Select Committee on Health Minutes of Evidence

Examination of Witnesses (Questions 100 - 119)



  100. The people in that area are ultimately still paying it back.
  (Mr Douglas) On the initial money that we provided from the Bank there are issues over what timescale it would be paid off and if all of it needs to be paid off. We need to make a decision about whether that is a loan or a grant or some combination of the two. What would be silly would be to loan £40 million in one year to deal with the £40 million deficit and then ask for it back the following year.

  Julia Drown: I understand.

Dr Naysmith

  101. I want to come in on the Avon area. It has a familiar pattern about what is being managed at the top. It is really a question for the strategic health authority to sort out first to see how they are doing in the wider area and then, presumably, South West England for us in Avon? Where I as a Member of Parliament go to somebody and say, "This is causing really immense problems. You are doing some really good things, but some things are funded from the centre and other things cut back simply because you have got to deal with the historic deficit"? I do not want to go into how it happened and whose fault it is. How can Julia and I get a handle on this and get it sorted out so that it is not a millstone around the necks of good people doing good work in our area?
  (Mr Douglas) The first port of call is generally the strategic health authority and then the director of health and social care for that area, but for somewhere like Avon, Gloucester and Wiltshire, I recognise that has become an issue that needs to be dealt with at a more national level.

  102. Absolutely, but there is supposed to be a plan being worked out and we have not had a financial director to deal with on that point and where are we now, nearly November, and it will not be long until we are at the end of another financial year —
  (Mr Douglas) Hopefully there is a financial director in the strategic health authority.

  Dr Naysmith:—Without someone being appointed to deal specifically with this. I am sorry to other members of the Committee and others not particularly interested in Avon, Wiltshire and Gloucester, but it is a really important problem.

  Julia Drown: It certainly is.

Dr Naysmith

  103. You would reckon the strategic health authority first?
  (Mr Douglas) The strategic health authority first and then the director of health and social care. Then if there is a problem there are issues that I would deal with at a national level.

  104. I will be on the telephone to the strategic health authority.
  (Mr Douglas) They will be on the telephone straight back to me!

Dr Taylor

  105. I think you have been rather coy about the inherited deficits because under section 3.3.1 you say a small number of health bodies would have received brokerage. Over the page you let yourself off the hook by saying that the audited accounts of individual health bodies will not be available just yet. Can you give us a flavour of the number of health bodies that have had brokerage because I would have thought if you go round this table each one of us thinks that our own area is wildly overspent. Are we wrong?
  (Mr Douglas) We have not got the final summarised, completed, audited accounts yet, but the figures look as though we have a national (and by national I mean NHS) surplus of about £70 million, so we do not have a deficit in the NHS, we have a small surplus of £70 million. I think the latest figures I have are around 50 organisations with deficits. They will include ones that have deficits in single figures which are very, very small amounts. Probably the brokerage around the system will have been up to around £200 million. Some of that will have been repaying from a previous year, some of it for this year. I would add in terms of the scale we are talking here of total NHS spend of £50 billion.


  106. One of the grievances I have had raised with me concerns the fact my constituency covers two separate health economies, and the other one is not the Wakefield one, it is the western side of my area, and a grievance that the PCT have raised relates to the fact that in addition to inheriting the deficit of the health authority, they are now facing the revenue costs of a hospital PFI scheme which very few of their patients actually go to. Do you tend to look at the appropriateness of the way that arrangement is occurring, because it seems to me rather nonsensical that some of my constituents should face the revenue costs of a PFI scheme when they do not benefit from that scheme. In our inquiry when we looked at PFIs, colleagues came across one particular area in the North East where this was a serious grievance raised with the Committee.
  (Mr Douglas) I find it surprising. It may well be that there were some local support arrangements that were set up by the old regional office and I assume that is what has happened in that case but as a general principle if the PCT is not using that facility they should not be supporting it. That would be a general principle. Clearly if arrangements have been made by the region in the past it is very difficult to unpick those other than over a long timescale, but the principle should be that the PCT should be paying for services their patients are using.

  107. It would be for the SHA in the course of things to address that issue if there is a grievance presumably?
  (Mr Douglas) If there is a grievance it would be with the SHA.

Andy Burnham

  108. What has been the principal cause of deficits? Does the Department have a view?
  (Mr Douglas) I do not think there is a principal cause. I think there are lots of causes in different places at different times. That sounds an awfully pat answer but that is the case. As was mentioned by one Member, there may have been past management failings. There are others where possibly the costs in that area have not been managed as well as they could. There is just a whole range of reasons for that.

  109. Do you think it may also reflect more generally the inadequacies of the current funding resource allocation mechanism to pick up where cost measures are in the system?
  (Mr Douglas) I think some people would argue that; I would not.

