Finances put NHS reforms at risk, warns The King's Fund

This content relates to the following topics:

Commenting on today's publication of the 2005 annual star ratings by the Healthcare Commission, The King's Fund chief executive Niall Dickson said:

'This report again raises some serious questions about the state of NHS finances. The fact that a third of hospital trusts are now running deficits is deeply concerning.

'We saw with the recent National Audit Office and Audit Commission report into financial management in the NHS that the health service was facing serious difficulties with many trusts heading into deficit. We already know that much of the new NHS money has had to pay for new pay deals for staff and other cost pressures, such as clinical negligence, pensions and inflation.

'But today's report reveals the NHS was overspent by £140million for the last financial year despite the government having provided unprecedented increases in funding. The NHS is undoubtedly facing a more volatile financial climate because of new reforms such as payment by results, patient choice and the need for trusts to be more financially transparent. Although these reforms are welcome, they could add to financial instability if not well managed. All the time the NHS is experiencing these significant deficits, it has relatively little flexibility to do other things - that's when patients will feel the brunt of poor financial management.

'This makes it imperative that NHS organisations have the necessary financial expertise on their boards, are willing to adapt services and begin to sort out their deficits now. If not, the financial outlook in a few years' time could deteriorate further.'

This is the final year that the Healthcare Commission will use the current star ratings system to assess NHS performance. The King's Fund said today's report shows the NHS is improving but called for smarter targets that are much better at meeting the needs of patients, clinicians, managers and the public at large.

Niall Dickson said:

'The challenges facing the NHS have never been greater yet today's annual star ratings show the health service is continuing to improve. More and more hospitals are hitting increasingly tougher waiting time targets, while death rates for cancer, stroke and heart disease continue to fall - this is all encouraging news. However, we are glad to see the back of star ratings. They were a useful first move towards producing performance management information for the NHS, but they are of little use to patients and health professionals, and are too volatile to represent a proper assessment of NHS performance.

'It also appears that those areas not covered by targets continue to lag behind areas that are. This raises the prospect that unless the annual performance rating system includes targets for everything, there will always be problems in some areas and the Healthcare Commission will end up commending on the one hand and criticising on the other. A move towards targets that measure health outcomes, patient measures of health improvement and patient satisfaction would be welcome.

'We support the move to a new assessment process which, although ambitious, should be better at meeting the needs of patients, clinicians, managers and the public at large, while at the same time keeping the burden of inspection and data collection to a minimum. However, we do have some concerns that the new system will not provide the useful information needed to inform patient choice or identify poorly performing doctors. The system remains too high level and relies on NHS trusts to tick boxes rather than provide useful data. We would like to see the new 'health check' focus much more on what information patients do need to make informed choices about their health care.'

Notes to editors

1. For further information or interviews, please contact the King's Fund media and public relations office on 020 7307 2585. An ISDN line is available for interviews on 020 7637 0185.

2. The King's Fund is an independent charitable foundation working for better health, especially in London. We carry out research, policy analysis and development activities, working on our own, in partnerships, and through funding. We are a major resource to people working in health, offering leadership development programmes; seminars and workshops; publications; information and library services; and conference and meeting facilities.