Published: 22/04/2002, Volume II4, No. 5902 Page 6 7

A health economy which racked up the biggest debts in NHS history has broken even this year.

Avon, Gloucestershire and Wiltshire strategic health authority had faced financial meltdown last June, when its total debts topped£219m.

Acting finance director Graham Bennett stressed that the underlying debts were still to be tackled - and the SHA had received financial help from the NHS Bank - but the region had now achieved a level of stability. Financial balance is expected to be confirmed when SHA accounts are signed off in the next few weeks.

He also revealed that North Bristol trust - savaged by an independent inquiry last summer after losing£44m in 2002-03 - will also break even.

Mr Bennett said: 'I think there has been a tremendous level of commitment from trusts across the region.'

He admitted there was concern as late as February about the SHA's ability to reach financial balance, which had been stipulated by senior Department of Health officials. In January, total spending was exceeding income by£15.2m.

Board papers at the time put the cost of implementing the consultant contract at£11.9m more than the funding available - pushing forecast losses at the end of the financial year to£17.8m.

But Mr Bennett said the 'flexibility of trusts' had meant money had been found without impacting on services or the delivery of national access targets.

This month - in line with the three-year recovery plan produced by the SHA - the NHS Bank is expected to confirm a further loan of£40m, with£20m the year after. This follows last year's£60m bank loan.

Underlying debts stand at around£108m, with the aim of hitting£65m by the end of the current financial year.

HSJ understands there are ongoing negotiations with the DoH on how much of the debt will eventually be written off.

NHS sources suggest that could happen if the SHA can bring the health economy to financial balance without relying on NHS Bank funding, a position which could be reached in two years' time.

Many senior managers have stressed privately to HSJ that without some deal on the NHS Bank loans, the region would never recover.

Stephen Webster, finance director at North Bristol trust, which last year recorded losses of£44m, said he was delighted with the success, praising staff and the support of the wider health economy.

Since April 2003, the trust achieved savings of£16m. He said this financial year, North Bristol would have to save a further£18m.

'It gets tougher, but we have obviously made good progress.'

Part of the financial transformation has been the result of improved management of agency staffing. 'At one point last year, we were paying out around£1m a month on agency nurses, ' Mr Webster said. 'Now that has gone down to around£250,000.'

'It is been about better control, better recruitment and retention.'

Bath and North East Somerset primary care trust chief executive Rhona MacDonald said: 'I think the word pain is not one that quite fits - but it has been tough.

'I think the key has been a corporate approach where we have been prepared to help each other out... But I still think it is going to be two years before we can say we have succeeded.'

Paul Nicholls, former Avon, Gloucestershire and Wiltshire SHA director of finance and performance management, is to leave the SHA on 17 May .

His position was scrapped last year under a restructuring of the executive board, and since then he has been working from home on a financial flows project for the NHS.

The SHA now has an acting finance director, Graham Bennett.

Mr Nicholls is the husband of Barbara Harris, who was sacked as chief executive of Royal United Hospital Bath trust for alleged waiting-list mismanagement before winning a£218,000 payout for unfair dismissal last July.