News / Good ALE results increase pressure on poor performers

NHS bodies in England have been praised for ‘impressive’ improvements in financial performance, revealed by the latest Auditors’ Local Evaluation results. But poorly performing organisations have been warned to expect increased scrutiny.

Under ALE, NHS bodies scored one to four for use of resources. Level one means inadequate performance and four is performing strongly. This overall assessment is based on judgements in five theme areas – financial reporting, financial management, financial standing, internal control and value for money – scored on the same one to four basis.

The results for 2007/08, published at the beginning of October, show that half of the 302 NHS trusts and primary care trusts (PCTs) performed well or strongly (levels three and four). Some 282 bodies (93%) achieved overall scores of level two or more – indicating they met or exceeded minimum standards – with level three being the most common score compared with level two in the past two years.

Overall 14 organisations scored four – the top level – with 137 recording a three, a further 131 receiving level two and 20 assessed as level one (inadequate performance). The results continued the trend of year-on-year improvement over the three years of ALE assessments, with the average score rising from 1.73 in 2005/06 to 1.96 in 2006/07 and 2.48 in 2007/08.

The improved financial position of the NHS underpinned the improvement in ALE results. A deficit guarantees a one in financial standing – which under ALE rules means an overall assessment of one. Just 10 organisations ended 2007/08 with a deficit compared with 82 in 2006/07.

‘The improvements in the way that NHS trusts and PCTs have managed their money in the past year are impressive,’ said Michael O’Higgins, chairman of the Audit Commission. ‘Financial manage-ment in the health service had been in poor shape, but better use of resources locally has made a difference…and many NHS bodies are now responding well to financial challenges.’ This positive assessment was endorsed by the Department of Health. Director of NHS finance Bob Alexander (pictured above) said he was pleased to see ‘movement the whole way through the spectrum’.

But both also warned against complacency. Mr O’Higgins said ‘pockets of real concern remain’ and only 14 bodies in the top category was not good enough. But the commission acknowledged that the authorisation of former high performers as foundation trusts had to be taken into account. Some 12 trusts scored level one for the third year running and were ordered to take immediate action in areas of weakness.

The Department’s Mr Alexander added that the elimination of deficits in the NHS meant an increased focus on the poorest performers. A dozen organisations were assessed as level one on financial management. While this was a four-fold cut on the previous year, Mr Alexander described the performance as ‘unacceptable’. ‘We’ll expect strategic health authorities to be focused on this in 2008/09 and we’ll take an active interest in progress,’ he said.

Reasons for not meeting minimum requirement in this theme included unrealistic medium term financial plans and poor budget monitoring. Mr Alexander said the Department was also concerned about the 13 organisations scoring a one for financial reporting – in some cases masked by being assessed as a two overall. ‘I’m concerned that if they can’t do final accounts under the old timetable, how will they cope with the faster closing timetable and [the move to] international financial reporting standards,’ he said.

Results at a glance

• 93% of bodies met or exceeded minimum standards
• 5% assessed as level four (performing strongly), 7% level one (inadequate)
• 2% improved by two levels, 56% by one level, 2% dropped a level
• One organisation – Bromley PCT – scored level four in all five themes