News / Welsh predict tough year ahead for NHS

Finance staff in Wales have warned that the local NHS faces a difficult year ahead and an even more testing time over the following two years.

The Welsh Assembly government announced in February that local health boards and Health Commission Wales would receive a 4.4% uplift in 2008/09. But finance staff said this would mean ‘severe hardship’ next year. Future years offered little respite.

In 2008/09, NHS organisations would have to generate efficiencies of 2.5%, they said, and trusts alone would have to find at least 1.6%.

A number of issues that could cause financial instability will be funded separately. The government said the financial impact of the extension of continuing care following the Grogan ruling would be managed ‘outside this allocation’. The same approach would be taken if the National Institute for Health and Clinical Excellence approved the drug Lucentis. The cost of Lucentis could exceed £20m while the Grogan ruling could be many times that.

Chris Lewis, HFMA Welsh branch chair, said 2008/09 would be a tough year for the local health service. ‘The level of resources being made available, as set out in the allocation letter, means that health communities are facing an inflationary shortfall of 2.5% in 2008/09,’ he said.

‘In addition, there will be a number of unfunded cost pressures and recovery plan requirements that could increase this savings requirement to 3.5% or 4% in a number of organisations. The sheer scale of this will present organisations with significant financial challenges in 2008/09, with the outlook beyond this not getting any easier.’

The allocation letter also said the results of a technical review to rebase allocations to reflect the move to activity-based funding and correct historical anomalies would be published this autumn and implemented in 2009/10.

It added that an expert group set up to develop Wales’ direct needs resource allocation formula had proposed a ‘substantial refinement’ of the formula. These changes, which could have a big impact on some allocations, will be consulted on in the coming months but will not be implemented before 2009/10.


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