3 The impact on services and the future
14. NHS organisations which perform well financially tend to be well-run organisations that provide good quality services to patients, have high patient and staff satisfaction (Figure 3). This is a reflection of the quality of financial management and the level of cooperation between management and clinicians in the running of the NHS organisation. Financial recovery therefore has to take place alongside service improvements, not at their expense.[20]
Figure 3: Correlation between an NHS organisation's financial standing and quality of services rating as determined by the Healthcare Commission
Source: C&AG's Report
15. The Department is confident that there was no adverse impact on services as a result of top-slicing. There is some evidence, however, to suggest that some patients may have experienced delays in receiving healthcare.[21] Decisions were made by some trusts in deficit to maintain services rather than to increase delivery beyond current targets by using growth monies to support deficits rather than to provide additional health care. The King's Fund reported in August 2007 that 14 Primary Care Trusts had imposed activity limits on NHS Trusts towards the end of the financial year, ensuring that non-elective emergency activity and elective activity did not rise beyond affordable limits.[22]
16. The Department considers that the surplus means that there are sufficient resources to deliver planned services in a way that will be more equitable for patients. The Department also considers that measures that could be perceived as cuts, for example, reductions in bed numbers, were more likely a result of efficiencies and productivity improvements.[23]
17. The Comprehensive Spending Review 2007 stipulated that all public organisations should aim to achieve efficiency savings of 3%. The Department is confident that, given a budget of £100 billion, it can realise the potential for efficiencies through improvements in productivity. The NHS is required to plan on this basis. While further additional resources are allocated to the NHS over the next three years the Department recognise that greater emphasis must be given to improving health care through more cost effective utilisation of resources.[24]
18. Moreover, more than one in five NHS organisations is still in deficit and their gross deficit of £917 million in 2006-07 will need to be recovered. The Department expects that the proportion of organisations in deficit will be reduced from 22% in 2006-07 to 7% in 2007-08. This compares with a figure of 33% at the height of the deficit.[25] In the current financial year, 25 organisations have planned for a deficit. The Department has processes in place to understand why these remaining bodies are still forecasting a deficit. For example, it is working with Strategic Health Authorities to develop action plans for dealing with the 17 organisations identified by the Department as the most financially challenged. These organisations are considered to be financially challenged due to their anticipated inability to repay loans within expected timescales.[26]
19. In 2007-08, the Department expects the NHS to have more than enough resources to deliver against its priorities and objectives. The Department is also aware that there is a long way to go in continuing the programme to improve the quality of management in the NHS. Sound financial management should mean that organisations can deliver better services by planning for the medium and long term rather than relying on crisis management as has been the tendency in the past.[27]
20 Q 20; C&AG's Report, para 2.3 Back
21 Qq 76-78 Back
22 Qq 8-13; C&AG's Report, para 14 Back
23 Q 9 Back
24 Qq 121, 141 Back
25 Qq 9, 109; C&AG's Report, para 3.1 Back
26 C&AG's Report, para 3.9 Back
27 Qq 140, 143 Back
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