Government bailouts for financially troubled hospitals have come under fire from a Whitehall spending watchdog in a report laying bare the deteriorating financial state of the NHS.

The National Audit Office report found the “worsening” position and “growing financial stress” experienced by hospitals made the health service unsustainable as a public service.

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The report said the DH should stop bailing out financially distressed hospitals by offering longer term support

Its analysis found trusts expect to receive £2.2bn more than healthcare commissioners plan to spend in 2015-16 – a funding gap predicted to quadruple to almost £9bn by 2018-19.

NAO comptroller and auditor general Amyas Morse described the “growing trend” for NHS trusts to fall into deficit as “not sustainable”.

“Until the department can explain how it will work with bodies such as NHS England, Monitor and the NHS Trust Development Authority to address underlying financial pressures, quickly and without resorting to cash support, we cannot be confident that value for money will be achieved over the next five years,” he added.

Margaret Hodge, chair of the Commons public accounts committee, described the report as “deeply alarming”.

“I do not believe it is any exaggeration to say that the future sustainability of our National Health Service is at risk,” she said. “Some trusts are only getting by on handouts.”

The report, called The financial sustainability of NHS bodies, suggests the DH should stop bailing out financially distressed hospitals by offering longer term and planned packages of support and investment instead.

“The department should consider, as an alternative to short term in-year funding to financially distressed bodies, tapered financial support for investment… matched to clear plans over a longer period with a clear end point.”

This would help organisations find sustainable solutions to their financial problems, it suggests.   

Providers that forecast deficits assumed the DH would continue to offer cash support to help prop them up, the NAO found.

In 2013-14, the DH issued £511m in largely non-refundable payments to 21 NHS trusts and 10 foundation trusts to help them pay creditors, its report added.