NHS trust shamed for £8.5m overspend

A London health trust has the biggest financial black hole in the NHS, a report showed today.

Hammersmith and Fulham Primary Care Trust (PCT), which funds non-hospital treatment of patients such as that in GPs' surgeries, overspent by £8.5 million in the financial year to April 2004.

It has not been in the black since it was set up in 2002, despite unprecedented levels of investment in the health service. The scale of financial deficits run up by the organisation and other NHS trusts was exposed in a critical report by the National Audit Office (NAO) and the Audit Commission.

The study shows one in six trusts failed to break even, with Hammersmith and Fulham the worst.

It also found the strategic health authority which overseas all north-west London NHS organisations, including the Hammersmith and Fulham PCT, had the second highest debt in the country for its type of body.

Its deficit in 2003/4 was ?13 million, just behind the worst performing authority, South West Peninsula, which overspent by £14million. The report said the Hammersmith and Fulham trust's debts were caused by rows with other NHS bodies regarding payments, unbudgeted costs and problems with unpaid invoices.

The trust had faced an accumulated potential deficit of £19 million - almost 10 per cent of its budget - but the strategic health authority agreed to provide £14.5million to help bridge the gap.

"Nevertheless, more still needs to be done," said the report.

A cultural change was needed to ensure the trust's budget and

objectives matched and that break-even could be maintained.

Sally Hargreaves, the trust's chief executive during its financial crisis, resigned last year.

Her replacement, Chris Butler, said today: "The PCT faced a serious situation at the end of 2003/04.

"We are very pleased that the hard work from our staff and NHS organisations we work with has been a success and our pre-audited accounts for 2004/5 show a breakeven position."

James Strachan, who chairs the Audit Commission, said with more changes to the way NHS organisations earn money and pay for the treatment of patients, cash-flow problems would get worse. He said: "Financial management is now a matter of major concern for the NHS. The Department of Health's welcome policy of greater transparency on financial matters means that many of the old practices which obscured the year-end financial position are no longer possible."

NAO head Sir John Bourn warned: "The major developments taking place in 2004/5 and beyond will pose unprecedented challenges with which all bodies in the NHS will have to deal."

Health Secretary Patricia Hewitt said: "In a minority of organisations leadership and financial discipline are weak. This needs to be tackled head-on with a sense of urgency."

Niall Dickson, chief executive of the King's Fund - a charitable foundation trying to improve health in London - said hospitals were under pressure.

" Waiting- time targets are tougher than ever, pay levels are increasing and other cost pressures are considerable," he said.