that the advisers would simply be there to assist patients in the use of its bedside entertainments, when HSJ posed as a potential recruit the company said there was 'obviously' a 'slight sales technique' involved in the job.


As John Reid departed for his 'dream job' at the Ministry of Defence, HSJ took a look at the legacy of 'Tony's rottweiler'. Commentators variously referred to Mr Reid as an absentee landlord, avuncular father figure and consummate politician.

In his place was welcomed Patricia Hewitt, who pledged to be a 'listening' health secretary.

A game of musical chief executives began with South Yorkshire strategic health authority's Mike Farrar taking over at West Yorkshire, Alan Burns of Trent taking the helm at Norfolk, Suffolk and Cambridgeshire, and Sir Ian Carruthers adding Hampshire and the Isle of Wight to his portfolio.

Big bucks beckoned for foundation trust chairs as the Foundation Trust Network proposed they receive salaries of£60,000 - up to three times those of their nonfoundation counterparts.

An inquiry began into how Kensington and Chelsea PCT overlooked£8m of unpaid invoices.

And Shrewsbury and Telford Hospital announced it was£10m in the red; its finance director was suspended.

As financial pressures mounted, the government began work on plans to protect core services such as accident and emergency if the rest of a hospital went into financial meltdown as a result of patient choice and payment by results.


Monitor chair Bill Moyes called for a single independent economic regulator to be created, taking on price and tariff-setting duties from the DoH. He called for fewer PCTs and said they, not acute trusts, should in future be the focus of performance measurement. Later he urged the DoH to consider 'restructuring' balance sheets so organisations could proceed to foundation status without being dragged down by 'very long-standing deficits'.

A report revealed that NHS staff are 'sick to death' of 'change being rammed down our throats'.

Interviews with 200 staff at all levels suggested that relations between some organisations were 'almost bankrupt' while patients were 'being processed like peas'.

London's University College Hospital opened its new£422m building - in the same week that a DoH official warned trusts to ditch planning 'expensive monuments'. Head of access policy Bob Ricketts said trusts should plan cheap, temporary buildings in order to compete with independent treatment centres.

New health secretary Patricia Hewitt promised to 'keep the foot flat down on the reform accelerator'. She also promised guidance on managing failure in the system in the autumn, guidance which remains eagerly anticipated.

It was revealed that the number of ambulances on the roads could be halved by 2011, and the number of trusts reduced to make them coterminous with the new SHAs.


Terror struck London and the response of 'team NHS' was magnificent. Fifty-six people, including the four suicide bombers, were killed in four blasts. Four hospitals - the Royal London, Royal Free, University College and St Mary's - were at the heart of the rescue operation tending to the majority of the 700 injured.

Ms Hewitt said she had been 'enormously impressed' by the way the emergency plans were implemented. But she admitted that communications problems arose on the day of the attacks. A digital radio system which had been due for roll-out by the end of 2004 would have enabled ambulances to bypass the mobile phone system, which collapsed when huge numbers of people tried to call loved ones. However London Ambulance Service trust chief executive Peter Bradley said there was no evidence his team's response was hampered by the lack of digital technology.

Meanwhile, HSJ learned that thousands of jobs were likely to be lost across the NHS as SHAs grappled with a£750m shortfall.

Several senior sources suggested more than 8,000 posts could go.

Healthcare Commission chief executive Anna Walker said a£500m black hole in NHS finances was a 'fly in the ointment' in a year when most trusts had improved their performance against tougher targets.

The era of the star-rating came to an end with chief executives claiming they were past their sell-by date.


The month started with the government's new blueprint for PCT reform Commissioning a Patient-led NHS being slammed. NHS Confederation policy director Nigel Edwards described the document's directive - that PCTs should, in most cases, stop providing services - as 'intellectually incoherent' given that practice-based commissioners would be able to both commission and provide.

Elsewhere, a Healthcare Commission report revealed that acute trusts were masking A&E target failures by sending a high number of patients home within the four-hour timescale. The study showed that only 83 per cent of patients admitted to hospital between April and June 2004 were dealt with within the four-hour target.

During the holiday period it also emerged that the NHS was failing to use thousands of diagnostic scans bought by the DoH from the private sector. More than half of the 70,000 magnetic resonance imaging scans, bought by the DoH on behalf of the NHS from Alliance Medical last year, had not been used by August.

The month ended with the revelation that the 303 PCTs could be reduced to roughly 144 within a year. An HSJ survey showed that some SHAs anticipated dramatic PCT mergers; from 19 down to five in Trent, and large cuts in West Yorkshire, Norfolk, Suffolk and Cambridgeshire which would bring co-terminosity with social services.


