Examination of Witnesses (Questions 100
MONDAY 21 OCTOBER 2002
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.
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
(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.
103. You would reckon the strategic health authority
(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
104. I will be on the telephone to the strategic
(Mr Douglas) They will be on the telephone straight
back to me!
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
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.
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
(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.
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,
114. Can I ask one or two questions related
to that. One thing completely missing from this paper is, I thinkalthough
I have to admit I have not read every page in huge detailany
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
(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.
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
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.