Tuesday, December 12, 2006

It is broke, so fix it


Tuesday December 12, 2006

The Guardian

It was hoped that tough accounting rules might do for the health service what being tied to the mast did for Odysseus. Just as he was protected against the lure of the sirens, so the health service would be protected against the temptation to which it has traditionally fallen prey: to solve every problem with a cash bail-out. But yesterday, along with optimistic plans to move the NHS as a whole into surplus, came the admission that the financial binds being imposed were "unsustainable" for many individual trusts - these are rules that cannot and will not be kept. Having acknowledged that the system was broken, however, there was no move by the government to fix it.

We reported yesterday that at least 13 NHS trusts (which run hospitals) faced a financial position that was irrecoverable. The government has not disputed this analysis. Such problems arise because the rules bite excessively hard on NHS trusts that began with weak finances. An overdraft in one year leads not only to a requirement to repay, but also to a reduction in income, creating a double penalty. In theory, this should eventually even out but, in practice, a mismatch in timing means a double hit applies. Debts can multiply, leaving managers with no freedom of manoeuvre and a situation that drags them down.

This is like punishing errant motorists by forcing them to drive with a steering lock on - regardless of the obstacles in their way. Without a bail-out or a change in the rules, hospitals up and down the country would have to close, not as part of a planned rationalisation, but in an arbitrary and indefensible manner. This will not happen: no government which has invested so much politically and financially in getting the NHS right could allow it. Sticking with doomed rules, as the government is still doing for now, will no more achieve credibility than did promises to cling to an overvalued pound in the run-up to Black Wednesday.

Acknowledging problems, the government looked to the Audit Commission to suggest changes, so why will it not now implement its proposals? Yesterday ministers pleaded lack of funds, but this is hardly plausible since there is no choice but to find the cash. Perhaps the real thinking is that by waiting for cries of help to become desperate, Whitehall retains a card that will give it ongoing control. That would make sense, but is hardly in keeping with welcome noises yesterday about greater delegation to the front line. And the dire straits in the worst-hit trusts leave the promise to make every hospital a foundation looking more distant than ever. So, if for no other reason than to fulfil its own policies, the government must now fix the problem it has at last acknowledged.