Tuesday, February 20, 2007

NHS Deficits- More Misery For The South East

The appliance of science... not

The Department of Health has just issued its update on those financial deficits.

As we've blogged many times, we know for certain that the system will be in small surplus by year-end because the Commissar has promised to resign if it isn't. And sure enough, the latest forecast is for a surplus of £13m.

But behind this manipulated net result, of course, is a continuing crisis. Deficit trusts have actually moved into even greater deficit than last year, but they've been "covered" by the simple expedient of witholding funds from other trusts- "top-slicing" as the DoH calls it. The underlying figures show a gross deficit of £1,318 million compared with £1,179 million at quarter two and £1,312 million in 2005-06.

So where are the 35% of trusts that are in deficit?

Where do you reckon?

Yes, that's right. They are overwhelmingly concentrated in the Greater South East.

A quick inspection of the detailed DoH tables reveals that of the £1.31bn total gross deficit, £0.84bn- 64%- is in the GSE.

According to the Commissar, the deficits reflect incompetent management. A far more likely explanation is that the capitation formula the DoH uses to divvy up the cash is heavily tilted in favour of the Labour heartlands up North (just like the RSG formula used to fund local authorities).

For example, one of the biggest deficits is Cambridgeshire PCT on over £50m. True, the managers may be incompetent, but it also turns out that for every £1 per head received by say Durham PCT, Cambridgeshire only gets 70p. Despite the fact that it's a much higher cost area.

The difference reflects the detailed weightings used in the distribution formula, including age and "social deprivation" factors, which favour Durham and penalise Cambridgeshire.

Until recently this has all been a classic black box, an arcane number crunching area that attracted little attention even within the DoH. But now the money's run out, that is changing (see here for Civitas overview).
PS I've just looked up the funding allocation for Tyler's PCT. Turns out it's 15% below the national average (£1274 per head), even though the cost of living here must be at least 15% above the national average. Needless to say, it's a blue constituency, and both "local" (ie within 6-7 miles) hospitals are threatened with the chop.

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