Published: 27/11/2003, Volume II3, No. 5883 Page 31
The row over North Bristol trust's£44m overspend during the 2002-03 financial year continues. Last month Department of Health finance director Richard Douglas told the Commons health select committee that the NHS had never before witnessed such financial meltdown (news, page 5, 23 October).
October also saw Avon, Gloucestershire and Wiltshire strategic health authority - burdened by debts of£219m as of June, as a result of overspends by zero-star North Bristol and other local trusts - publish a report by auditors Deloitte and Touche, reviewing North Bristol's finance and governance.
Although the report did not find any evidence of fraud or deliberate concealment of information, it did pick out several reasons for over-spending - some of which are familiar elsewhere in the NHS.
One reason with national resonance was heavy spending to cut waiting lists, with 'an approach of spending to meet targets 'at any cost''. Doing so cost£9.5m. Another reason was excessive use of agency nurses, contributing to an overspend on nursing budgets of£10.2m.
As a result, North Bristol trust has now shunned use of some private nursing agencies in favour of NHS Professionals and its own bank of part-time staff, in association with other local trusts including United Bristol Healthcare, Royal United Hospital Bath and Weston Area Health.
'We did seem, as a city, to get into a situation of there being a good availability of agency work, so a lot of staff went down that route, ' says Sonia Mills, who was appointed acting chief executive of North Bristol trust in February and confirmed in the post in May.
Permanent staff at the trust were tempted to leave to join agencies.
North Bristol has also been spending to save on buying capacity from the private sector.
It has built a fifth orthopaedic operating theatre: 'That means we can do more in-house, ' says Ms Mills. It has also commissioned Weston Area Health trust for some work.
However, the reason the trust strayed so far into the red was not just overspending - the trust was expecting a deficit, and a£12.6m saving programme was in place as a result - but also because many senior staff did not realise how much the trust was overspending, and how badly the savings programme was going.
The Deloitte and Touche report says executive members and board directors found the trust's financial reports difficult to interpret, but did not challenge the figures.
One problem resulted from headline figures being adjusted positively to take account of planned efficiency savings.
When these savings did not materialise, the numbers turned out to have understated the problems:£10.2m of the£44m deficit came from unachieved planned savings.
Headline figures were also adjusted for initiatives funded from other sources. As with efficiency savings, this caused problems when such external funding failed to arrive. Standard balance sheet and cashflow data failed to reach the board or the finance committee.
'We have abolished the finance committee, strengthened the terms of the audit committee and financial reports are now much clearer, ' says Ms Mills.
'Another thing is that, where We have set targets, those planned savings are being monitored and reported to the board.'
There are plenty of tough decisions ahead. Getting the trust back to financial balance has meant stopping the rise in - and in some areas cutting back on - expenditure. Staff appointments are also reviewed by a panel before they proceed.
The trust will then analyse why its costs have been so high and, in the long term, reconfigure its two major sites, Southmead and Frenchay. The trust has yet to realise some of the benefits of the 1999 merger that produced North Bristol trust.
Ms Mills says such reorganisation makes communication with staff important. 'It is about making the position very clear to the organisation as a whole. The problem was that these things were dealt with centrally by project teams.'
She has already presented the trust's new plans at mass meetings.
'When we get the detailed recovery plan, we will have another series of open staff meetings.' She also intends to keep staff representatives well informed.
What will this mean for patients? Patients Association communications director Katherine Murphy says the hope is that such cutbacks will not affect patient care, or cause longer waits for treatment.
'Unfortunately, from past experience, It is always patient care that is affected.We always say that trusts should look at the management structure, and how expenditure is monitored within the trust.
The public has a right to know how their money is being spent, and perhaps a say in how that money is being spent.'Ms Mills believes patient care should not be affected.
Ms Mills says the Deloitte and Touche report is not about the problems of a financially hardpressed trust. 'The report is about having the appropriate financial mechanisms working.
From a chief executive's point of view, It is about making sure all parts of corporate governance are working properly, and your board is functioning well.' l Further information www. northbristol. nhs. uk/board/ Final report RL0306004. pdf l HSJ is holding a conference on financial flows in Manchester on 10 December.For details of the programme and registering, visit www. hsj. co. uk/paymentbyresults
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