News / News review - Seamus Ward assesses the past month in healthcare finance

As widely expected, the summer kicked off with the appointment of a trust special administrator to South London Healthcare NHS Trust under the unsustainable provider regime. Matthew Kershaw, former Department of Health national director for provider delivery, took control on 16 July. A draft plan is to be published in Parliament by 29 October and a final report must go to the health secretary by 8 January. Andrew Lansley must make a final decision on the trust’s future by 4 February.

The other big story at the beginning of July ended early as the British Medical Association suspended its industrial action over the government’s pension proposals. It will join other health unions in discussions with the government over the details of planned pension changes. The move appears to end the doctors’ body’s opposition to the reforms, though it hopes to win concessions, particularly an abandonment of plans to link the normal pension age for all NHS staff to the state pension age. ?

One of the features of the summer has been the flurry of consultation documents issued by Monitor and the Department. As well as consultations on licensing and the provider market (see p8 and p16), the Department said it will consult this autumn on two of Monitor’s new roles. In October it will focus on the number of objections required for Monitor’s proposed methodologies for calculating the tariff and the risk pool levy to be referred to the Competition Commission. At the same time it will consult on Monitor’s powers to require commissioners to contribute to the risk pool.

Monitor has also proposed revisions to its guide for foundation trust applicants. These include giving the regulator power to require applicants to commission external reviews of their service performance or governance arrangements and to certify they have provided all relevant information to Monitor in their submissions. The proposals follow the internal audit review on University Hospitals Morecambe Bay NHS Foundation Trust, which was found to be in significant breach of its authorisation a year after it was authorised. The consultation closes on 5 September.

Further proposals from the Department would require local authority health overview and scrutiny committees to take account of financial sustainability when considering referring a health service reconfiguration to the health secretary. The committee would also have to secure agreement of the full council before referring. The consultation closes on 7 September. ?

The NHS Commissioning Board (NCB) has been busy too. It received its first mandate from the health secretary (right), which includes the care objectives for the board and is based around three themes: improving health and healthcare; putting patients first; and effective commissioning. Consultation on the draft mandate, due to come into force in April 2013, will end on 26 September. Mr Lansley also published his annual report, the first under the health secretary’s new duty to publish a 12-monthly report.
The NCB has received applications from the first wave of 35 aspiring clinical commissioning groups (CCGs). The first wave is due in October.?The Department also announced that the NCB and NHS Trust Development Authority regional directors will oversee delivery and planning services and the foundation trust pipeline from 1 October. However, formal transfer of budgets, statutory functions, accountability or employment of staff will not take place until 1 April next year.

The commissioning board will also host the 23 newly renamed commissioning support units (CSUs) from October, not April 2013 as originally planned. The move aims to give CSUs a chance to ensure their income covers their costs before April 2013. While none of the 23 applicant CSUs would be stopped at the current assessment stage (checkpoint 3), their configuration could be changed when the outcome of the checkpoint is announced in October.

Amid all this activity, it would have been easy to miss the Department’s announcement of a further funding transfer to social services. The NHS will transfer a further £300m over the next two years to local authorities to deliver social care and promote integration between health and care. A white paper, published alongside the government’s draft care and support bill, said the government had committed to transferring £2.7bn from the NHS to local authorities over the spending review period (2011/12 to 2014/15). But a further £100m (2013/14) and £200m (2014/15) would be given, promoting further integration. ?

Fears over NHS finances persisted. The Institute for Fiscal Studies said the NHS in England could face another 10 years of relative austerity. Its report, funded by the Nuffield Trust, which modelled a number of funding scenarios beyond the end of the spending review period (2015/16 to 2021/22), said even if spending increased with national income it would be less than that needed to keep up with costs. The amount needed to fund growth with national income, and the knock-on effect on other public spending, would force the Treasury to implement deeper welfare cuts, increase tax or borrow more.

The National Audit Office said without major change the financial pressure on some providers will only get more severe. Securing the future financial sustainability of the NHS said that although there was a £2.1bn surplus in 2011/12, there were signs of distress, particularly in hospitals – 34 NHS bodies reported a combined deficit of £356m. The NAO said without direct financial support, a further 22 may have reported deficits. Four FTs and 17 NHS trusts required injections of working capital totalling £1bn from 2006/07 to 2011/12. The Department anticipates trusts are likely to need £300m more public dividend capital in 2012/13. ?

One trust searching for a way out of financial difficulty – Mid Yorkshire Hospitals NHS Trust – outlined its options for change after it revealed it was losing £100,000 a day. The trust ended 2011/12 with a £19m deficit and even with a savings plan expected to yield £24m this year, it is forecasting a year-end deficit of £26m in 2012/13.