Hospitals warn of worst funds crisis for years

Patient care being severely affected, survey shows

The National Health Service is facing its worst cash crisis since the introduction of the Government's reforms, according to a survey of finance directors and senior executives in trust hospitals and health authorities across the country.

The survey confirms the recent warnings of doctors and managers of an "emergency only" service this winter, which forced Stephen Dorrell, the Secretary of State for Health, to seek extra funding for the NHS from the Treasury. However, the sum won by Mr Dorrell - estimates range from pounds 500m to more than pounds 1bn extra in total - applies to the next financial year and will do nothing to avert problems this winter. The Department of Health has ruled out any interim payments to see hospitals through this period.

But the new survey of more than 130 trust hospitals and one-third of all health authorities, suggests that patient care is being severely affected by the present funding crisis.

The trusts are being forced to increase waiting lists, lengthen out-patient waiting times, close beds, and reduce staffing levels in order to maintain some degree of financial viability, the survey found. More than one-quarter said that they were "worse off" than expected by up to pounds 1m, and about one in twenty cited a figure of more than pounds 1m.

"Even those trusts who are keeping within forecasts have had to take tough decisions and strong measures to keep within their budgets," according to the survey by the Healthcare Financial Management Association which represents all NHS finance directors, and the National Association of Health Authorities and Trusts.

Action being taken by health authorities - who purchase care from trusts for the population under their care - includes increasing waiting lists, deferring extra-contractual referrals to specialist hospitals or centres of expertise, and renegotiation of their contracts with trusts to reduce prices.

Almost one-third of the health authorities which responded to the survey said that they were worse off than expected by up to pounds 1m; more than one in ten said that the figure was more than pounds 1m, and about one in eight said that it was more than pounds 2m.

One specific finding was that 27 per cent of trusts were anticipating an increased income from extra-contractual referral of patients, while 35 per cent of health authorities were planning to defer such referrals. "These expectations are inconsistent and one of other position is bound to worsen," the survey concludes.

Keith Ford, chairman of the HFMA which is part of the Chartered Institute of Public Finance and Accountancy, said yesterday: "There are clearly a number of trusts and health authorities under pressure. HFMA is not interested in running scare stories but neither is it prepared to minimise difficulties."

The near unanimous view of health-service personnel, from doctors to chief executives, that the NHS faces possibly the worst crisis in its history this year, has meant that their claims are being taken seriously and not dismissed as the usual pre-budget "shroud waving".

The Government's own figures also lend support to this view. Earlier this month it was revealed that 36 trust hospitals were already in the red by pounds 34m, just six months into the financial year and despite a statutory responsibility to break even. In addition, 63 of the 99 district health authorities expected deficits in the 1996-97 financial year.