How entrepreneurial ethos bled a health trust

The dangers of encouraging an entrepreneurial culture in the health service are highlighted in a report which shows how it led to fraud, corruption and theft in one health trust.

The saga of illegal practices and dubious deals at the South and east Wales ambulance NHS trust is disclosed in the report by the National Audit Office, which also revealed that more than 1 in 10 NHS trusts was facing serious financial problems last December.

The Government published a list of the 47 worst-affected trusts in England (plus one in Scotland and two in Wales) and said the overall financial situation in the NHS had deteriorated since December.

The British Medical Association said an immediate injection of a further pounds 500m was needed this year to avert a winter crisis, with patients queuing on trolleys and being ferried round hospitals in search of a bed.

Inquiries into the trust, which ran up a pounds 1.4m deficit, found a catalogue of problems ranging from the misuse of credit cards by members of staff to the purchase of useless equipment. One member of staff who used a fuel card to buy petrol for private use was convicted of theft.

A computer system costing pounds 125,000 was formally accepted by the then chief executive, David Triggs, in April 1996, even though it did not work. It has never been used.

A former manager of the ambulance fleet, Steve Whitehart, bought a redundant ambulance and persuaded mechanics in the trust's garage to convert it into a camper van for his holiday in France at a cost of pounds 2,500. No attempt was made by the trust to recover the money until the auditor investigated. It has now been repaid.

As losses mounted in the early years of the trust 1993-95, managers resorted to desperate measures to balance the books. They appointed management consultants to seek savings on a contract that guaranteed them pounds 1 for every pounds 1 of annual savings identified. A preliminary report, which cost the trust under pounds 10,000, said savings of pounds 800,000 a year were possible. Under the pounds 1-for-pounds 1 contract, which required more detailed work, the consultants revised this estimate down to pounds 550,000 and received the maximum agreed payment of pounds 356,000 - but only pounds 182,000 a year had been saved by May 1996, with the potential for only a further pounds 51,000. An official said: "They were like gamblers chasing losses with ever high stakes."

Mr Triggs and John Curteis, the chairman , resigned in February 1996.

The new chief executive, Allan Davies, who was appointed in July 1996, yesterday said he was confident the financial management of the trust was now under control. However, Sir John Bourn, head of the National Audit Office, says in his report that the Welsh Office should continue to monitor the trust closely and "communicate any lessons of general applicability" more widely.

A spokeswoman said: "It is an example of what can go wrong with local autonomy harnessed to an entrepreneurial style."