A letter from NHS director of delivery John Bacon told SHAs to stop 'rushing headlong' into a redesign of services provided by PCTs. The strongly worded letter insisted that in future PCTs could be big or small - as long as they could justify their reasons.

A survey of PCT chief executives showed the vast majority believed the proposed reshuffle of primary care was 'rushed', 'political', and 'vague'.

Almost two-thirds urged the DoH to put back its deadlines for submissions on PCT reconfiguration until the white paper on healthcare outside hospitals was published. An emergency summit was called between the health secretary's policy adviser Matthew Swindells and PCT chairs amid fears that the reconfiguration rush would damage patient care.

It followed a scathing public attack on the government's policy by NHS Appointments Commission chair Sir William Wells. Foundation trust regulator Monitor demanded that the government guarantee a minimum income for mental health foundation trusts before introducing payment by results.

In a month when the government confirmed that ambulance trusts would be slashed to 11 from 31, the health secretary at first defended the pace of Labour reform of PCTs but later admitted that the government's plans to transfer the bulk of PCTs services to other organisations by 2008 had 'created considerable fear and anxiety'.


Pressures on the health secretary were mounting. The government's plans to increase the use of the independent sector had already received a kicking at the Labour Party conference, with Unison winning a vote demanding the policy be reviewed. Now parliament was back in action, and MPs were not happy. Former health secretary Alan Milburn condemned proposals to scrap Darlington PCT as 'bungled' and 'ludicrous'.

Minister for delivery Lord Warner admitted that communications over the changes to primary care could have been better handled, and stressed that a process of genuine consultation was ahead.

Meanwhile, Patricia Hewitt told the Commons that the government was prepared to welcome 'different solutions'. But the anger would not abate; a week later, after meetings with MPs, she went still further, announcing that staff would only be transferred out of the NHS if their local PCT chose to do so, and following consultation.

Ms Hewitt's announcement that all women with early-stage breast cancer would be tested to see if they were suitable for treatment with the drug Herceptin was more popular with the media but caused disquiet among cash-strapped NHS managers. They questioned the point of having a National Institute for Health and Clinical Excellence, if a drug which was not even licensed for patients with early-stage cancer could be given instant ministerial approval.


Former managers at the beleaguered Shrewsbury and Telford Hospital trust were accused of creating a 'financial fantasy'. An inquiry found a catalogue of 'amateurish' reports with 'vague proposals' for cost savings put together by then finance director Martin Herd. Meanwhile, the DoH set about investigating why the NHS Leadership Centre had handed the trust£1m.

A week later, HSJ revealed an internal DoH memo from NHS chief executive Sir Nigel Crisp to Patricia Hewitt which suggested PCTs would not be given full control of their budgets until 2008. Another letter from Mike Farrar, who is leading the DoH's work on commissioning and providing, suggested SHAs could take on a substantial role in managing the new NHS market.

And in a last-minute U-turn, Thames Valley SHA postponed radical plans to contract out the commissioning of primary care across Oxfordshire.

But many managers had more pressing concerns. Mid-year figures revealed the scale of financial problems across the NHS, with initial forecasts of a£1bn deficit by year-end, later revised to about£700m. And even savings do not come cheap; the month ended with news that the government's planned NHS reorganisation could cost£320m, and see 6,000 jobs lost.

The cost compares with annual management cost savings of£250m pledged in July's Commissioning a Patient-led NHS.


As 2005 draws in, money remains the hot topic.

At the start of this month, the health secretary announced plans to send 'turnaround teams' into 52 trusts with deficits of£5m or more. The DoH said the teams would 'check the robustness' of recovery plans put together by the 29 acute trusts and 23 PCTs on their list.

Some commentators urged Ms Hewitt to support more radical action - such as hospital closures - while Monitor chair Bill Moyes made the case for financial restructuring to set trusts free of some of their historic problems.

Yet at the start of the month, HSJ revealed government plans to spend yet more money - in the shape of new incentives to push take-up of practice-based commissioning, under the renegotiated GP contract.

NHS Employers announced a review of redundancy terms which is likely to reduce some of the perks for older NHS staff. Packages which give preferential terms to staff aged 41 or over look likely to fall foul of age discrimination legislation which takes effect next October. Union Managers in Partnership feared the review could be used as a way to push down the cost of redundancy in the forthcoming restructuring. It also urged the government not to give vastly different treatment to managers culled in the reconfiguration, depending on whether employment ends before or after October. Happy New Year!