England’s NHS hospitals needed at least £200 million in bailouts and loans as they struggled to balance their books while also meeting tough savings targets, according to a spending watchdog. The Audit Commission said nine NHS trusts “failed to achieve financial balance” and many more applied for extra funding from managers and the Government, although overall performance “continues to be good”.
Health bodies spent £289m on redundancy payments but the number of staff employed in hospitals actually rose by almost 8,000.
Dozens were found at fault with the “value for money” they offer and a fifth of all NHS bodies failed to meet their savings targets despite cutting back on staff and the number of patients they treat.
The Audit Commission, the public spending watchdog that is being scrapped, warned that health service providers face even tougher times ahead as savings become harder to find and Government spending increases dry up.
Andy McKeon, managing director for health at the Audit Commission, said: “It is impressive that the NHS overall performed so well financially last year, even if some organisations struggled.
“But there is no room for complacency. Tighter funding, and the need to continue to improve services and implement reforms, will make the next three years much tougher. NHS organisations will need to make a determined effort to find further recurrent savings while continuing to deliver high quality services.”
The watchdog looked at the 2010-11 accounts for Primary Care Trusts, which pay for treatment; hospitals not including the semi-independent Foundation Trusts; and the regional Strategic Health Authorities.
It found that they were running a £1.5 billion surplus and had actually underspent by £272 millon on the £2.95 billion in capital expenditure they were given by the Department of Health, twice as much as recorded the previous year.
But seven hospitals and two PCTs failed to break even, one fewer than in 2009-10, with the biggest deficit of £41m recorded by South London Healthcare NHS Trust.
At least 16 NHS organisations needed additional financial support from PCTs which is never paid back “thereby obscuring their real financial health”.
Managers gave out £90 million to hospitals, while the Department of Health issued loans totalling £34 million to four hospitals and also gave £76 million to two trusts which did not even have enough money to pay back loans.
Ministers want to cut management costs by 45 per cent at SHAs and PCTs, which are being restructured, and they did let 5,713 people go with average pay-offs of £40,000 each.
But the headcount at hospitals actually rose by 7,616 and only fell by 27 in the 10 SHAs.
The Audit Commission did not find any NHS body’s accounts were not “true and fair”, but it did issue “qualified Value For Money conclusions” for 27 hospitals and 18 PCTs, suggesting they had problems with “financial resilience” or “economy, efficiency and effectiveness”.
The Audit Commission warns next year will be “a more financially challenging year” as there will be no “significant real-terms increase” in the central budget, so trusts will require “determined effort and strong leadership”.