'Urgent action' needed on poor money management, says Audit Commission

The Audit Commission's Review of the NHS Financial Year 2006-07 reported 104 NHS organisations - 31 per cent - were inadequate in their overall financial management (to read the report, click here).

Last year 39 per cent fell into this category.

Despite the return to financial surplus and a jump from 12 to 27 per cent of trusts performing well or strongly, the commission expressed concern over 27 organisations (8 per cent) that were inadequate on its three core measures (see list below).

Commission managing director, health, Andy McKeon told HSJ that some of the 27 were 'getting worse, or hadn't shifted at all since last year'. Nineteen were primary care trusts.

'These bodies need to take urgent action,' the review said.

The report highlighted a growing problem with 'disputed balances', where organisations claimed they were owed money by other NHS bodies. Often this involved bills levied by hospitals for treatment under the payment by results tariff. Typical cases could involve£5m in dispute between a PCT and an acute trust, Mr McKeon said.

The report said managers were sometimes to blame: 'There is a growing problem with disputed balances which were not resolved on a timely basis and in some cases were not effectively reported or monitored by management.'

NHS Confederation policy director Nigel Edwards told HSJ there had been growing concern over the accuracy of payment by results coding. He said it was unlikely 'gaming' (deliberately miscoding activity to maximise payments) was as widespread as some PCTs suggested. But he warned there was 'a fine line between accurate coding and gaming'.

None of the 27 were ranked higher than 'fair' for the quality of their patient care in the Healthcare Commission's annual health check last week. As with the health check, the Audit Commission found that reconfigured PCTs fared less well than those left unchanged.

Mr Edwards questioned whether the 55 organisations which took out£771m cash loans from the Department of Health could meet their repayment timetable. The commission found that loans ranging from£3m-£17m had five-year repayment schedules. Mr McKeon said that it was 'too early to tell'.

The report revealed that the one-off costs of reorganisation had so far reached£192m, of which£38m was spent on senior management redundancies. Of the projected£250m annual savings, just£90m was achieved last year. Mr McKeon said the NHS was 'on track' to save the full£250m this year.

Needing urgent action

Trust, Deficit (£m)

Barking, Havering and Redbridge Hospitals trust - 16.8

Bedfordshire PCT - 17.6

Berkshire West PCT - 1.5

Bexley Care trust - 8.5

Buckinghamshire PCT - 20.1

Cambridgeshire PCT - 52.2

Cumbria PCT - 36.7

East and North Hertfordshire PCT - 23.6

East Sussex Downs and Weald PCT - 18.1

Enfield PCT - 13

Great Western Ambulance Service - 1.4

Great Yarmouth and Waveney PCT - 1.5

Hillingdon PCT - 52.1

Hinchingbrooke Health Care trust - 13.4

Hounslow PCT - 12.9

Kingston PCT - 21.1

Norfolk PCT - 46.7

North Somerset PCT - 8.8

North Staffordshire PCT - 3.6

Royal Cornwall Hospitals trust - 36.5

Scarborough and North East Yorkshire Healthcare trust - 7.2

Surrey and Sussex Healthcare trust - 12.2

Surrey PCT - 16.3

Trafford Healthcare trust - 6

United Lincolnshire Hospitals trust - 13.8

Warwickshire PCT - 7.9

West Hertfordshire PCT - 26.6