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Debt in the News - Insight into the NHS debt drama

Watford Observer
Thursday, March 29, 2007

ALAN POND is a man who flexes some serious financial muscle. In the accounting year starting next month, he will dispose of a revenue budget of £1,281million - that's £1,239 for every man, woman and child in the county.

This may sound like a lot, but it is significantly less than the average for England of £1,388, as the Government says we are a healthy and wealthy bunch who don't need so much looking after.

It is calculated on a complex formula which is supposed to weight different areas according to their population's needs - people in west Hertfordshire are deemed to need £37 each more per year than those living a few miles to the east.

Mr Pond said: "It is a bit like the Duckworth-Lewis scoring method in cricket - I couldn't even try to explain it.

"There is justification that areas like inner London and Manchester should get more.

"Their health needs will be higher than ours."

Hertfordshire's overall cash will be more than nine per cent higher than in the current year - only the latest in a series of annual above inflation boosts. Even the Government's harshest critics couldn't accuse them of not taking health seriously.

But doubts over whether this bonanza has produced value for money have been reinforced by the headline-grabbing deficits. Last year, West Hertfordshire Hospitals NHS Trust, which manages Watford General Hospital, axed 500 jobs and slashed spending to claw back a £28million deficit.

With ministers so generous - or profligate - with taxpayers' money, how come the NHS in Hertfordshire had overspent by £84million by this time last year?

Mr Pond said: "Look at what the NHS has been asked to do.

"Waiting times are much shorter now.

"Many more patients are being treated than before.

"There is more equipment. There are so many new drugs, particularly for cancer, and they work, but the drugs bill is millions of pounds more than before.

"Treatments are improving massively, but it all costs money."

Critics argue much of the new health cash has gone into the pockets of staff - under their new contract introduced in 2004/5, GP salaries have soared to a national average of £106,000.

Mr Pond said: "Primary care in Hertfordshire is very good quality. The money is rewarding good quality practices."

Local surgeries rate very highly on the Quality and Outcomes Framework, which scores practices on, for example, what proportion of heart disease patients have their blood pressure and cholesterol levels monitored.

Primary care itself - GPs and dentists - accounts for only 26 per cent of the budget of the primary care trusts (PCTs), which channel 80 per cent of all NHS spending.

The biggest slice of the cash Mr Pond doles out, 45 per cent, funds major hospitals such as Watford General. The rest goes to clinics, community hospitals, mental health and long-term nursing care.

Bosses have known the 2007/8 revenue allocation for some time, allowing them to plan ahead, but the 2008/9 figure is unpublished The huge leaps of recent years definitely won't be repeated, and Mr Pond hopes for a little more than inflation.

The separate amounts available for capital expenditure, only just announced for 2007/8, have leapt by around 30 per cent, which Mr Pond said could be spent on facilities such as new computers in surgeries.

The £84million debt - the combined deficit of Hertfordshire's two primary care trusts and two acute hospital trusts - is down now to about £54million, which Mr Pond is confident will be cleared over the next year.

The debt, fortunately interest-free, is, in effect, owed to other parts of the NHS.

But if big cash boosts have been needed in the past few years, how are local health services going to cope unless these are repeated in future?

Not only will trusts be free of the burden of repaying debt, Mr Pond explained, but the massive effort in cutting waiting times in recent years will have been a one-off expense.

Once the maximum wait between GP referral and treatment is down to 18 weeks, which Mr Pond believes will be achieved by the end of 2008, the NHS will be able to keep it at that level without such massive annual cash injections - at least, that is the theory.

He said: "Expectations of the NHS are high, as they should be.

"But take where it was - there were years of lack of funding.

"Once the PCTs are back in balance, we will be able to invest in services more than in the past."


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