What's the answer for the NHS?

By Tracey Sparling

A HUGE question mark hangs over Suffolk's health services today.

Just where did it go wrong? How did it get in to so much debt? - and what's the answer now? Features editor TRACEY SPARLING throws our county's trickiest question open to top experts for independent analysis.

TODAY some would argue that it is time for a fresh perspective, on the way our health services are delivered.

Suffolk's health bosses are juggling a huge £20m debt, against their enduring bid to give us the best service possible. Figuratively, they hold a red pen in their fingertips, poised to draw a final line through some services like The Bartlet Hospital in Felixstowe, and other hospitals and services which are under threat. The power is in their hands, as they plan what to provide instead.

The challenge the NHS faces today, is to make big financial savings, that go well beyond any tried-and-tested measures, without adversely affecting patient care.

This comes in the face of rising expectations, as more and more people call ambulances, and arrive at A&E for conditions that they once wouldn't have seen a doctor about.

But across the country, experts are watching Suffolk, and their independent observations bring ideas which might not be so drastic as closing community hospitals like The Bartlet.

The King's Fund - an independent health think tank based in London - has just published two reports on NHS finances, which reveal almost 90per cent of new investment into the NHS nationally has gone on wages and costs, rather than improvements to patient care.

Half the new investment was spent on higher pay for staff. Another 27 per cent went on increases in capital costs, the cost of clinical negligence, drugs and meeting recommendations set by the national Institute for Health and Clinical Excellence.

The findings prompted the Fund to urge the government to 'plan in a more sophisticated way' before committing any more money to the NHS.

Former BBC journalist Ruth Thorlby, a fellow of The Kings Fund, has studied waiting list issues, and was involved in a study of the media's coverage of public health issues.

She gave her observations on the funding of health systems like Suffolk's to the The Evening Star.

She said: “When the Labour government took office in 1997, it inherited an NHS which was widely acknowledged as suffering from a severe lack of money. Waiting lists were long, hospital buildings were crumbling and equipment was outdated. It was clear that the United Kingdom spent much less on health care, as a proportion of national wealth, than comparable countries, such as France or Germany. And in 2000 the Government made a decision to allocate more money to the NHS than previous governments had done and to start catching up with Britain's European neighbours.

“The current government has made great political capital out of this generosity to the NHS - funding, in cash terms, has doubled since 1997 and stands at over £70 billion - and now, when some local NHS bodies (like Suffolk) are in financial difficulty and appear to be cutting back services to patients, ministers are quick to point out that the blame lies locally, not with the centre. How fair is this?”

But she said the answer is not a straightforward one: “Although money has been injected into the NHS at an unprecedented rate of increase (and well above inflation), it has not been a blank cheque for NHS institutions to spend on developing or improving services at will. Our recent research has shown that much of the increases in cash in recent years have been soaked up by higher pay and other cost pressures, beyond the control of local NHS institutions. Since 2000, there have been two major pay settlements, with consultants and with GPs, that have resulted in substantial pay increases for both groups (and some of the best paid doctors in the world.) There have also been pay increases for other staff, including nurses.

“New money has also been earmarked to pay for new drugs that are recommended for NHS use, the costs of clinical negligence claims, and the cost of new buildings, including those built under the Private Finance Initiative schemes. When all these are taken into account, the remaining money for “other” developments, is rather less. Out of an original cash increase of £4.5 billion for 2004-5 for example, only £475 million is left for “other developments” once the other elements are accounted for.

“But even this money has to be spent in a certain way, to meet a stringent regime of targets, aimed at speeding up treatment for patients, such as four-hour maximum wait in Accident and Emergency departments. Hospitals have been under considerable pressure to meet these targets, which often meant spending on extra staff or overtime.

“What these cost pressures cannot explain, is why some trusts are in deficit and others are in profit across the country. However, what is becoming clear is that some parts of the NHS have been “carrying” debts for many years, but it is only recently that changes in accounting rules have made the scale of these deficits clear and the government is now adamant that the books have to be balanced. For those trusts in debt, the cost pressures have accelerated their problems to the point where they now have to take some very unpopular decisions in cutting services.”

Some experts also allege ministers failed to cost new contracts for NHS staff properly, which mirrors the problem which faced British schools three years ago - when extra funding led to deficits because the impact of pay awards for teachers had not been fully allowed.

Staff costs were also an issue for Chris Ham, professor of health policy and management at the University of Birmingham, writing in the British Medical Journal. He draws on 25 years' experience to

advise on health services. He has advised the Audit Commission, the British Dental Association, the British Medical Association, the NHS Confederation and the House of Commons Health Committee.

The fellow of the Royal Society of Medicine and Academy of Medical Sciences suggests a few solutions for cash-strapped NHS organisations.

He said: “With a high proportion of the NHS budget spent on staff, redundancies and freezes on recruitment will be among the first steps to be taken, in the most challenged organisations. Action to improve the use of expensive temporary staff is also likely.”

He also suggests where there are surplus hospital beds they must be cut but Ipswich Hospital beds are busier than most. Some people stay in hospital longer than others because levels of care vary so much across the country, and Mr Ham says ironing out the differences could help balance the books.

Lastly, he suggests wiping out debts must involve the 'full engagement' of all NHS organisations and staff at the frontline, as well as management.

He added: “The organisations with the biggest deficits are under pressure in part because of weaknesses in leadership, and the NHS lacks a reserve of talented managers able to help in those circumstances.”

So last year The Department of Health commissioned KPMG to assess the finances of organisations forecasting significant deficits or underlying cash problems.

Mr Ham added: “The attempt by the Thatcher government to attract business people into the NHS following the introduction of general management in the 1980s was not conspicuously successful, at least partly because of the political constraints on general managers.

“Today's turnaround teams are of course different in that will be working behind the scenes, their role is advisory, and they do not carry responsibility for the consequences of their advice in the longer term.

“But whether the private sector will success where the NHS failed, remains to be seen.”

2002: When Ipswich, Central Suffolk, and Suffolk Coastal primary care trusts were set up, they inherited debts totalling £2.2m. Together with Ipswich Hospital Trust and Suffolk Mental Health Partnership Trust, they make up East Suffolk's health system.

2004: The regional Strategic Health Authority intervened. A joint strategic board was set up for the PCTs, plus a scrutiny and performance monitoring committee.

A strategic framework was drawn up, to outline how services would be developed and delivered.

2005: A financial recovery plan was finalised to tackle the deficits. By the end of the financial year 2004/2005 Ipswich, Central Suffolk and Suffolk Coastal PCTs had debts of £10.1m, £3.8m and £6.2m respectively.

In December the government-appointed KPMG team which had brought about turnarounds in the private sector, decided East Suffolk PCTs didn't need direct intervention.

2006: Auditors whose report was out this month say the PCTs have failed to meet their financial duties for three years (two for Central Suffolk).

The future: The accumulated debt is forecasted to be £26m by the end of the financial year 2006/2007 (from £22m at the end of 2004/2005) partly due to the interest on the historic debt.

Auditors say significant progress has been made, and the Strategic Health Authority says the debt is now £19.7m. But auditors warn that repaying the debt over three years presents a 'significant challenge.'

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If you work for the NHS, what do you think of the experts' suggestions? Write to Your Letters, The Evening Star, 30 Lower Brook Street, Ipswich, IP4 1AN or email eveningstarletters@eveningstar.co.uk.