Auditors find “substantial improvement” in NHS financial performance

The third annual Auditors’ Local Evaluation (ALE) report from the Audit Commission, published on 2 October, shows an overall picture of financial improvement for many NHS organisations in England in 2007/08.

Half of the 302 NHS trusts and primary care trusts (PCTs) assessed in England have performed well or strongly in the way that they have used their resources and only 3 per cent have failed to balance their books.

According to the Audit Commission, good financial management means that trusts and PCTs are better placed to improve services for patients.

Findings from the new evaluation show that:

– Ninety-three per cent of NHS trusts and PCTs met or exceeded minimum standards for their overall use of resources;
– The North West Strategic Health Authority area achieved the highest average score overall across England, while those in the Yorkshire and Humber Strategic Health Authority area scored the lowest on average;
– London’s performance is the most mixed: it has the highest proportion of NHS bodies performing strongly, but it also has the highest proportion failing to meet minimum standards;
– Six NHS trusts and eight PCTs achieved the overall top score for use of resources in 2007/08; and
– Twenty NHS bodies in England have failed to reach minimum financial standards, of which 12 have failed to meet minimum standards overall in their use of resources in each of the past three years’ evaluations.

Michael O’Higgins, Chairman of the Audit Commission, said:

“The improvements in the way that NHS trusts and PCTs have managed their money in the past year are impressive. Financial management in the health service had been in poor shape, but better use of resources locally has made a difference. Auditors have shown that many NHS bodies are now responding well to financial challenges and this local evaluation is helping to drive improvement.

“However, pockets of real concern remain. Poor financial management can put services for patients at risk. Patients and the public deserve better from the poor performers, who must learn from the strong performers. And we should be seeing a lot more than only 14 NHS bodies performing strongly in their use of resources.”

Auditors have found many signs of financial improvement in the NHS and the better overall financial performance is especially noteworthy as foundation trusts are not assessed in this evaluation. This year only one organisation has failed to meet the minimum standards in any of the five use of resources themes compared with four bodies in 2006/07.

An outstanding performance in this year’s report is from Bromley PCT, the first NHS body to score a 4 (performing strongly) in all five themes that make up the overall use of resources score.

A new detailed report, Financial Management in the NHS 2007/08, which also examines the financial environment in which NHS bodies were operating in over the most recent financial year, will be published jointly by the Audit Commission and the National Audit Office in November 2008.

For further information on the 2007/08 ALE results, including access to the full report, click here.

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