  110. Why would you not argue that?
  (Mr Douglas) Because you will find those deficits have arisen in all sorts of different places. There is not a common factor you can pull out and say there is a particular issue on the costs associated with that part of the country or the particular needs issues in that part of the country. There is a whole range of things there. Most of the financial problems that have emerged have tended to emerge in high cost areas and have tended to emerge across the south of England. The other point I would make on that is that when a financial problem emerges in one place that could be expressed as an activity problem somewhere else. There may be a waiting problem in one area and a major financial problem in another. It is very difficult to unpick these and just look at one of them.

Mr Burns

  111. Given that this year there are quite radical changes going on in the Health Service with the PCT and the way money has been pushed down to them to provide health care, given that many of the PCTs are very new indeed with many new people on them who may not have had a role in the past, in effect, in running the provision of health care locally, is the Department doing much to monitor carefully how they are performing so that one does not see a position in possibly January or February of next year where they have not recognised the financial disciplines that should have been on them over a 12-month period and they are going to be suddenly confronted with a serious financial problem with some of them because they have literally run out of money when there is still eight or ten weeks to go in the financial year?
  (Mr Douglas) We have partly tried to handle that through the appointments process. I have experienced people involved in the appointment of finance directors across the country but we also deal through the overall performance management. I will link through with four finance directors for health and social care. I will also link with 28 strategic health directors who themselves will monitor the PCT finance directors and trust finance directors, so we do have a system in place for monitoring them.

  112. We are just halfway through the financial year, as far as you are aware have problems been emerging?
  (Mr Douglas) In some places problems have emerged but in some places problems would occur at this time every year. The particular ones we know about we address, the larger ones you address through the bank. There are other areas where they will deal with them within their own strategic health authority.

Dr Taylor

  113. Turning back to 3.1.3, the impression one gets from looking at that, and I just want to confirm that is correct, is hospital spending is rising much faster than spending on GP services. Is that right?
  (Mr Douglas) I think that is right from those numbers, yes.

  114. Can I ask one or two questions related to that. One thing completely missing from this paper is, I think—although I have to admit I have not read every page in huge detail—any assessment of the cost of agency nurses to the hospital sector as a whole?
  (Mr Douglas) I do not have an up-to-date figure for that. I would be able to draw that from this year's annual accounts, which will probably be ready within the next three to four weeks, so I could pull out the figures from the annual accounts. I am almost certain there are separate lines for agency nursing.

  115. It would be helpful to know how much your own agency that you are thinking of putting it would cut that back? Another detail, I think it is 3.9 you mention the high percentage of people who do not turn up for outpatient appointments. Do you have any idea of the costs that could be saved if those were ironed out?
  (Mr Douglas) We did do some costing on this. .
  (Ms Edwards) From memory I cannot remember what the costs were. It is quite difficult because you can simply take the number of patients that do not attend and multiple that by an average cost of an outpatient appointment or an inpatient figure. That assumes that everyone who has a slot is lost when in reality, like most big organisations, people tend to slightly overbook because it is fairly consistent, particularly in outpatients, that you run at about 10 per cent. The real cost to the NHS is quite a bit lower. We have been doing some work again and it is mainly the admin costs, so on the basis that most of the slots are filled by overbooking outpatients the real costs have been in administrative costs, which are far less than the actual total cost of clinical time.

Julia Drown

  116. If you look at the activity given in the table, outpatient attendance per 10,000 of the population, 3.9.1 c, there are huge differences, in the eastern regions it is 2,100 new attendances compared with London 2,900. If you look at finished consultant episodes per 10,000 residents of the population in general acute centres, table 3.9.1 h, the West Midlands is 1,400 and the northwest 1,700. Yes, there are some regional inequalities in health but surely not those sort of huge differences! What is being done about that?
  (Ms Edwards) We are doing quite a bit more further work to understand this. One of the factors we know, particularly in areas like outpatients, is it varies depending on the quality of primary care and the amount of work done in primary care. The policy aim is to divert more outpatient work into primary care, that is one of the big factors that we know, depending on what is provided in alternative sectors such as primary care, which will affect what gets into secondary care. There are also other factors, in the southeast one of the factors that caused the southeast to have a lower inpatient admission rate related to the fact we have higher private sector usage. We are trying to bring all that together at the moment and work through it.

  117. Do you have any idea of what sort of percentage of that varies?
  (Ms Edwards) Not at this stage. Again we have done some work comparing GP numbers with referrals into hospital and there is quite a correlation. Again, where there are areas with bigger GP referrals into hospital, which would imply a supply issue not a need issue, we are doing some work there.

  118. Not a need issue but a supply issue.
  (Ms Edwards) One of the factors, indeed only one factor, is where there are lower GPs per head of population you tend to get lower referrals into the secondary care system, it is to do with having less access to primary care that results in less access to secondary care, and those are factors that we need to look at.

  119. That is suggesting people are not having access to services which they should have. Is there anything working the other way?
  (Ms Edwards) As I say, it is a real mixture, some of it is because services are actually better provided. We want to reduce admissions to hospital, the less patients that are going into hospital is an indication of good quality primary care. It really does need to be done carefully and a lot of the detail we do not yet have.

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