Rise in bailouts as more hospitals overspend on budgets

http://www.theguardian.com/society/2014/jul/22/hospital-trusts-overspend-budgets-bailouts

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The NHS's finances are deteriorating sharply, with more hospitals ending up in the red as they struggle to look after the growing number of patients needing care, government figures reveal.

Sixty-five hospital trusts overspent their budgets by a combined £767m in 2013-14, with 35 of them sharing £536m in non-repayable bailouts in order to keep services running smoothly.

That is dramatically worse than the previous year. In 2012-13, 45 trusts ran into trouble, 11 received £263m in emergency funding and there was a £383m surplus overall.

The significant decline occurred despite the NHS spending over £2bn more on caring for patients than a year earlier, mainly because of a drive to improve standards resulting from the Mid Staffordshire hospital scandal. That led to 34,000 more staff being hired, for example.

The Department of Health's annual accounts for 2013-14 show financial problems are spreading so quickly that the annual refund it controversially gives the Treasury when the NHS in England underspends its £110bn budget shrunk in a year from £2.2bn to just £400m.

At the same time, the amount of the service's budget handed to non-NHS providers topped £10bn for the first time, prompting Labour claims that the coalition has put the NHS "up for sale".

In all, £10.02bn of NHS funding went on the "purchase of healthcare from non-NHS bodies", including private companies such as Virgin Care, Care UK and Ramsay Health Care UK, which have won contracts worth as much as £500m to provide NHS care. Independent providers of social care services also received another £859m of the department's budget, the accounts show.

Experts said more and more hospitals' budgets are under increasing strain due to the need to hire extra staff to provide better care to an inexorably rising number of patients – caused by the ageing and growing population – at a time of what ministers accept is unprecedented financial pressure.

Richard Murray, director of policy at the King's Fund health thinktank, said the figures showed the NHS's finances are "sailing close to the wind" and may get even worse before next year's general election, in which the NHS is expected to be a major issue.

The accounts acknowledge that the NHS is facing "a financial situation that remains exceptionally tight". But Una O'Brien, the department's permanent secretary, hinted that, despite growing calls for an increase in the NHS budget, a major injection of extra cash looks unlikely. She wrote in her forward to the accounts: "2013-14 was a challenging year for the department and the NHS given the context of austerity and growing demand for services, as well as being the first year of reforms to the management infrastructure of the NHS. Realistically, we recognise that the environment will continue to be challenging as we make plans for the next spending review in 2015."

Trusts' widespread difficulty in balancing their books meant the £767m deficit incurred by the 65 trusts more than wiped out the £660m surplus generated by the other 184 providers of care. The resulting £107m gap was the first time the hospital sector as a whole had ended the year in the red since 2005-06 – which, ominously, was the last time the NHS experienced large-scale financial difficulties.

Meeting "the fiscal challenge of reconciling rising demand within finite resources" had been a priority, as had dealing with the escalating demand for care caused by the growing number of older people and also public expectations of receiving high-quality care as well as new treatments, the department said. That includes surgery and expensive drugs.

Andy Burnham, the shadow health secretary, blamed the coalition's unpopular NHS shake-up of the NHS last year.

He said: "Everywhere you look, there are signs of an NHS now heading rapidly in the wrong direction. David Cameron chose the worst possible moment to pull the rug from under the NHS with a huge reorganisation that nobody wanted. It has thrown NHS finances off course – trusts are increasingly struggling to keep their heads above water."

Anita Charlesworth, chief economist at the Health Foundation thinktank, said NHS spending had risen 2.6% in real terms year on year because "acute hospitals in the NHS are finding it incredibly hard to manage their activity pressures".

That extra spending, though, showed that the coalition was "over-delivering" on its promise to give the NHS above-inflation budget increases throughout this parliament, she added.

The accounts gave no breakdown of the £10bn to non-NHS providers, which in some cases will include charities such as Turning Point, which provides some drugs, alcohol and mental health services.

"People will question how David Cameron has been able to find more money and contracts for the private sector at a time when NHS services are struggling and being cut back," added Burnham.

A department spokeswoman said: "By taking difficult financial decisions, this government has protected the NHS budget and continued to increase it in real terms with spending on the NHS increasing by £12.7bn during this parliament. The key thing is that patients get the best possible care, free at the point of use, no matter who provides it, which is why NHS competition rules haven't changed under this government."